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How To Build Your Edge In The Markets
A guide to building an advantage over other players in an adverserial market
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How To Build Your Edge In The Markets
Recently I’ve been pondering the question of what exactly my edge is. In my head, I have this idea of it being something extraordinary, like being able to tell the exact movement of a token, akin to the ability of predicting the future.
I have no idea why I have such an impression in my head, but it’s probably from the combination of action movies I’ve watched, and the fact that “edge” sounds like such a potent advantage to have. In reality, while it’s not as flashy as it sounds, it’s definitely an advantage you should build and aim to have.
I recently went on Twitter to say that if you don’t have an edge, follow those you think are smarter than you and keep screenshots of what they say. If you don’t have an edge, build one.
If you don't have an edge, just do what I do
have a bunch of screenshots from people that do
I have a literal document of them, lmao
I want to expound on this idea of building your edge further. When you first started playing this game, you most likely didn’t have an edge unless you were a genius. Think of yourself as a piece of sheet metal, unblemished yet useless. But through countless trials and tribulations through cycles and the ups and downs of the markets, you’re carved into something else. Some become chef knives – precise, and accurate, while others become cleavers – large but it gets the job done.
Point is that building your edge is a skill in its own right. The way to go about it is more nuanced and elaborate and probably beyond my capabilities in explaining it, but I’ll try to anyway. In general, I believe it comes from a desire to learn from your mistakes. One of my edges lies in being able to identify decent projects that I think will do well. Did I have this from the beginning? No. Did I invest in a bunch of crappy projects? Yes! But the desire to better myself brought me to look back on my mistakes and identify certain areas in which I misevaluated something. This iterative process is how you hone your edge. By making mistakes and learning from them, you’re able to pinpoint areas in which you failed so as to avoid making the same mistake next time.
Another extremely helpful tool I’ve used to build my edge is CT. Remember what I said to keep screenshots of what people said? Go one step further – identify what reasons they use and why they use them in backing up their claims, and through that, you’ll build an intuitive understanding of charts and economic cycles. In doing so, you deepen your knowledge of core concepts, while making sure you improve on any flaws in understanding you may have.
A misconception people have is that your edge is infallible. I myself fall prey to this – I get wounded when I invest in a bad project, because I’ve established that “this is what I’m good at”, and the fact that I still made a mistake makes it 10x worse.
This is obviously not true – we are human, after all. It’s only human to make mistakes. But I find myself getting more wounded because I’ve established that “this is what I’m good at”, and the fact that I still made a mistake makes it 10x worse. I think that it’s important to understand that we’re all human, and we all make mistakes. What matters is to not get too demoralized by it.
Lastly, building your edge takes time. It’s hardly something built in a day, nor a month, nor even a year. In my opinion, trading is a game where the length of time you’ve been successful at it is directly proportional to how good you actually are at it – the way you know something is a “successful strategy” is not when you get one 100x with it, but you get consistent +EV returns over an extended period of time. After all, would you consider a strategy to have one 100x and twenty -50% “successful”? What matters is the fact that you CAN build it, given the time.
Learn to be patient, and trust in the process. Never stop learning – we are all forever, students of the market.
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