I have been listening to a great deal of the Toddler music channel on Pandora so pardon my lyrics.
First comes skill
Trading Skill!
Next comes edge
Trading Edge!
Then comes trading profits in your head
…..And in your bank!
Our firm has edge during Russell imbalances. I was discussing this strategy in theory with our college training class, exposing them to the different ways traders can find an edge in markets. One very ambitious student from China asked, “How do they do it?”
This is a perfectly acceptable question. Or is it?
I didn’t develop this strategy so I cannot share it. It’s not mine to share. Traders who sit on our desk eventually learn it from other traders after they have developed trading skill………. AFTER they have developed trading skill! Their trading skill allows them to understand, execute and manage these inefficiency opportunities.
But even if I did, it wouldn’t help that ambitious student. He/she doesn’t know how to trade yet. Learning an edge without trading skill is closer to dangerous than profitable.
Most trading edges are very small. Some say great traders are right perhaps slightly over 50 percent. They know when they are right. They get big when they see it. They exit when the trades are not worth risk. Yes they have edge but its their trading skills that allow them to capitalize on this edge.
First comes skill.
Then you can find edge.
Then comes profits.
Related posts:
Finding and Increasing Your Trading Edge
“You can be better tomorrow than you are today!”
Mike Bellafiore is the Co-Founder of SMB Capital and SMBU, which provides trading education in stocks, options, forex and futures. Bella is the author of One Good Trade and The PlayBook.
No relevant positions
2 Comments on “What Do You Need First to Gain Trading Edge?”
I am very glad to have read ‘ One Good Trade ‘ & discover this wonderful blog :). Mike, you have shared an interesting & exceptional insight into the working of a prop firm and what does it takes to become a CPT. The fact that your vision is shared with someone who is sitting in New Delhi, India at this moment proves that you have excelled in your mission & your ethics are imprinted on my mind for eternity ! Having said this, I have no personal interest to become a prop trader but a CPT, trading only my personal account 🙂 Some day, if I visit the states, I would definitely like to hear you in person or in a seminar :-))
Best Regards,
Rishi
Thxs Rishi. We look forward to meeting you one day! Looking forward to learning you a CPT.