By Michael Brook
Source: StockCourse
One
of the curious things about trading is that it is a rule free place. There
aren’t any real rules as to how you interact with the ebb and flow of price on
a daily or minute by minute basis. There isn’t a policeman there to tell you
that you are speeding or going the wrong way. There aren’t any stop signs
telling you that you just about to drive into a highway on the wrong side when
all the traffic is heading in the opposite direction. The trading environment
is a rule free space.
There’s
a saying in german, “Wer hat der Wahl, auch hat der Qual”. Translated this
means that if you have the choice you have the burden of the choice and it’s
consequences.
In a
rule free space like trading you have to make a lot of choices repeatedly and
the burden of those choices are yours and yours alone. Every time you think
about a trade you are making a choice about that trade. Will you stay in or
will you get out… what about the last time this happened?, what’s going to
happen next? Etc, etc, etc…
In
such an environment, what is critical it to decrease the burden of the choices
you necessarily have to make by virtue of being in the rule free space we call
the market.
The
best way of doing this is to have a clear set or rules that you have for
yourself that you have worked out works for you. My style of trading will be
different to your style. My risk profile may be different to yours, my skill
level may be different, the instruments I like to trade may be different to the
ones you like to trade etc, etc, etc…
Before
you can trade successfully you need to make clear decisions about:
The
instruments and markets you trade in
The
timeframe you trade in
The
level of risk you are tolerant of.
The
amount of time you have to learn the skill.
The
intention you have for learning how to trade.
Each
of those choices will affect your decisions and future profitability and
success.
