Jack Sparrow writes: What does it mean to have an “edge” in
trading… or poker… or any structured competitive endeavor for that matter?
An old rule of thumb is: “If you don’t know what your edge
is, you don’t have one.” That statement
is a helpful clarity filter. If you have a winning program, you should be able
to articulate what makes you successful (especially in the context of a zero or
minus sum game). The phrase is
unhelpful, though, in the way it muddies the waters. The single edge notion is
a misnomer. A winning player has a critical mass accumulation of edges that all
come together.
Because of this, it’s often a red herring, or a source of
misdirection, to try and assign one or two large-scale reasons as to why a
trader is profitable. There might be dozens of small-scale reasons, or
something to that effect….
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