When one’s money is invested in some avenues for potential profits, the concerned individual usually spends monetary resources to gain knowledge in the form of research, seminars, workshops etc. to explore the opportunities involved.  The trading systems learned from such activities will leave a false notion of perfection in the minds of the individual - belittling the fact that such strategies are in one’s fancy only and not in reality.

Years of research have proven that the phases of traders education commences with development of strategies, continues with the art of money management and finally concludes with the understanding of the psychological aspects of trading. Yet, instead of corroborating the preceding phases further, this article will try to dwell on the unheralded path which declares that- the key to unlocking the mystery is to move backward i.e. the journey should begin from the psychological aspects towards money management, culminating in the development of trading strategies.

When a trade is initiated, logic no longer applies because s/he is enveloped by different forms of emotions. The yearning of multiplying the investments is shadowed by the fear of losing it in the process. Once this psychology is understood by a trader, then s/he can focus on money management. Money management deals with the question of how much risk a trader should undertake where uncertainty is inevitable. More clearly, what part a trader should put his money into risk. Here, the trader should have a rule- of- thumb i.e. suppose I go by 3:1. That is, if the trader risks Rs. 10,000 of his money, then the aim for profit should be equal to Rs. 30,000 or more. The same way, s/he can also have the rule for the risk that s/he can take in his account balance, using the similar rule, 1%- 3% of the account per position i.e. if the trader has Rs. 100,000, then s/he should risk no more than Rs. 3000 on a single trade. Such rule not only helps to reduce the risk of innate losses if one’s trade decision is inaccurate but also assures longevity. Once the money management part is over, the trader should move to the last phase i.e., determining the strategies. It’s a clear and defined way of examining price action. One can choose from various technical tools available to view price action. It’s generally suggested to use a simple tool as it’s said that like an appliance, the fewer parts is has, the less likely it will break down in disfavor.

Learning the ropes is a traders’ prerogative while gaining experience in the market. The sophisticated trading mechanism has ushered a new wave of trading techniques which have complicated the simplicity of trading. But it’s imperative to remember that - simplicity in complexity is the way forward as we embrace the ever-evolving activities of the markets.