If have ever been on the forex factory forums, there is a very popular and long running discussion thread devoted to trading a set of trading strategies by James16. The thread has been running since 2005 and has over 2,500 pages on it. Given the insane length of this thread trying to understand this trading method takes a lot, a real lot, of of hard work. You can pay James a subscription of $129 a month to help decode this massive thread, but as many others have noted, most of the content is on the Forex Factory thread, you just need to pull it apart yourself.

I have not coughed up the cash to find out what happens in the paid group, but I am curious about the James16 phenomenon, so I thought I would bravely try and summarize what little I know about the James 16 trading method.  If you are interested, then read on.

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In my previous article I looked at the different sources of getting an edge in trading. In this article I want to explore this issue a bit more as not all edges are equal.

The value of an edge depends on how often you can successfully identify the pattern and how much you win or loose in the process of trading the pattern.     If you have a low win rate system (e.g. 20%) as long as you make more than 5 times as much as you loose per trade you will be profitable. Similarly if you have a scalping system and 80% of the trades are successful, then you need to make 25% more than you loose on each trade. (more…)

I have read so many trading books that say you need to understand your edge in trading. They all go on to describe how to measure the size of your edge by looking at the expectancy of your system, but so few of these books fail to describe how to find an edge or where the edge for their recommended trading strategies actually comes from. In this posting, I will try to define where my edge in trading comes from.In trying to identify where a trader’s edge comes from, there are two key questions you need to answer:

• Is the market too random to make money?
• Is the market too efficient to make money?

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