A Serious Pro Gently Teaches to the Limit! Takumi Murai’s Introduction to Systematic Trading | ③ What is a Trading Edge
This is a super beginner-friendly swing trading course by Takami Murae, a renowned pioneer of system trading, and his staff Ryuma Yoshida, designed so that anyone can understand. The third installment provides an explanation of edge in trading.
*This article is a reprint and rewrite of FX攻略.com October 2018 issue. Please note that the market information described herein may differ from current market conditions.
Takami Murae Profile
Murae Takayoshi. Chairman of the Japan Trader Coaching Association (General Incorporated Association), CEO of Excellent Horse, and principal of Super Trading School REED. A leading figure in “NLP Trading,” teaching the modeling methods of top traders domestically and internationally based on NLP psychology, and an active system trader. Specializes in coaching traders and guiding investment methods, widely active nationwide. Currently trains coaches who provide high-level skills to Japanese individual investors and engages in writing, lectures, and seminars. Certified Technical Analyst by the NPO Japanese Technical Analysts Association (CMTA) and Master Practitioner recognized by the American NLP Association.
Ryuma Yoshida Profile
Yoshida Ryuma. In 2013, after taking Murae Takayoshi’s “NLP Trader Coaching” course, achieved a positive shift in lifetime performance. In November 2016, moved from Chiba to Fukui to participate as staff at Super Trading School REED, driven by Murae’s philosophy and passion for trader education. A current system trader with 11 years of trading experience. Markets he handles include Nikkei 225 futures, FX, commodities, and cryptocurrencies, among others.
What is the state of market edge?
YoshidaProfessor Murae often says, “This method has an edge.” But what exactly is edge?
MuraeEdge refers to biases or trends in the market, also called trading edge.
Before explaining edge, there is an assumption that most market movements are random.
YoshidaRandom price movements mean you don’t know at that moment whether the price will go up or down, right?
MuraeExactly. The probability of going up is 50%, the probability of going down is 50%, so if you trade randomly, theoretical results would be a draw. However, you pay spreads with every trade, so you gradually lose by that amount.
YoshidaSo, trading in a scenario without edge should be avoided.
MuraeYes. However, this random state can break down, and either upward or downward bias can arise. This is precisely the state where edge exists.
YoshidaWhy does edge arise?
MuraeEdge mainly arises from interactions among participants. Various courses and articles explain that the market is a battle trader versus trader. When human-to-human trading leans in one direction, the market becomes easier to move upward or downward.
YoshidaIndeed, the market is truly a human-to-human battlefield.
