Analogies trade

Trying to develop skills in the new area, people often think of analogies. Analogy can be used to integrate new information with old. By analogy, it is concluded that, if two or more things are similar in some respects, they are similar in other respects. There is a very human tendency to use previously acquired skills in learning new. It is easier to understand a new topic, if it can be associated with already studied. This is especially true in trading. Trading in the markets – a difficult lesson, and it is easier to learn, if we associate it with familiar themes: that is, we can easily understand trading, thinking of analogies.

We represent many analogies to trade: Trading is like a sport; technical analysis – the art; traders – intuitive scientists or trade is similar to surfing. Thinking analogy helps to understand the trading, but it is important to remember that this method is used only as a guide. Do not confuse analogy with the real facts, you are trying to understand. Trade may be similar to some activity, but it is after all very different. Let’s look at some of the usual analogy trading and evaluate what their similarities and differences.

Science: A scientist develops a hypothesis about the general laws of nature, collects data and verifies the legitimacy of these hypotheses. Traders are also developing a hypothesis about the markets. They are trying to measure market sentiment, to predict that the market will do, and test their hypotheses in the transactions, watching what was happening. But scientists are conducting studies to find the basic laws that are repeated. Scientists have tried to study the markets, but with little success. Unfortunately, markets are too random and chaotic. It is important to remember that. Markets are not as predictable, as required by science, so do not pretend that one may make accurate predictions. Do not strive for predictability. Accept that markets are unpredictable.

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Sports: Trading is very similar to sports. Professional athletes are awarded for being extremely well-developed their abilities. Trade also requires a well-developed skills. Trader trains, ready to “play” on the market when they see an opportunity. Trade is a lot like sports, but it requires knowledge of trade practices. And the markets are a little less predictable, compared with what could make the other team or the opponent.

Artist: Art is often difficult to understand. Have you ever seen a modern art? It is difficult to see what makes it art. But it is. All this – the question of context. Observation chart patterns that indicate the possibility of trade – art. In assessing the schedule in the right context you can see and feel the model, which can lead to big rewards. But the trading – not quite art. It is useful to have an artistic flair, but traders should be accurate in their interpretations of the market or they do not make a profit.

Businessman: A lot of traders talk about the need to consider trade as a business. Businessmen are very punctual when it comes to planning, equipment, or sale of goods. But they usually eat or a good idea or something, what the audience needs. Supply and demand in the market a little more complicated. Sometimes the fundamental forces of supply and demand have little to do with the movements of prices, this is important to remember in trading.

Analogies can be useful when trying to understand the trade, but remember, the analogy – just an analogy. Trading activity may seem like you already know, but he also may be very different.

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