MENTORSHIP - Trading & investing - Introduction - Coggle Diagram
MENTORSHIP - Trading & investing - Introduction
What drives trading?
Trading is driven by the motto of an investor or a trader to generate a return on capital.
That means a professional trader or investor should generate growth on the capital. That means they should consistently make more money with money, like any other business.
Any professional trader or investor will always keep in mind that the capital he has invested in the trading business should be secure first - before it earns a return for growth.
So, in trading, survival (avoiding risk) is the first mantra. The second one is thriving (earning a return).
Always consider return adjusted to risk. If risk is bad, your return is never secure or sustainable.
Your trade should be anti-fragile. That means it should not break down suddenly. It can give a loss but not a steep loss that you cannot recover.
We trade because we have to generate growth on our capital. For this we should find opportunities for growth.
Whenever you want to make money, you should find growth opportunities.
In any business, what is an opportunity. It is a discrepancy between a buyer and a seller - for any product or service.
For tapping an opportunity, a company or an investor should identify the discrepancy.
Then they should find out how to fill that discrepancy and tap that opportunity.
As we consider trading as a business, in trading, the discrepancies occur whenever someone is doing something in the market.
In a stock market also, discrepancies occur when someone is doing something. That means, for example. some trader or investor is in urgent need of a cash stock to pay for his short position. Then he will buy that stock at any price. That is a discrepancy. If you understand that, you can expect a short covering and gain from it.
Then, how do you find these discrepancies to tap for your growth.
Finally, in a market, trading opportunities occur when someone is doing something. Not when a technical indicator is in a position to drive a trade.
Who is this someone? We will learn about financial institutions tomorrow. Who are that someone.
Identifying that something is also important. Means what they are doing. We may not get to understand it fully but even if we have decent probability on what we can see, we can easily trade with a low risk.
General: (a) financial institutions; (b) financial instruments
; (b) stock fundamentals; (c) market fundamentals
(a) one point touch, (b) two point touch; (c) three point or multi point touch.
Market Profile: (a) basics; (b) day types; (c) open types; (d) market structures; (e) advanced concepts
Orderflow: (a) basics; (b) VWAP; (c) auction market theory