Article - The Most Precious Commodity In The World

Were Time a precious commodity like gold, coffee and crude oil then what a price it would command indeed. We can never find too much of the most precious gift of Time. As traders we live under even closer scrutiny for our actions set against the backdrop of Time.

Time is ticking, Time is moving and we simply cannot find enough hours and minutes in the day to accomplish all our ideas. Faced with choices and bombarded by news announcements we often find ourselves boxed in a corner fighting against the Time to choose whether to go long or  short. Thus against such a backdrop we are pressured and we tend to hasten our plans and in doing so we make mistakes and may trip and we may fall. The rule of the thumb over the longer range is that we even can make more mistakes than our winnings, even to the ratio of 7 losses to 3 wins per set of 10 trades and still we can come out on tops should we learn how to use Time and manage our risks and effectively narrow our stop losses. Traders always want to accomplish the most spectacular gains in the shortest possible time frame. This is not possible in reality. We are always trying to reach our destination as fast as we can. We are always aware that Time is ticking and we do not have enough of it to take ourselves to our destinations as fast as we possibly can. So de facto Time indeed is the most precious commodity in the world if only we can work with it and arrange our risk over the longer range of Time.

Time can either work for us or against us. It is for us to stop running about, to stop, look and listen to the rhythms of nature around us. Watch the seasons in full swing; observe the starry firmament wheeling round, listen to the march of nature through the cycles of time. e listen to news, we read data and we become our own judges and live and die by the sword. We march in step with the universe but not all of us can detect the subtle shits of mood and sentiment as with the change of the seasons. In failing to understand the true nature of markets and the seasonal swings of a cyclical universe or the circular mathematics of Fibonacci, we hasten our plans, we compound our risks and eventually we doom ourselves because we do not give Time the room to work for us and not against us.  Given the volatility of nature, if our risks are not manged properly we are faced with the onslaught of a reversal with no place left to hide beyond our diminishing account balances. Sunny days could end in a torrential downpour. Freezing rain could melt as the sun appears from behind the clouds. In Time all things are possible, all permutations a reality; long or short, hedged or not, it is for he or she that can master Time to lengthen the odds of sustaining a trading career.

The forex markets can be logical in the long run but sometimes a blip can turn the market on it's head and refute everything we believed in making our models of analysis. 9 times out of 10 we may observe a black crow and reason with ourselves that all crows are black given the totality of our statistical sampling and then Bang! Here comes along one single oddity of a grey crow and the refutation of our theory that all crows are black hangs in the balance as the mathematics of solidity becomes liquid and our conceptions fail to accommodate error and compute such error in terms of financial means. Time maybe our friend or our worst enemy; it depends how we choose to use time for the long or short run.

Successful forex trading is not inane and uniquely a gift of the exceptional trader. Forex trading requires deep patience and patience is not easy to cultivate. It is a craft learnt by rote learning; repeat and repeat - if, then; in logical sequence and prevalence. Time becomes your friend once you master the principles of trading. Learn the foundations of cycles in Time and you have a platform to stand upon and pick your trades as you move with the nature of the markets in swing. But in developing your craft there is always the element of surprise in nature; the sudden violent storm. You must always understand though time can be your friend in the long run, in the short run there can be some nasty surprises indeed. Take care not to become too strongly reliant upon our models in the face of short term danger or you may endanger yourself to become robotic and not understand that at some times you need a degree of flexibility and adjustment to baton down the hatches when the storm comes. There must be flexibility in your model to accommodate the risk of a shock. Yes learning the cycles of forex markets is helpful but this must be also in balance with a keen nose and ears for the sudden unwanted burst of information that sends markets reeling. Be strong in your model but be adaptable to withstand a hurricane when it unleashes and trade down your size in fast moving markets lest whipsaw and reversal catch you and destroy you in a fast moment. We are human after all and we do tend to panic and anything out of the norm can send any platform of parameters upside down. Therefore building parameters is but one step of successful trading. But there must be room to bend like a tree in the wind but not snap. automated trading system based on a few simple parameters, given last 10 sessions, highs, lows, opens and close, and deviations from averages, to generate buy and sell signals, can only base their models upon historic evidence, whether based upon few statistical samplings or the many, with few parameters or several, models may simply go bust in the event that given all crows are black, along comes an anomaly to defy possibilities of mathematical prediction. In the long run Time will smooth out anomalies and we can use models to march forwards with a great degree of success; but do we need flexibility too and have the power to understand Time can show many different colors and moods and we need to ride out the blips that always do occur.

In addition to errant model building comes the inability to quantify risk and measure down or up as events spring surprises on our models of forex trading. Over trading is one such cardinal sin. An over trade of position during a shock event like the January 16th SNB decoupling from the EUR, can even throw  a sturdy forex model and your concepts can become strained under the refutation of your base forex parameters. If we over trade we increase the risk of damage during a market reversal. In Time all directions can become clear; but in the short term surprise events can be the ruin of us. The heat of the action can work against the understanding of Time and we over-trade in panic when all our concepts based upon sound models has been turned upside down. As a result of the lack of understanding of how to control Time, we fall into a nightmare of our own doing as our own demons of fear unleash themselves as we cannot simply step back until the turbid motions settle and clear. Over trading a position can happen to anyone in a fast moving market when we can assume the entire universe is as safe as houses because in the long run all crows are black. But do we have the deep pockets to over trade? How deep can a pocket be and how long will Time take to turn events in our favor? Questions and answers and a 100 riddles perplex us at every turn and then we unravel in our minds and precipitate a risk crisis.

Pyramiding our trades with our accrued profits can be likened to trying to squeeze blood out of a stone. It is a grotesque reality and consequence of our fears of controlling Time for ourselves. we go 1 long, then we buy 2 more then as the market moves on we buy 4 more longs not quite understanding how risk works and damages compound if ever a reversal or whipsaw should occur. But how often we actually think we can get away with it? The utter hubris is shocking. Greed can come back to haunt us if we linger..... we want more and more and we want to take this trade right to the very edge of stardom. Why is it that we cannot find satisfaction in the small trade? The quick in and out within the context of a deeper understanding of market directions against a larger backdrop of Time? Why do we have to risk so much, more and more to accomplish our goals as soon as possible? The wind often turns as Time has show and woe unto he that cannot listen to the march of Time and work in its favor. Taking on an extra 2 trades on top of the original direction to accumulate position requires not only double the reasoning but squared the probability that the risk of a pull back can be negated with our exuberant confidence to take on the extra 2 trades. trading ranges on a daily basis are always going to change. Volatility is always going to change. Nothing remains static in Time. Therefore the successful trader can manage his Time and avoid the pitfalls of accumulated positioning and the ensuing nightmares simply by understanding that a trading plan needs to be paced out to move with the market swings in Time. Work with Time and Time will indeed become your precious commodity as Time will reward you again and again with increments to your portfolio. but run against Time and take the extra risks here and there with added positions to a winning trade and the doubling up can increases all probabilities of compounding losses. Then indeed Time truly can become your vicious Nightmare.

Show me a trader that can span 5 years. Time often erodes the haughty. Like dust in the wind the memory of the star trader is often scattered. The bold but reckless have no care to cultivate patience. Time often fades the Ozymandias as proud and vacant as Time shall often bare. Laud not the massive sudden victories but maintain sobriety. Be Humble and if your models are not working simply walk away and let Time smile upon you that you have not lost it all in a single moment of madness and over trading. Your models are good in the long run but you must learn to bend with the wind like a tree and be rooted in the ground. There's a time to increase your trading activity and a time to ease down. The market that befriends you now and bestows laurels may come back to haunt you down the road. Little makes Big. Long on the pauses, short on the lull, day trading, or longer term trading, we must learn to be humble and to take our positions and then step away when markets do not make sense anymore.  A little here and the little there all adds up. Large things in life have small and humble beginnings. Make 10-15% per anum on your portfolio over 5 years and truly you are a master of risk management. if you can survive 5 years and make modest gains then indeed you have the most precious gift in the world in that you can truly understand Time and the precious gift of wealth that it may bestow.

Pieter Bergli - DeLoren Trust Holdings

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