I have often heard people saying that trading is an art, and not a pure science. Well, based on my little experiences, I can certainly say for sure its not an art. Whether its a science or not, I would take another year or so to make a view on.
When I say Art here, I mean a field where individual choices are different, and there is no way to judge two different entities. Two paintings or two works of music can both be good, and they might be incomparable to each other. Similarly, one can argue that even in trading there are different techniques used by different traders, and no one of them can be said to be superior to the other. Agreed to this, however, isn't it always about the output more than about the process?
Whatever be the technique employed by different traders, over a sufficiently long period of time, its a common measure that is used to judge who was better amongst them. Again, this measure can be flawed over the short term where luck and chance play a big role, and that is the reason why I have said over a sufficiently long time - around 10-12 years.
In my humble views, trading is much closer to science. All the successful traders have always been hardworking people, who keep a closer look at anything and everything happening in the world. I have seen/heard good traders working on the weekends to catch-up on the events of the past week, and get up to date with the world. They must study not just their own asset classes, but also what is happening in the other asset classes. At the minimum, one's view on interest rates and foreign exchange is a must, irrespective of the assets one trade. In the recent times, Commodities have acquired much more significance than in the past, and may truly end up becoming another big asset class. Its more a result of unrelenting efforts by the investment banks and hedge funds to bring it to prominence, and this is the first time we have had an oil shock after the derivatives got popular. It may have far reaching results a to how traders keep track of the world.
I'm yet to develop my own methods of trading, and that has more to do with the fact that I have not been able to zero down on the final asset class/securities that I would be trading. I have to make a choice between Equities and FX at the broader level, and between delta trading and volatility trading at the securities level. At the moment, I'm more inclined towards FX and Delta trading, and will be able to make a final decision by first half of 2009.
When I say Art here, I mean a field where individual choices are different, and there is no way to judge two different entities. Two paintings or two works of music can both be good, and they might be incomparable to each other. Similarly, one can argue that even in trading there are different techniques used by different traders, and no one of them can be said to be superior to the other. Agreed to this, however, isn't it always about the output more than about the process?
Whatever be the technique employed by different traders, over a sufficiently long period of time, its a common measure that is used to judge who was better amongst them. Again, this measure can be flawed over the short term where luck and chance play a big role, and that is the reason why I have said over a sufficiently long time - around 10-12 years.
In my humble views, trading is much closer to science. All the successful traders have always been hardworking people, who keep a closer look at anything and everything happening in the world. I have seen/heard good traders working on the weekends to catch-up on the events of the past week, and get up to date with the world. They must study not just their own asset classes, but also what is happening in the other asset classes. At the minimum, one's view on interest rates and foreign exchange is a must, irrespective of the assets one trade. In the recent times, Commodities have acquired much more significance than in the past, and may truly end up becoming another big asset class. Its more a result of unrelenting efforts by the investment banks and hedge funds to bring it to prominence, and this is the first time we have had an oil shock after the derivatives got popular. It may have far reaching results a to how traders keep track of the world.
I'm yet to develop my own methods of trading, and that has more to do with the fact that I have not been able to zero down on the final asset class/securities that I would be trading. I have to make a choice between Equities and FX at the broader level, and between delta trading and volatility trading at the securities level. At the moment, I'm more inclined towards FX and Delta trading, and will be able to make a final decision by first half of 2009.
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