Chapter 6 Locking in Edge

We just spent the last chapter explaining how to spot edge. However, given the market, edge in a trade can account for nothing. A trade is not a winner until the value is locked in. In this chapter, we will talk edge and locking in trades.

When I started trading, Scott Kaplan, my trading mentor, asked me, “Where is the edge?” What he meant was: Is there a way to lock and/or protect that value? Because if the value of a trade isn’t locked in, the trade might not hold value. If the trade doesn’t hold value, it doesn’t have edge. Thus, the only way to trade with edge is to buy something against a sale or to sell something against a buy. Let me give you an example from a market maker’s perspective.

When I was a floor trader, ...

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