Edges Die. Recognize It Before the Market Does.
Every edge eventually decays. Holding on too long is more expensive than missing the next one.
Sports betting markets close inefficiencies within hours of them being identified. Options market-makers reprice volatility within minutes of a catalyst. Prediction markets compress mispricings as soon as liquidity arrives. Every edge has a half-life.
The pattern that costs speculators the most: identifying a real edge, scaling into it, and continuing to scale long after the market has caught up. The trades that used to work stop working. P&L drifts sideways or down. The natural reaction is to size up. Surely the next one will work. It will not.
A functional edge-decay protocol: 1. Track win rate and ROI by category and by tag over rolling 30-day windows. 2. When a category drops more than 30% from peak rolling ROI, halve position sizes in that category. 3. When a category goes negative on rolling 60-day ROI, pause the category entirely. Spend two weeks reviewing why.
ROW's analytics page surfaces these breakdowns automatically. The point is not to predict edge decay (that's impossible) but to react to it faster than the version of you that wants to believe nothing has changed.