A trading edge is a trading method, or approach, that helps to accumulate more profits than losses. An edge can be a strategy, technology, psychological fortitude, persistence, understanding of market movements, risk control, or basically anything that allows someone to succeed in making profits where many others fail. It is what separates winning traders from losing traders.
Those without an edge may win trades occasionally, but they are unlikely to profit consistently. An edge is necessary, otherwise a trader is essentially donating their money to the market.
When starting out, most traders don’t have an edge, and they see their account dwindle initially. But as they improve their skills – strategies, consistency of approach and mental game – they begin to develop an edge and profits may begin to flow their way. The bigger the edge, the bigger the profits tend to be.