Religion, Politics and Trading

What do Religion, Politics and Trading have in common? Find out a secret about trading the markets successfully

Posted in Traders' Delusions, Submitted by Trading Critic on Sat, 2006-11-04 05:30.
What do Religion, Politics and Trading have in common? Find out a secret about trading the markets successfully

Religion, politics and trading. At first glance they don't seem to have anything in common. However, there is something that ties these seemingly different topics together. We'll delve into that later. What you will find out in this article (the professional trader's secret) is important for your own professional trading health and safety. You may think your trading is FINE but if you don't use this secret tactic in your trading, you are bound to be a loser. Save yourself that distress and keep reading!

So, what do these three have in common? Religion, politics and trading... three totally different things. One is the pursuit of the "bigger picture," call it spirituality, God, the circle of life... whatever. The other is the pursuit of order and control for the greater good of society. Trading is gambling - and is wholly the pursuit for more money. So what do they have in common?

The answer not coming to you yet? Each pursuit, is not an exact science. Unlike mathematics and certain areas of science, there are proven laws; religion, politics and trading are not exact sciences. In mathematics, one plus one is always equal to two and ten times ten is always one hundred. The speed of light will always be 299 792 458 metres per second and gravity on Earth is always 9.80665 metres per second. There are many religions on our planet, many differing views that is a source of much conflict. There are many political parties, each with a different view - left wing, right wing or somewhere in the middle. Are any of the religions the right one? It depends on your personal beliefs. We'll definitely find out which one is the right one when we die. Is any of the political parties the right one? No, not all the time - that's why the political landscape always changes. The same goes for trading.

Trading is not an exact science. And as we've seen, neither is religion or politics. So if any salesman comes up to you claiming to have some sort of magic trading system that just rakes in money automatically – you'll know their full of shit. Logic tells us that if there was any such system in existence, either that there would be a lot of rich people walking around or a person who have found such a system would not sell such a thing (Law of supply and demand - if every one knew about it then the rewards will diminish for everyone). All the market views, hot tips, trading systems are not perfect. Some people try to sell the idea of probabilities - that's mathematics right? So that must be an exact science. Not really, once the assumptions made have changed, the measured probabilities aren't valid results anymore (reference to back testing people). The real question is that are these trading systems giving us false hope? On the other hand, if you found a trading system that seems to work, milk it for all its worth...

So what's this secret trading tactic you were telling us? You have two weapons against this uncertainty. Risk management and money management. These two articles talk about risk management: Risk a Little, risk the Lot and Quality versus Quantity Trading. Also, risk management is all about stop losses. That is, limiting the amount of money on the table you have for every trade you make. This should be an exact science - some people risk only 2 percent a trade, other risk 100 percent. It really depends on how much drawdown your trading system and your trading account can handle. The target is not to get wiped out, and to be able to trade another day even with a few straight trading losses. Finally you've got money management. This is about how much money you are going to withdraw (to realise your profits) or fund your trading account with. This is really up to you and how much you can afford (to lose). I hope I've given you something to consider in your trading. This article applies to forex traders, share traders or stock traders as they are called in the US and any other market trader who trades in the short term.

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