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A Work on System Design-I : 15 Questions you should ask before trading

May 9, 2010

For the next seven posts, following twice in each week, I will be talking about the art and science of trading system designs.The blog posts will encompass,the logic,the philosophy behind the logic,the code, developments, design and other technicalities of trading systems.

Never gamble. But if you must, know and have these three on your side- the rules,the stake and when to walk away

If ever I am to give an advice regarding trading, to any newbie, then this will be it.

This post or the nexts are not going to teach you the rules. But it will teach you, to know your stake and have it to your advantage, and the knowledge of when to walk away.

But paradoxical is the ways of the nature, and paradoxical even still is how we go about making decisions. Hence, to anybody taking his first steps into trading, I would recommend going through these questions. Even though you might not be taking your first step, its important to ask yourself these questions, from time to time, to review your aims,your style and all other small things, which we often ignore in our bid to make more money.
Note, there is no right or wrong answer. When posed with an either-or question, its possible you dont fit into either. As far as possible, try to stick to the options, but if you can’t go ahead and add your own answer. Write it down on a piece of paper.

Who Am I?

1. How old am I?
2. Have I traded/invested before?
3. Why do I want to trade?
4. Describe one situation in life, where I have taken risk?
5. From where am I going to put my trades?
6. What is the frequency with which I can go for a smoke/coffee/amble towards my mate for catching up that office joke?
7. When I come home, what happens to the clothes I was wearing?Shoes?
Trading Places

8. Before I take a decision,do I tend to deliberate and delay or am I finger happy and say “damn-the-torpedoes”? [Both have been phrased in a negative way]
9. Am I ready to sacrifice? Sacrifice a lot?
10. What is the money with which I am going to trade?
11. Elaborate on the possibility of a golden solution to life’s problems?
13. Do I take my decisions of day to day life by myself or do I like to listen to others suggestions?
14. How many hours of reading do I put per week?
15. Does one have to be always right to make money?
16. Do I give attention to detail?

Write them down. There is no right or wrong answer, mind you. So feel free.Neither am I going to give you a right or wrong answer, but will try to give you ideas to understand yourself better. The questions I have put before are important, not from a technical perspective but from a perspective of psychology and that bit will help you in designing a system that fits.
Till then,

P.S: The title says, there are 15 questions. If you are like the rest of us, you would have probably missed that there is no question no 12.

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