1. Changing nature of markets
Having an "edge" might be an accepted "catchphrase" when trading is going gangbusters. When trading is performing badly, we readily accept that our strategy has lost its "edge" & we set about improving it.
2. How?
By fiddling with a perfectly good strategy "without" knowing what the "edge" is or what having an "edge" really means. Luck, randomness, market timing, could be all tributers to my trading performance.
3. Perseverance
One thing I do know that I possess in spades is "perseverance" - maybe that's my edge.
Skate.
1. To answer whether traders can possess an 'edge' is really analogous to asking whether markets are a random walk. To answer the latter question, you have to ask and answer the following: can traders predict the future?
Certainly 'fundamental analysis' whether macro or micro, attempts to do precisely this. Earnings and earnings growth trajectories will be calculated in any number of ways, which, is a prediction of the future. When undertaken for a stock, belief in the narrative combines with financial projections to create a trend. TSLA is currently the perfect example. In the past we had Enron etc.
The 'trend' overcomes the random walk of the future, as long as the future does not seriously break the narrative. The trend will periodically be tested by profit taking, poor earnings (as long as the excuse is believed, the trend will likely continue) and any number of potential flies-in-the-ointment.
The trend ends when something serious breaks the narrative, the financial projections or a combination of both. In other words, the prediction of the future was proven to be incorrect as the future becomes the present. A random walk is usually presented on a daily basis. My proposition is that a random walk can extend across much larger time frames, thus giving the impression of less randomness than actually exists. This same basic principle is fractal: that is to say, top down or bottom up, it works the same way.
2. So your system will (should) have an articulated edge. This should really be no more than a single sentence. It should not exceed a single sentence because much more than that and you are creating too many qualifiers, which is basically overfitting your edge to the current market conditions. Your strategy or system is a collection of rules (hopefully less rather than more) that code your edge. If you are fiddling with your system, you do not actually (or probably) do know what your edge is.
@Skate has identified his edge: trend following. An edge summarised in 2 words. All that remains are the entry rules and exit rules. When the system delivers poor results, the system is not broken: it is that the market being traded is no longer a strongly trending market (unless you have chronically overfit your rules to a very specific type of trend) in which case, yes, maybe the system is broken.
3. Perseverance as an edge must be linked to capital. You can only persevere if you are liquid, which rather raises a secondary topic.
jog on
duc