An edge is a repeatable situation where the odds are in your favour over many trades. Not every trade, not every week: over a large enough sample, the setup makes more than it loses after costs. If you can't describe your edge precisely, you can't test it, and you can't know whether you have one.
State it in one paragraph
An example
"I trade NQ futures between 09:30 and 11:00 New York time. When the daily bias is bullish and price is in discount of the previous day's range, I wait for a sweep of the overnight low followed by a 5-minute bullish CHoCH with a fair value gap. I enter on the first return into that FVG, with my stop below the sweep low and my target at the previous day's high, taking the trade only if it offers at least 2R. It should work because the overnight low holds obvious sell-side liquidity and the opening hour has the volume to reverse from it."
What makes an edge real
- Specific: two people reading your rules would take the same trades.
- Logical: there is a plausible reason it should work: liquidity, structure, timing, behaviour.
- Measured: you have a sample of trades showing positive expectancy after costs (chapters 3 and 4).
- Suited to you: it fits your schedule, temperament and account size.
Key takeaways
- An edge is a repeatable situation with positive expectancy over many trades, after costs.
- Describe it in one paragraph: market, time, context, trigger, entry, stop, target and why it should work.
- A real edge is specific, logical, measured and suited to you.
- Even a real edge has losing streaks; judge it over a large sample.