So what is a researched EDGE and why is it important when trading?

A researched trading edge is a set of entry and exit criteria that, when executed, should deliver profit trades that are sufficiently large enough to cover your trading costs and loss trades, and deliver you a positive return on your capital and time. The biggest strength of deploying a researched edge in the market is not the researched edge itself, it is the processes that define executing the researched edge. These processes will keep you engaged in the game. Focus on your processes and the outcomes will take care of themselves. Change your focus to the outcomes and your processes will break down which will lead to worse outcomes than you otherwise would have had. Breakdown of process leads you off on dead-end tangents and trial and error on the fly. This should be done during the preparation (research) phase, not during execution.

SPA3 has been researched and designed to give users a researched EDGE in the market. The researched edge dictates that if the process and rules of the system are followed, over a large sample of trades, the user should have an edge in the market. This has been the case through research and live portfolio trading.

As wins and losses come from the market, SPA3 works on simple yet fundamental principles that help achieve this EDGE.

• Cut your losses and cut your end of trade drawdown
• Increase exposure to a rising market and decrease exposure to a falling market

Whilst these principles are recognised as fundamentally essential for any active investment strategy, they directly affect the following two criteria.

• How many winning trades the system has compared to the number of losing trades
• How much larger the profit trades are compared to the size of the loss trades.

The following example simply explains an EDGE.