Trying to develop skills in new area, people often think with analogies. The analogy can be used to consolidate the new information from the old. By analogy is done the conclusion that if two or more things are similar in certain respects, they will be similar and in other respects. There is very human tendency to use earlier received skills at training by the new. It is easier to understand a new theme if it can be connected with already studied. It is especially true in trading. Trade in the markets – difficult employment, and it is easier to run in, if we connect it with familiar themes: that is we can understand is easier trading, thinking with analogies.
We imagine set of analogies for trade: trading is similar to sports; the technical analysis – art; traders – intuitive scientists, or trade it is similar to surfing. The thinking with analogies helps to understand trading, but it is important to remember that this method is used only as a conductor. Do not confuse analogy to the real facts, which you try to understand. Trade can be similar to any activity, but it after all and differs very much. Let’s consider some usual analogies of trading and we will evaluate, in what their similarity and distinctions.
Science: the scientist develops hypotheses about nature general laws, collects data and checks legitimacy of these hypotheses. Traders also develop hypotheses about the markets. They try to measure market moods, to foretell what will do the market, and check the hypotheses in bargains, observing that occurs. But scientists carry out researches to find basic laws, which repeat. Scientists tried to study the markets, but with small success. Unfortunately, the markets are also casual and chaotic. It is important to remember it. The markets are not so predicted, as the science requires so that it is not necessary to pretend to be that it is possible to do set of exact predictions. Do not struggle for predictability. Accept that the markets are unpredictable.
Sports: trading is in many respects similar to sports meets. Professional sportsmen are awarded for the fact that they have extremely well developed abilities. Trade also requires good-developed skills. The trader trains, being prepared to “play” the market when will see possibility. Trade is in many respects similar to sports, but it requires knowledge of methods of trade. And the markets are a bit less predicted, in comparison with that other command or the opponent could make.
The actor: art is often difficult for understanding. Have you ever seen the modern art? It is difficult to see that does it an art. But it is. All this is a context question. Supervision of models of the schedule, which indicate trade possibility – is art. At schedule estimation in a correct context it is possible to see and experience model, which can lead to large compensation. But trading is not absolutely an art. It is useful to have an artistic vein, but traders should be exact in the interpretations of the market, or they will not do profit.
The businessman: some of traders tell about requirement to consider trade, as business. Businessmen are very punctual, so far as concerns planning, the equipment, or sale of goods. A supply and demand in the market is a little more difficult. Sometimes fundamental forces of a supply and demand have a little in common with price ranges, it is important to remember it in trading.
Analogies can be useful at attempt to understand trade, but remember, analogy – only analogy. Trading can seem similar to activity, which you already understand, but also it can differ very much.
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