At the core of any successful trading and investing strategy is an edge. Few traders and investors ever attain the significant market edge they desire and there is a simple reason for this. Most new market speculators begin their quest for edge building information and education on the internet. They naturally are drawn to websites with the best marketing and popular authors and so on. The problem with learning how to properly trade and invest with the needed edge from all this is that everyone else is reading the same material. Your competition is learning the same investing strategies you are. They are learning to buy and sell exactly where you are learning to buy and sell, and therein lies the trap. Simply put, if you are processing market and strategy information the same as others (your competition), you can’t possibly have an edge. For this reason, I typically focus my articles not on conventional trading, technical analysis and market information, but instead on edge building reality based concepts that you won’t find on the internet. In today’s piece, I will cover two of many simple tools that may help you in your quest for that needed edge when speculating in markets.

Trends

It’s easy to see what the current trend is by looking back at recent prior data in any market on a price chart. Most of you are very familiar with the conventional concept of higher highs to identify up trends and lower lows to identify downtrends. That’s how everyone looks at and thinks about trends. But, is there another way that can give us an edge when investing in the markets? 

A little concept I can share today has to do with assessing the strength of a trend. Here is a different way to assess how healthy the current trend is and when and where it may end. While supply and demand levels are the strongest way to determine this, we can also measure the distance between the lows of the pivots during the uptrend. Notice the uptrend in the chart below and how the distance between the pullbacks (pivot lows) is decreasing as the trend moves higher. The logic behind this is that a strong trending market does not pullback often. If it does, it is not a strong trending market anymore. Keeping with our constant supply and demand theme, remember that a trend on any time frame is really a supply and demand imbalance moving back into balance. This concept works equally in any time frame.