What is Edge Audit?
An edge audit is a structured review — typically monthly or quarterly — in which a trader examines the expectancy, win rate, and profit factor for each setup tag and strategy in their journal to confirm that a statistical edge is present, stable, or improving. It also identifies setups that have degraded and should be paused.
Indian market context (NSE)
Reference levels: Nifty 50 at 24,300, Reliance Industries at ₹1,300, Bank Nifty futures at 55,000 (lot size 30). Examples below show how Edge Audit shows up on Indian index, equity, and futures books — update to live quotes in your journal.
Nifty 50 perspective
Edge Audit in Indian context at Nifty 24,300: apply SEBI/regulatory framing where relevant and tag index trades separately in weekly review.
Reliance Industries perspective
Edge Audit using Reliance at ₹1,300 as a liquid large-cap example — adjust numbers to your live quote and contract note.
Bank Nifty futures perspective
Edge Audit with Bank Nifty futures at 55,000 — respect lot size 30 and quarterly vs monthly contract rules on NSE.
How to validate
- Validate Edge Audit with a written rule and at least 20 tagged examples.
- Ask whether the reading changed because of process or one outlier trade.
- Compare two independent time windows before adjusting position size.
- Document validation date in weekly review notes.
How to track in TradeLyser
- Mention Edge Audit in trade comments when it influenced the decision.
- Mirror the term in weekly review questions for consistency.
- Filter trades mentioning the concept during monthly analytics.
- Cross-link to related glossary terms in mentor notes.
Best practices
- Teach Edge Audit the same way to mentors and peers — shared vocabulary.
- Re-read this page after major rule changes to Edge Audit usage.
- Prefer one improvement per month over ten simultaneous tweaks.
- Link learn articles when Edge Audit needs deeper study.
Common pitfalls
- Using Edge Audit buzzwords without measurable journal tags.
- Copying another trader’s Edge Audit rule without sample size context.
- Skipping weekly review because the term feels “basic”.
- Letting social media redefine Edge Audit mid-quarter.
Reference guide
| Context | Value | Reading |
|---|---|---|
| Audit frequency | Monthly audit with 30+ trades per setup | Never auditing — trading a dead strategy without knowing it |
Related terms
Expectancy answers whether your edge pays each time you repeat the setup. Positive expectancy means the system earns over many trades; negative expectancy means it bleeds even with a high win rate.
Monthly review is a periodic deep audit — typically 60–90 minutes — that examines aggregated journal metrics: expectancy, profit factor, drawdown, rule-break rate, and setup-level performance across a calendar month or ~20 trading sessions.
Profit factor summarises whether total winning rupees outweigh total losing rupees over a window. Below 1.0 means net losing; above 1.0 means net winning before you judge consistency.
The sample size rule in trading is the principle that no meaningful conclusion should be drawn from the performance of a setup until it has at least 30 closed trades (for directional confidence) or 100 trades (for statistical robustness). Evaluating win rate or expectancy on fewer trades conflates luck with edge.
A strategy scorecard is a one-page summary of the core performance metrics for a specific trading strategy — including win rate, expectancy, profit factor, max drawdown, average R-multiple, and sample count. It enables side-by-side comparison of multiple strategies and quick identification of which deserve more capital allocation.
Tag taxonomy is the controlled vocabulary of labels used in a trading journal — naming conventions for setups, market regimes, mistakes, and session types. It prevents duplicate tags (ORB vs opening-range-breakout) from splitting one edge into false small samples.
By trader level
Level up — system optimisation
Already journaling? Use these metrics to measure your edge, manage risk, and evolve your system.
FAQ
How many trades do I need before an edge audit is meaningful?
You need at least 30 closed trades per setup for the statistics to be directionally reliable, and 100+ for statistically robust conclusions. An edge audit on 10 trades is anecdotal. TradeLyser shows a confidence indicator alongside expectancy to signal when sample size is too small.
What should I do if my edge audit shows no edge?
First, check whether the degradation is recent (last 30 trades) or long-term (all trades). If recent, it may be a drawdown phase — continue paper trading or reduced size. If long-term, the setup logic may be flawed or market conditions have changed. Document findings and reduce or pause size until a re-test period shows improvement.
Start journaling with
TradeLyser
Connect your broker, tag strategies, and review performance with AI-assisted insights.