Thursday, December 28, 2017

Sources of positive and negative edges

Just a rough summary that I scribbled in my notebook.

SOURCES OF POSITIVE EDGE (apply as much as possible)

+ trade against retail sentiment
+ trade with positive carry/swap
+ historically positive technical strategies
+ trade in favour of hawkish vs dovish currencies
+ trade higher timeframes
+ possess more trading capital
+ mental resilience
+ anti-martingale position sizing (reduce positions as you lose, increase as you win)
+ longevity (the longer you survive, the more you learn)
+ meditation & exercise
+ emotional detachment from outcomes
+ have other income sources
+ ignore other traders' opinions (trade your edge only)
+ check markets routinely and on time (don't enter late)
+ constant learning & journaling
+ networking

SOURCES OF NEGATIVE EDGE (avoid as much as possible)

- fees and commission
- negative carry/swap
- price gaps and extreme spread (avoid news & trading over weekends)
- no trading plan and strategy
- not following trading plan and strategy
- martingale position sizing (avoid increasing positions after losing)
- emotional investment in trades ("I must win", "I'll look bad if I lose" etc)
- performance anxiety / trigger-shy
- excess leisure (erodes discipline and drive)
- distractions (time and energy are diverted elsewhere)