Tuesday, 18 November 2014

The Trading Game

In some ways Trading is a Game, with serious consequences that is.  Nonetheless there are times you need to treat the Market like a game.   For example when you're trying to figure out how to win.  You need to put on your thinking hat, do lots and lots of research, for fundamental traders that means studying the economic news calendar and past releases; for technical traders that means chart analysis with their favorite indicators.   The only way to win the game is to figure out your strategy.  You can copy someone else, but that will only get you so far.

The Serious Part of the "Game" is the money part.  If you've got money to blow and you don't care about seeing it ever again then great.   If however you are taking it serious and are wanting to make money then that changes everything.  Trading can quickly turn from Game to Nightmare.   Money has a funny way of influencing you.   Aside from relationships I would say money is likely the cause for severe stress. 

Money isn't everything but it sure helps a lot.  When you are faced with living pay cheque to pay cheque, or worse, you don't have a pay cheque, then your "world" can quickly change.  Psychology is fascinating.  One day you have full on confidence and then... BOOM...  your life can be in turmoil and your confidence changes as the world around you changes. Yet all that's changes is perhaps your bank account balance, your employment status, or service to debt ratio.  And the thing is you will have (just as some of you are now) said to yourself "That won't happen to me. And if it does, I will bounce back...."    The reality is, there are things outside of your control that can change everything you know.  In other words, the game will suddenly become very very real. So keep your risk and exposure in check and practice practice practice.

Trading is a Game.  Sure.  It can be.  Life can be a game.  What matters is that you come out ahead and figure out just how to beat the odds and win with minimal risk and exposure.