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Warrior Trading Blog

How a Big Mistake Can Help You Find Your Edge in Day Trading

Hey everyone, Ross Cameron here! Today, we’re talking about one of the most important concepts in trading: finding your edge. If you want to be consistently profitable, you’ve got to have a strategy that works. And I don’t mean a one-hit-wonder that makes you a few bucks here and there. You need something that over time, gives you an edge over the market.

Finding that edge might take time. Trust me—I learned the hard way. There are some tough lessons in trading, and in this post, I’ll walk you through one of the wildest case studies and the lessons that came with it.

What Does Having an Edge in Trading Mean?

In simple terms, your “edge” is your ability to find setups that give you higher odds of making money. Every trade won’t win, but when following your strategy, you should see a pattern of more wins than losses over time. Without an edge, you’re just gambling, and you’ll probably end up losing more than you’re making. It’s super important to have a strategy, a set of rules, and to stick to it.

For example, part of my edge comes from focusing on momentum stocks that show certain patterns in the morning. I don’t just dive into any stock. I look at indicators and past performance to tell me if it’s something worth trading. This edge has been developed over years of trial and error. But let’s be real here—if you don’t have an edge, you’re shooting in the dark.

The Challenges Facing Retail Traders

One thing I’ve learned over the years is that most retail traders, people like you and me, are at a disadvantage compared to the big Wall Street firms. These institutions control a large chunk of the volume in the market. They’re often well-connected, have access to way more info, and straight up make money in ways we can’t.

The good news is, we still have opportunities to win. But we need to develop a solid edge. The way I see it, retail traders have to outwork the bigger players. You and I can’t just “YOLO” all our cash into one stock and hope for the best. Big firms might get away with that because they have tons of capital – we don’t.

The Intel Gamble: A Case Study

Let me give you an example of why having an edge is so important. There’s this story floating around about a college student who received an $800,000 inheritance from his grandmother. Instead of playing it safe, he decided to throw $700,000 of that inheritance into Intel stock. No diversification, no strategic plan. Just one big play. And guess what happened? He lost a big chunk of it almost immediately.

Now, you’ll hear people say, “Intel is a solid company,” or, “It’s undervalued.” But here’s the thing—it was a contrarian bet. The stock had been trending down for a while. Sure, sometimes people make money with contrarian trades, but was he really following a proven strategy? I doubt it. He bet big, ignored basic risk management rules, and he got punished for it. And trust me, Reddit roasted him for that move.

Why Diversification Matters (And Why It’s Not Always the Answer)

There’s an old saying: don’t put all your eggs in one basket. In trading, that means diversification. By spreading your investments over different companies or sectors, you protect yourself from losing it all on one bad call. If this student had opted for a more balanced, diversified approach—like investing in an ETF or dividing his funds across several stocks—he could’ve minimized his losses.

But here’s the catch: while diversification helps lower risk, it also means your profits might grow more slowly. A lot of day traders put the idea of diversification aside because they’re looking for big, fast gains. For most, including myself, that means focusing on high-momentum stocks instead of hedging bets across slow-moving assets.

Momentum Trading vs Contrarian Investing

If you know me, you know I’m a fan of momentum trading. I don’t try to predict when a stock will reverse. I follow trends. I wait for the stock to show clear upward movement, and I jump in while it’s moving. You might hear people say “buy low, sell high.” That’s not me. I “buy high, sell higher.”

Contrarian investing, like what the Intel college student did, is risky because you’re basically fighting the market consensus. Intel was dropping, but this student had a hunch it would go up. You’re betting that you know better than the market, which is tough. The market’s like an ocean, and fighting the current usually doesn’t end well.

Finding Your Edge: Where to Start

So what should you be doing instead of YOLO’ing like the guy on Reddit? For starters, find a niche that fits your style. Not everyone can trade the same way. For me, it’s momentum stocks. For others, it might be swing trading or options trading. The key is all in finding a strategy that suits your account size, risk tolerance, and the time you can commit.

If you’re just starting out, look at your account size first. A $500 account is different from a $5 million one. And don’t feel bad if you’re starting small—that just means you have to be more aggressive with higher risk and potentially higher reward strategies, like focusing on low-priced stocks.

Once you’re comfortable with how much you can risk, it’s time to think about your edge. What’s your strategy for finding winning trades? Do you know when to get in and out of a trade? Can you read the charts and understand technical indicators? All of that goes into fine-tuning your edge.

Lessons from My Own Trading Journey

I’ve made my fair share of mistakes. Early on, I was all over the place. I tried penny stocks, big caps, ETFs, you name it. Nothing stuck. It took me two painful years of losing money before I figured out what worked for me. My biggest turning point came when I started analyzing my own trades. I looked for patterns in both my wins and losses, and I found that my biggest winners had very specific commonalities.

Here’s what I did—I started leaning into those trades and cutting out everything else. I looked at the data and got super focused. I now primarily trade stocks between $2 and $10 with high volatility and news backing them up. These are the kinds of stocks that give me the edge I need to make consistent profits.

Using Data to Build Your Strategy

If you are serious about finding your edge, start by tracking everything. Keep a journal of your trades—what worked, what didn’t, and why. Data is your friend here. After collecting enough info, sit down and analyze it. Where are you making the most money? What types of trades are constantly losing you money?

When I did this for myself, the results were crystal clear. I discovered when and where I made the most profitable trades, and—more importantly—I figured out when to stay out of the market.

Final Thoughts

At the end of the day, finding your edge in day trading is about understanding yourself, the market, and your strategy. Don’t bet everything on one trade or one stock. Don’t think you’re smarter than the whole market—because 9 times out of 10, you’re not.

You’ve got to put in the work to find your sweet spot. Trade within your risk tolerance, understand your own personal strategy, and never be afraid to take a step back and re-analyze your approach. That’s how I turned things around, and trust me, it paid off.

If you’re interested in learning more about my personal day trading strategy, check out my 14-day Warrior Pro Preview. But remember, nothing replaces hard work and discipline!

Trade smart and see you in the next one!

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Warrior Trading was founded by Ross Cameron in 2012. Today Warrior Trading is a thriving community of thousands of day traders learning to trade under the curriculum designed by Ross

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Disclaimer: The results shared are based on my personal trading experiences and are not typical. Trading involves significant risk, and past performance is not indicative of future results. Always practice in a simulator before trading with real money.