I’m not really clear what you mean by mindset, do you mean discipline, positive mental attitude, or the intellectual capability to develop an edge ? Or something else ?
There’s no easy answer to this edge question. At the simplest level, you could argue that a method either had an edge, or it didn’t, but you can only really say that with the benefit of hindsight. I’m sure that most people with a bit of technical ability could get some market data, and design a strategy that works based on some optimized parameters for some particular market. Does that system have an edge ? Well it did for anyone who traded it using a similar system at the time !
You can design a system with a negative edge, randomly open a trade, and close it immediately. There you have a perfect example of a system with negative expectancy, and it’ll always certainly have a negative expectancy.
Likewise you can have methods that have an appearing edge for some people. A good example might be a technical system used by a bunch of guys on various timeframes and instruments. Some do great, some not so great, but is that an edge, or just random chance ?
You can design a method with an edge, but the edge only exists as long as the basis on which the edge is based still holds. For example a decade ago I designed a method to profit from interest rate differentials. It continued to work until interest rates changed, then it stopped working. Did it have an edge ?
So I’m going to argue that mechanically, methods can have edges, but those edges are possibly transient, although I do know discretionary technical traders who have successfully traded the same technical set ups for over a decade, but I doubt those approaches could be automated or traded purely mechanically
Money Managements a bit of a strange beast too, particularly when you start considering staking plans because again, some of these things lend themselves to curve fitting. People will argue that it’s not possible to profit simply by applying money management techniques to a zero or negative expectancy system, and strictly speaking, I’m in agreement. What is almost certainly true is its possible to destroy a perfectly good profitable system by the application of incorrect money management, but once again, you only get to find that out in retrospect.
Mindset or psychology is pretty much the same. There’s a famous experiment that was conducted where no traders where asked to participate in a trading simulation. The simulation had a 60 percent win rate with 1:1 risk reward. An adequately funded chimpanzee should be able to profit from that system, and a half decent trader could make a fortune, but of course practically all participants in the experiment lost money
So again, psychology can destroy an edge
I suppose the question is can psychology give you an edge ? Will having a positive mental attitude give you an edge ?. The answer has to be no, will following a system with a negative expectancy give you an edge if you are disciplined ? Again the answers no. Having said that, I’d argue that psychology plays a part in all aspects of a traders development. It effects the types of strategy that they are drawn to, it effects how much research they are likely to undertake, how much testing, the thoroughness of that testing, their approach to absolutely every single aspect of system design, how much risk they take, ability to withstand drawdowns, their ability to accept variance in results etc etc.
In summary, I believe that the slightest deficiency in method, position sizing or ability to execute a method is going to cause people a world of pain, the slightest problem or weakness leads to potential disaster. Once all of that stuffs under control, it’s about understanding the theoretical inefficiency your trying to exploit, monitoring to ensure that the edge still holds, and a decent run of luck to exploit that opportunity whilst it’s still there.