How to Tell If You Have No Trading Advantage (AKA Gambling)


Bulls on Wall Street

Many new traders don’t know what a real trading advantage is, let alone how to develop one for themselves.

When you’re just starting out in your career, it’s difficult to get an advantage if you don’t know exactly what it is. Before developing one, you need to first understand the general signs that you are acting to no avail, and then create a process to address those issues. Let’s start by defining what Trading Edge is:

What is Trading Edge?

Trading edge simply means trading actively over a number of weeks and months. The goal as a dealer is to be a casino. Casinos know that as long as they play enough hands they will win in the long run. Unfortunately, most of the dealers are players in the casino. Many new traders have difficulty distinguishing a drawdown due to lack of advantage and a drawdown due to chance. Here are signs that your drawdowns are due to a lack of advantage:

Your losses are far greater than your gains

Losses that are much larger than your gains clearly show that you have no understanding of the risk / reward ratio in your strategy. Proper risk management is a key component of any trading advantage. So by making sure your winnings are three times or more your losses, you can move your career forward.

You ‘system hop’

Many traders without edge “system hop”, which means that they switch from strategy to strategy, asset class to asset class and concept to concept. One day they might just want swing trading, another day scalping, another small-cap trading, and another large-cap trading.

Yes, you can be good at trading multiple things IF you have experience and have progressed as a trader, but many new traders avoid taking any real advantage with a system because they are constantly looking for the “perfect” system . Nothing in trading is perfect. You will have losses. Whichever system you trade with, you will face some losses. Accept that fact, choose what works for you, and develop an advantage within a system without skipping.

You have way too many strategies

Even if you’ve decided on one system and stick with it, you only need to stick to 1-2 strategies in that system to begin with. We will sometimes see students graduating from bootcamp focusing on day trading large caps. But then they make the mistake of trying 5 different day trading strategies per day instead of mastering one and setting them up first.

When you have a real advantage, you have confidence in your edge. That trust comes from focusing on a handful of strategies that keep working. So when you stand in front of the screens you have a clear idea of ​​what you are looking for. This video lesson will show you how to narrow down your niche and find a strategy that works for you:

You take losses personally

Losses are part of the game. You’ve probably heard this over and over, but when you get emotional about losses or take them personally, you are missing a significant part of your head start. When you have a real benefit and system you know that any loss you suffer is only part of the process and the journey. Trading Edge allows you to differentiate between good trading losses and bad trading losses. Learn from your losses, learn the lessons from them, and move on.

You have great emotional fluctuations

One day you are at the top of the world and the next you feel like a worthless loser. Your trading days shouldn’t be like this. An edge is your “constant leading hand” through the markets. If you are following your edge, make sure you choose solid setups with the right risk-reward parameters and don’t end up with crippling losses. Your days should be calm and smooth. Controlling emotions is one of the most important keys and steps in becoming a profitable trader, so mastering this step is critical.

As a new trader, the road to profitability can seem long and daunting, especially without benefit. We have helped many traders like one of our new students of Islam here gain the consistency they need through proper, structured education.

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