The trader mindset

In essence, the market price of any financial instrument is the sum total of the collective action of the market participants. This idea is borrowed from the "dow jones theory". This holds true across timeframes.

The fundamental difference between the trader and the investor mindset is that a trader, as suggested by the name, brokers between a buyer and a seller with a margin. Keeping this in mind, it is required to integrate the idea that the future price or even its direction is an estimated guess and never be predicted. A buyer or a seller that's an investor could be closing or resizing their position for absolutely any reason, ranging from, wanting to invest in a more attractive opportunity ; and not limited, financing a new villa. The reason for a price spike could be completely unrelated to the fundamentals and existing trends. It could be, but, it could be otherwise too... The idea is to integrate the concept of unpredictability and still work with it.

As a trader, every trade is essentially a calculated gamble. Once cannot control the gambling part. One's ability to refine the calculations is the secret sauce. This includes a variety of components such as position-sizing, diversification, risk-tolerance management and others. If gambling is defined as taking part in an activity without being certain of the outcome, trading is definitely a gamble, but so is trying to catch a flight through traffic.

Its more beneficial to a trader to compare trading as an activity that involves constant correction and recalibration. Something like driving a car through hilly curves, without any assistance. Not certain of what's beyond the turn but surely enough, yet, fully prepared with one's ability to maneuver through. The prize is to reach where one wants to reach, to hone the required skills to navigate through the obstacles is the price.

A highly simplified analogy between trading and driving could be visualized as follows. Imagine looking at a hilly/mountainous road from a helicopter far enough to see the entire stretch from the side where the road starts from the left and ends at the right. Assume there are no bridges and tunnels, just a simple road that curves one the surface of the hills and goes up and down the valleys. If one were to plot the altitude of the vehicle against the distance travelled, it would resemble a price chart. As a trader, the opportunity to buy and sell is similar to deciding between the brake and the gas pedals. Every drive through the same road is unique, knowing one's limits and staying within it improves the chances of survival. Over time, the volatility in behavior and outcome stabilizes and that reflects the skill of the driver/trader.

At MMAIgo, what we believe in, and constantly refine is our strategy to respond to historical market trends and behavior. We built our strategy around the idea of the accuracy of the strategy over the past data and coupled it with our operational capital to come up with a dynamic risk management strategy. Every trade is a gamble around a win-rate pre-calculated over historical data. At each trade set up, we risk loosing an allotted sum of the capital, and we diversify the entry-points over calculated range, and diversify the profit bookings over a similar normal-distribution-curve. The core idea is just this. Just like in the analogy, it's the skill of the driver that determines the fuel consumed and the time it takes to reach the destination. The overall journey remains the same... same same but different.