Drop by drop the river is formed.

This morning I realised that the kitchen faucet is leaking. Have you ever experienced one of those moments when something small from your daily lives brings memories or helps you come up with a new idea or visions?

Have you ever thought of how close the elements of life are to trading?

This morning I was mesmerised when I realised how similar leaking faucets and profitable trading are.

Read on…

Rain falling on to a virgin landscape eventually organizes itself into streams and eventually a river. After a river is formed, it goes to the sea.

In a very similar way, trading ideas can sometimes organise themselves into an outcome. Sometimes, two “rivers” form and there is a double outcome. Traders then need to choose between the two.

But which one is the right one?  We, as traders, do very seldom ask ourselves those questions. Impatient, greedy, fearful and willing to get rich quick are all terms defining the average trader… the losing trader.

The faucet keeps on leaking…

Trading may have more than one outcome.

In one-stage trading we go from a field of possibilities to a single outcome.

In two-stage trading, we go from a pool of possibilities to a few alternatives and then possibly to a couple of outcomes.

In three-stage trading, we might first build our own trading theory, then discover a pool of possibilities and then choose from a few alternatives.

There is no such need to categorize many outcomes and alternatives, as long as you do realise that you cannot go straight to the right outcome. You cannot be a profitable trader by just looking for the “right answer”.

Traders often aim at reaching a single conclusion, but they forget that what makes a trader profitable is the process of trying to extract maximum value from both sides of any contradiction and not a blindfolded coin toss.

It is the process…

And so, the faucet keeps on leaking…

And so, profitable trading takes time to form a “river”.

Then the student of the markets thought… if only I could have the persistence of a leaking faucet.

Drop by drop…

This material is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results.

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