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Astronomer @astronomer_zero on x 34.9K followers
Created: 2025-07-21 11:59:42 UTC
An Edge in Trading and Investing
What is an edge, and why it's possible to have an edge as sharp as a sword
Some context
It's been a while I wrote an educational post. For a reason, I don't particularly like the idea of only writing educational posts constantly. I set the bar high and they have to come along when it makes sense. And besides that, my focus is calls, direction, and posts that are directly tuned to make you and me money.
And in my humble opinion, I think that should be the aim for everyone trying to help. Drawing fancy charts, or just saying "A or B has been going up" and pumping your bags or doing some empty quoting all in hindsight with a lack of calls, then blaming you after for not taking action on it as if that was the idea etc. ("descriptive TA" as fund managers call it), is not as helpful. And if educational posts come from that corner they are not really helpful either.
Before I took markets seriously, I learned the hard way that while a few practices are truly golden, most of what’s out there doesn’t help, at least not consistently. Thankfully, I learned that lesson quickly: making money doesn’t require looking smart or overcomplicating things. It requires one thing: a real edge, and a strong one.
So today, with knowledge compiled over years into proper edges, and from a humble stance where I am glad to be the user of a long history, condensed into effective select few of edges I created myself or have learnt from peers and combined into the close-to-optimal collection, I am excited about this post.
Introduction
The term "trading edge" is often thrown around, but not often explained. So here is my full layout, of what an edge is, how to find your edge, and how to exploit it. And also with a note as to why it is possible to sharpen your edge from a random sphere, to as sharp as a sword (or close) with the right mindset/approach. And why sharpening it, has an exponential effect on your growth, not just a linear effect.
Purely educational, no trading calls in this post, let's get to it.
What is an edge
The proper definition is "an advantage over others which makes you money in the long run".
And, an edge could be price based, but also time based, it could be logic based (white box), but also data based (black box).
Now personally, I never liked the idea of "in the long run", or more specifically "if you lose X times and win once and that one win outweighs those X losses, that is still an edge and you won money". Cool, but that type of trading is not really good for your mental state IMO, and your edge isn't really strong in that case. Who wants to lose X times before winning it all back with one trade if at all.
What I consider an edge is a significant advantage over others, with a significant sharpness so that it works many times and so that you see the effect of it rapidly.
That way, you don't go around in circles, you are able to show up immediately and show business, not just pull up some fancy charts, overcomplicate data, or other excuses which just try to make you look smart, but aren't really useful in any proper way if not acted upon or not enabling the ability to act upon consistently.
An edge is also not "price is going up, so I must long", or "war news strikes so I better sell in case war breaks out", or "smart seeming influencer told me to wait with buying because alt season won't come (Then suddenly celebrates upside, just to look like as if he/she was in, without actually taking the trade)".
Don't get me wrong, those scenarios could be edges, and they all make logical sense. But unfortunately, logic is not the same as market logic.
And if no proper data is backing it, it isn't an edge. It's just a sales tactic, from the market (trying to make you buy green), from the news (trying to make you sell the idea to sell to safety), or the influencer (trying to sell you the idea he is smart/right). Sometimes, following those things can work out. But sometimes is not enough. We need "work out very often" at least, or you won't make money, and certainty not relatively stress free, my personal aim.
So my personal definition is: an edge is a significant advantage based on a strong set (not one or two data points) of data (black box) or market logic (white box) or both, offering you an advantage you are aware you have, against others (whether that is PvP or PvE, there always is a losing end).
The last part is important. If you see the majority fading your edge yet you know with cold hard truth (white or black box) it works consistently, that is not a bad thing, that is an added bonus. And that taps into sentiment reading, which is the final refinement and confirmation of your edge.
"Sentiment is the constant confirmation of your edge"
And using sentiment is not "oh everyone is bearish so I am long".
Instead, using sentiment is only useful if you use it as a confirmation that your edge is in fact an edge. i. e., you know why you are buying with cold hard data and/or logic, and sentiment confirms no one else is really aware of it. Which indeed, confirms your edge is indeed an edge i.e. an advantage over a lot of (unaware) others.
How to obtain and sharpen your edge
This is a big one, yet also, relatively straightforward. It's nothing but (i) studying the markets/fining good sources and understanding how they work (to attain market logic), and (ii) collecting data/finding good sources who provide you with good data, and build a system to apply it (most importantly, but comes naturally).
Both are important, purely data driven gives confidence, but no conviction because you don't know what is happening and who you are taking money from. And purely logic driven gives conviction, but no confidence because you don't know if this type of logic worked on human beings i.e. you have not (back)tested this logic on historical data.
So having both is ideal.
Finding logic takes a deep dive into understanding who takes money from who, why certain people capitulate, when, why others won't.
That's a whole book on its own. But there is a reason why a significant low gets swept first before moving up if certain people are positioned a certain way, or it happens twice due to the rule of X in psychology (low, sweep, sweep). And there is a reason why the 2025 cycle looks like the 2017 cycle, and not the 2021 cycle, and why the 2021 cycle looked more like the 2013 cycle (it happened twice), and why the 2029 cycle likely will not look like any predecessor (again the rule of three here). Finally, there is a reason why mmd is so effective in markets and why the final leg has the strongest confirmation on mmd, a great reason explaining why $EHT-$BTC mmd recently pushed $ETH so high and we went big on $ETH.
On the other hand, finding data, also takes a deep dive into markets. And it's not as simple as "the cycle has topped in December 2013, 2017 and 2021 + 4, etc, each time so it will again in December 2025.
It can be, but three data points is not enough to give great confidence. You need more from different angles.
Yes, if December 2025 comes, I may say "okay the top could be in". But there is a reason I don't often post one liners and I would never say such thing without more substance. I don't put my money on the line for one liners frankly, would you?
If December 2025 comes along, and I have my collection of X major signals to a confidence level of 93%, then, and only then, I can make a confident decision, with a refined risk. Not an "oops, market went higher I sold way too early and I am missing out for another year because this is an extended cycle".
Now X does not sound like a lot. But silently, I meant the X best of the entire collection.
Those X were not the easiest ones to find, they can be easy to find, but sometimes, they take years of searching, back testing, cross referencing, to increase confidence enough. Then in live time, they require verification of order flow, market signatures and sentiment (confirmation).
Once all is done though, you see in front of you what's happening, the buildup, the actual event, and the development after it. Of the many who are tested, the best ones are the ones that make a lot of sense and you understand exactly why they works.
It's like finding gold, they do take a long time to find, but are very obvious once found. For a reason called, "nuggets"...
And so after a lot of hard work, you obtained a simple, easy to explain (logical) signal with simple execution, but a lot of depth and history.
Combine multiple logical signals and black boxes together, and you have a very strong stance (a very sharp edge - goal achieved), especially if topped off with sentiment.
Now finding that logic, and finding that data is hard, especially if you constantly have to filter out noise to get to the right sources, especially in a world where many sources "seem smart".
There are shortcuts, sometimes you do find the right person willing to tell you what works and why, giving you a guiding hand on how to apply it. Or you just learnt it yourself. Either way, once achieved, you have a proper edge, to standards, and you are far on the sharpening path of it.
And the rest is entertainment...
... of you bank account growing.
Why sharpening is worth it (the exponential effect)
Now, when you are on the path of sharpening, or have a shortcut to an already very sharpened edge, both, are very worth chasing.
Because a sharper edge, allows for more risk for the same stress free growth optimal.
E.g. an edge working XX% and giving you on average twice what you risked, and assuming your stress free tolerance for risk is 4%, allows you to risk X% if the win rate increase to XX% for the same sharpe ratio (best metric for stress factor). So not only are you winning more, you are also allowed to risk more.
So even sharpening your risk slightly, is worth millions.
Conclusion; TLDR
An edge isn’t just a concept, it’s a weapon. And sharpening it is not a luxury, it’s a necessity if you want to thrive rather than just survive in the markets. Whether your edge comes from logic, data, or both, it should be something you understand, trust, and can execute without hesitation, not because it "feels right," but because it proves right, again and again on multiple fronts, before pressing any button.
This post was not about signals or predictions. It was about frameworks. Because once you have a true edge library, everything changes: your decisions become clearer, your risk becomes smarter, and your growth becomes exponential, not chaotic.
That has been my focus for years now and continues to be. Filtering, refining, and confirming what actually holds up in the markets. Along the way, a select few of the best edges emerged, representing the bulk of what I know. All forged through time, logic, sentiment, and market truth.
And while I usually keep these close, some of them may soon find their way into the hands of others ready to use them well, accurately, and silently.
Because in a world of noise, the real edge is silence, the calm confidence of knowing exactly what you’re doing, and why.
Once in place, then the noise, is just your confirmation...
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