Hello - Im Jeff Bryant from HomeTrader. Welcome to the second in our series on Successful Trading. In the last episode, we spent some time on the differences between Investing and Trading - and if you haven’t seen it yet, check out the archives so you can catch up on the ground weve already covered. In this Episode, we’re going to look more deeply into the reasons WHY we need a robust Trading Strategy. Prominent financial author, Jack Schwager, in his Market Wizard books concluded that the one thing the Super Traders hed interviewed all had in common was a trading plan method strategy system call it what you like, when they stuck to it they were OK; when they didnt things started going wrong. Now - imagine you have a bat and a ball. Together they cost $1.10 & the bat costs a dollar more than the ball. How much does the ball cost? Most of you will be thinking 10c. You might even be thinking Im trying to trick you - not this time. Heres the answer: together they cost a $1.10. The bat costs a dollar more than the ball - so the ball costs 5 cents! This takes us right into the world of human decision-making and the field of Trading Psychology. As humans, we make decisions at 2 levels. Firstly, theres the intuitive, subjective level; System 1. Its quicker, easier & gives us our first impressions. System 2 is slower, but more rational & reasoned. For most people, to answer the question I posed earlier, youd need to reach for pen and paper. But you probably already had 10 cents …
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Ronnie Holt