Finding the Edge

Introduction to Edge

Big shout out to  @therobotjames as the main inspiration of this report and thought framework. The lessons learned from @therobotjames deserved to be shared and experience by more people. Further detailed sources, lessons and resources on the following topics can be found at the end of this report. 

Edge is a repeatable process in which a trader can expect to make money over time, net of costs and fees. In other words, edge can be thought of as a trading process with positive expected value. Expectation is integral when defining edge.

What is expected value (I’m not Sam Tabasco, I promise…)? Expected value is a statistical measure that represents the projected average outcome of a particular trade over time. Let’s use a simple coin flip example to illustrate how this works.