Preface
I had been in trading various stuff like dolls to timber and as I grew up started to trade the stocks and currencies. There is no one on this earth who had passed all the test before tasting success. "Success" is measured by various parameters and there is no limit to quit in either way - be it a profitable journey or be it a journey of loss. Loss is a vitamin that stimulates you to see the success and it has a more powerful influence to learn more and as the journey keeps moving, it moves like a convoy. Interestingly, the purpose of the convoy is to keep moving.
As I grew old and after winning so many little battles, I slowly started to prepare the big battles, not victorious yet though, but assured and confident, and my body language started feel much better and reassuring. Battles especially bigger ones cannot be fought solitarily, and need the support of young ones along the journey, so I thought to educate the ones and share my experiences to the younger ones who can get prepared for the big battles much more quickly than me, avoid the silly mistakes that I committed and take you through the journey of this interesting and enterprising Stock and Currency Trade.
Risk Management
Before we commit to do anything, we need a roadmap and a plan to ensure that the path is leading to the road of destiny. Once the way is clear, we need to work hard to execute the designed plan. Specializing the trade or profession is the key. While our destiny is Success in Trade, we need to analyze all the attributes that are in the Trade, so that while we are in danger, our exercise come very handy to come out of such tight situation. Trading is not just winning small scores but it is a habit to build upon it. A smart Trader is not one who just keeps winning trades after trades, but how it was achieved is rather important. During a winning streak, all the stakes go in your way like a single way traffic, but during a losing streak, how good you are to sustain the earned profits is the question that needs to be judiciously answered. Sometimes wins come very easily in fluke, but such victories are very short lived. One big breeze can blow all the profits. A new Trader may be losing a seres of trades, but his acumen towards Risk Management is smart and over a longer period of time, the results show that he has won a few Big Battles and lost more smaller ones. It is because, he is prepared to exit trades that are moving against his direction and quickly books his loss at a small ratio and makes the big moves at the most right times. He waits for the True Signal to emerge and go for the larger stakes.
Trading is just the preparedness to book loss as the profit is booked in the normal course. Loss is an integral part of Trade and we need to accept that losses will be more and gains less, but the return of gain should be large in wiping off the deficit. In otherwords, Trading is the art of preserving the equity in conjunction with the inflanatory trend that prevails.
I had been in trading various stuff like dolls to timber and as I grew up started to trade the stocks and currencies. There is no one on this earth who had passed all the test before tasting success. "Success" is measured by various parameters and there is no limit to quit in either way - be it a profitable journey or be it a journey of loss. Loss is a vitamin that stimulates you to see the success and it has a more powerful influence to learn more and as the journey keeps moving, it moves like a convoy. Interestingly, the purpose of the convoy is to keep moving.
As I grew old and after winning so many little battles, I slowly started to prepare the big battles, not victorious yet though, but assured and confident, and my body language started feel much better and reassuring. Battles especially bigger ones cannot be fought solitarily, and need the support of young ones along the journey, so I thought to educate the ones and share my experiences to the younger ones who can get prepared for the big battles much more quickly than me, avoid the silly mistakes that I committed and take you through the journey of this interesting and enterprising Stock and Currency Trade.
Risk Management
Before we commit to do anything, we need a roadmap and a plan to ensure that the path is leading to the road of destiny. Once the way is clear, we need to work hard to execute the designed plan. Specializing the trade or profession is the key. While our destiny is Success in Trade, we need to analyze all the attributes that are in the Trade, so that while we are in danger, our exercise come very handy to come out of such tight situation. Trading is not just winning small scores but it is a habit to build upon it. A smart Trader is not one who just keeps winning trades after trades, but how it was achieved is rather important. During a winning streak, all the stakes go in your way like a single way traffic, but during a losing streak, how good you are to sustain the earned profits is the question that needs to be judiciously answered. Sometimes wins come very easily in fluke, but such victories are very short lived. One big breeze can blow all the profits. A new Trader may be losing a seres of trades, but his acumen towards Risk Management is smart and over a longer period of time, the results show that he has won a few Big Battles and lost more smaller ones. It is because, he is prepared to exit trades that are moving against his direction and quickly books his loss at a small ratio and makes the big moves at the most right times. He waits for the True Signal to emerge and go for the larger stakes.
Trading is just the preparedness to book loss as the profit is booked in the normal course. Loss is an integral part of Trade and we need to accept that losses will be more and gains less, but the return of gain should be large in wiping off the deficit. In otherwords, Trading is the art of preserving the equity in conjunction with the inflanatory trend that prevails.
When a trader whose equity was 100K at the beginning of Year-1 and doubles his money at the end of Year-6 is a moderate trader or a normal trader. Though 100K had fetched him a profit at 100%, his emotion and feelings tell him that he has achieved really 100% return. Whereas, the truth is he has achieved less than 100% because he is not aware of the inflation calculation that is prevailing. In simple terms, the current inflation rates in United States as on July is 1.0533% [source :http://www.rateinflation.com/inflation-rate/usa-inflation-rate.php ] and for the last six years inflation rates could be more than 1.0533 p.c. and that is reduced from the earnings. In otherwords, Inflation is nothing but "Too much of money chasing too few goods" . United States has a good and strong economy while comparing to many other countries. Other countries like Japan is around 1.3520% for the last year http://www.rateinflation.com/inflation-rate/japan-historical-inflation-rate.php?form=jpnir check respective source on a detailed inflation study. It is important that a Trader should precisely know his Rate of Return on his investment.
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