The Professional Trading Edge

Professional Trading-4

The Professional Trader's Edge(s) ''Many people get involved in the markets without any edge. They get in the market because their broker told them that the market is bullish. That is not an edge. Make sure you have the edge. Know what your edge is. Use rigid risk-control rules. Basically, when you get down to it, to make money, you need to have an edge and employ good money management.'' - Billionaire Professional Trader Monroe Trout While all ''trading secrets'' are wearing overalls and dressed up like hard work, it is an open secret among professional traders that their success can be measured, to a large degree, in direct proportion to how numerous and effective their edges are. The term ''edge'' is used with frequency among professional traders for good reason. A legitimate market edge either generates trading income or protects and preserves trading capital, the lifeblood of a professional trader's business. Professional traders therefore strive to use every proven resource at their disposal to gain an edge in their trading activity. Before the opening bell ever rings, the professional trader already has edges in place that give him an advantage in capturing profits over many market participants. From real-time live audio feeds and actionable information delivered directly from the S&P options trading pit, to a vastly superior cost structure that pays them rebates for providing liquidity to the market and utilizes per share transaction fees vs. per trade transaction fees, to operating a customized professional level trading platform with advanced direct market access capabilities and highly adaptable automated programs that execute his trading strategy to it's maximum potential, the pro trader begins each trading session well ahead of the restless money crowd. Once technology driven edges are in place and a stock selection strategy has been developed that identifies high-probability trading candidates, the #1 edge that professional traders seek to acquire is the ability to be properly hedged for any market environment, also known as being market neutral. Trying to predict market direction day-to-day is never a major part of the professional's equation. The question that market-neutral professional traders ask themselves every moment of every trading day is,'' Do I care which way the market moves next? '' If you can honestly say that you do not care, you are properly positioned. If you say ''I wish the market would do this or that...'', you are out of synch and vulnerable to unnecessary risk. In volatile markets being properly hedged is your first and best line of defense, and gives you a distinct performance and risk advantage over the directional guessing herd. The experience edge in trading combines multiple edges acquired after surviving many years of direct participation in the market, and gives the trader what is known as ''feel'' or ''trader's intuition'' , an invaluable internal indicator on his trading instrument panel. Other competitive edges available for professional traders to gain expertise in include, but are not limited to, strategy edge, risk/reward edge, technology edge, direct access/timing edge, training edge, research edge, pattern recognition edge, risk control edge, capital edge, network edge, filter edge, psychological edge, cost edge, probabilities edge, and information/education edge.