Leak vs Edge
An edge is what you repeat. A leak is what you remove.
Edges: - repeatable conditions where your process performs well
Leaks: - repeatable conditions where your process breaks
Most traders try to add edges before removing leaks. That is backwards.
Key Points
- •Edges are repeated, leaks are removed.
- •Leaks are conditional and repeatable.
- •Fixes are constraints, not motivation.
Common Leaks (That Hide in Plain Sight)
Common leaks: - late entry - stop moved - size creep after win - revenge re-entry after loss - fatigue trades late-session
Leaks are expensive because they compound quietly. They are often a small percentage of trades and a large percentage of drawdown.
Key Points
- •Leaks often represent a small slice of trades but a large slice of damage.
- •Tagging makes them visible.
- •Fix leaks before adding complexity.
Fixing Leaks with Constraints
Pick one leak. Install one constraint. Measure weekly.
Constraint ideas: - cooldown after loss - trade cap - hard stop time - reduced size after drift
If the constraint prevents even one bad trade, it compounds.
Key Points
- •One leak at a time.
- •Constraints are the unit of change.
- •Measure weekly and iterate.