First and foremost, trading is a probabilities business. It’s primary component being information. The acquisition of relevant information, and the analytical skills necessary forcorrect interpretation are central to investment success.
Like all games, financial speculation has many rules and numerous variables. The challenges peculiar to this business, specifically arise from the fact, that there are so many variables at play. However, like any other game, the potential rewards are proportional to one’s mastery of the rules and inherent nuances. In fact, the world investment arena provides for open ended and unparalleled returns! I was 24 years old when I first began to appreciate the scope and magnitude of this business. I attended a talk about investing in the stock market.
The speaker, who was 23 years old, and who I learned afterward was already a multi-millionaire, became my first mentor/guide. Though at the time, my awareness of the possible financial rewards was but a shadow of what it actually was and still is today, I knew it was critical to acquire as much knowledge and know-how in order to be an eminent player and approach optimal financial gains.
This last point is key. The most important asset in a trader’s business is their knowledge and/or acumen!!! It is even more important than whatever capital assets are currently available. So moving forward to the present, some thirty years later, my teaching and mentoring work with Pacific Trading Academy, is consistent with, and a logical extension of, my specific view as to the requirements essential to profitable speculation. Though there are similarities between the types of games one might play in a casino, for example, and a trader’s investment activities, there are for certain, critical differences.
Typically, in normal games of chance and/or skill where there is a financial stake involved, the pot or reward is finite or at least stable. This is not always the case in financial markets. Also, unlike most games, where the rules are fixed or constant, in the financial arena, conditions are constantly changing. The dynamism inherent to capital market structure, is a primary contributor to their complexity, and as a consequence rules rapidly become obsolete. In a sense then, since a trader’s success is measured strictly in profits, there is really only one, significant rule. That is to take money from the market. Period!!!
It is towards this end, that a student trader/mentor relationship may skew the odds in such a way favorable to a specific market participant. Remember, however complex this game of financial speculation can be, it’s potential rewards are commensurate, and is sufficient incentive to get the “know-how” necessary to play the game to win!
Tune in to my webinar this Wednesday (05/07/14) at 10:00 Pacific Time, where I’ll be presenting capital allocation concepts integral profitable trading.
