Trading Edge
Definition
A repeatable reason a strategy should make more than it loses over many trades, shown by positive expectancy after commissions, spread and slippage.
Example
“His backtest showed a small trading edge, but it disappeared once he added two cents of slippage per share.”
Detailed Explanation
An edge is a statistical tilt, not a promise about the next trade. It can only be measured over a large sample: a strategy with a small real edge can still lose over 30 or 50 trades, and a strategy with no edge can look brilliant over the same stretch by luck. That's why traders log at least 100 trades before judging a strategy. Edges also depend on conditions. A trend-following edge that shows up on strong one-way days can disappear in choppy, range-bound markets, and an edge that exists before costs can vanish once realistic spread and slippage are counted, especially for strategies with small targets such as scalping.
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