This week we take a light hearted yet serious look at what it means to have an ‘edge’. In the natural world animals develop skills and characteristics that allow them to prosper and survive often under strange and adverse conditions. This process of evolution gives those that develop these skills a survival advantage over those that don’t.
In the financial markets a similar story prevails. Those traders and investors who have an ‘edge’ over the market through a robust strategy with unambiguous entry and exit rules coupled with risk and money management techniques will be the ones that prosper and survive often under adverse market conditions. The markets are never perfect, and equity curves will never grow in a straight line – there will be periods of euphoric out performance and periods of drawdown and frustration. Over time however, with a proven strategy, a focus on process rather than individual trade outcomes, and an ‘edge’, disciplined investors will not only survive but will evolve to become consistent long term out performers of the market. They will develop a skillset and mindset that allows them to keep on doing what is necessary to deliver positive returns over the long term despite the imperfections of the market.
I hope you enjoy watching the attached video clip that is a perfect example of the development and use of an ‘edge’.
[local /wp-content/uploads/2010/09/bottlenose_dolphins1.wmv nolink]