Don’t even think of buying or selling without having realistic expectations of what can go wrong and just as importantly, what can go right. Here is another intersection of game theory and trading. Without a proper exit strategy you can let the two of the worst game altering forces enter the equation; Greed and Fear. These two forces will alter your probabilities of success. Game theory counts on rational participants. You need to remain a rational participant. Once greed and fear enter the picture most hope of remaining rational goes out the window. Set your targets and respect them.
So You Want to Trade Actively – Things to Consider
You may have many reasons for wanting to take control of your investments and be your own trader. Maybe you have had some success picking stocks, maybe you’ve had some catastrophes and want to turn it around, perhaps you would feel like you can supplement your current income, invest for retirement, or even trade as a career. There are many reasons why you should become actively involved in investment markets. There are also a number of reasons why you should stay away. It is important that you recognize that you need to have an idea about what is happening with your money and why. Even if you only have a 401k or other retirement account, you have money at risk. Do not let anyone tell you otherwise. It is important to understand the how and how much of this risk. It is almost never zero.
Consider this a brief overview. This will serve as a primer that should get you thinking about what you need to do and how to prioritize your efforts to be able to start actively managing your investments and begin trading on your own, or not. Continue reading “So You Want to Trade Actively – Things to Consider”