Opportunities exist for skilled traders and skilled poker players to profit from gamblers and other participants who expect to lose. It follows, therefore, that we want to discover how to become consistently winning traders or consistently winning poker players. The answer lies in knowing when you have an edge over competitors.

You will know when you have discovered an edge once you have acquired the skills and resources to successfully make profits. However, you must recognise your edge if you are to predict whether you will be profitable. You must know your edge if you are to be profitable in the long run. You must be able to recognise when it presents itself, and you must exploit it whenever possible. Without an edge over competitors you will lose. This is equally applicable to online trading as it is to playing online poker.

Trading performance will generally reflect a combination of skill and luck. However, in the long run skill produces better performance than luck. Skill continues to affect returns while luck will only produce random returns. Over time, good luck and bad luck cancel each other out, where skill will generally persist.

When we return to Harris's research, further investigation reveals how access to information of various types creates trading advantages. "...On any given transaction, the chances of winning or losing may be near even. In the long run, however, winners profit from trading because they have some persistent advantages that allow them to win slightly more often (or occasionally much bigger) than losers win." TradeStation is considered by many to be the best online trading platform in the world. It provides a wealth of resources to assist traders in finding an edge over competitors. Profitable trading strategies can be developed using technical analysis, fundamental analysis, or a combination of both. What's more, before risking a penny in the markets trading systems can be back-tested over as much as 25 years of historical data.

As regards losing traders, Harris continues, "...Many traders lose money because they do not understand clearly what they are doing. They may not appreciate the skills and resources required to successfully trade their styles and they may not even be able to recognise what styles they intend to trade."

Harris reveals the determinant economics of many types of winning and losing traders, and demonstrates how their trading styles lead to profits or losses. Different trading styles are generally associated with specific types of traders including value-motivated traders, headline traders, technical traders and chartists, bluffers, noise traders, uninformed investors, fledglings and gamblers to mention a few. "...While many traders will employ several different styles simultaneously, being able to decompose trading behaviour into well understood characteristic styles is a valuable skill if you trade."

Knowing that you have an edge over competitors is vital to becoming a consistently winning trader or consistently winning poker player. It follows, that traders and poker players must have useful tips they can share...

NEXT: Winning tips for serious traders and poker players.

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