The 3 Keys To Determining Your Trading Edge

by Mark Williams on January 21, 2009

You need to have an edge in your trades. Without it, there is no way you will be able to make money long term with trading.

The reason for this is the true secret to trading: You Want To Avoiding Giving Back More Than What You Keep!

So, you may wonder, how does one go about creating this mythical, magical thing called an EDGE (trading edge)?

Well, in trading, you can gain an edge by

  • Choosing a proper portfolio of securities to trade(EUR/USD pair, S&P Eminis, Options, Crude contracts, AAPL, etc).
  • Choosing the trading system (Bollinger Bands? The Turtle system? Donchian Channels? RSI/Stochastics)

and most importantly…

  • Money Management (Where are your stops? When do you get out of a trade? How much are you putting into a trade? How many contracts/shares? How much of you account should you risk on a trade?)

Of these, the most important one here is money management. You could be trading the best system in the world, but without proper money management, you WILL blowup your account (a blowup is a massive string of losses that end your ability to trade).

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