26
2024/07
5 major market characteristics for informed trading decisions
Aside from its fundamental characteristic of uncertainty, the market has several more specific features. Recognizing these can help you make more informed trading decisions. Here are five key characteristics to understand:
1. Market Inclusiveness
The market is inclusive, reflecting complexity due to traders’ diverse trading philosophies, principles, models, and methods. This inclusiveness means that the market accepts all existing and future trading ideas, theories, principles, and methods.
Each can adapt to a particular aspect of the market and be profitable, yet none can perfectly adapt to every aspect. The market’s inclusiveness results in various trading methods, leading to two extreme attitudes: unquestioning optimism and total pessimism. This inclusiveness can confuse investors, causing them to switch between different trading methods without finding one that suits them.
2. Predictability and Unpredictability
The market is a dialectical unity of predictability and unpredictability. Trends can be predicted, while the fluctuations that make up these trends cannot.
Trends are formed by market rationality and are relatively stable, while fluctuations are driven by emotions and psychology, which are random. Traders should choose whether to trade based on trends or fluctuations depending on their approach.
3. Uncertainty of Trading Costs and Profits
Unlike setting a budget for a physical business, trading costs and profits are uncertain. Trading costs include fees and losses from stop-losses, which cannot be precisely predicted. Similarly, trading profits are influenced by market conditions, trading skills, and other factors, making them difficult to estimate.
4. Contradiction of Stability and Randomness
The market’s stability, as reflected in trends, is its foundation. However, the market also experiences significant randomness due to policy changes, wars, natural disasters, etc. This randomness can result in unexpected gains or catastrophic losses, which traders must face and endure.
5. Proportionality of Profit and Trading Ability
If your profits come from luck or exceed your skill level, the market will eventually reclaim them. The market is inherently fair and rewards consistent skill over luck. It’s important to realistically assess your trading abilities and set achievable goals to avoid disappointment.
Achieving Success in Trading
Success in trading requires skills, knowledge, patience, and self-discipline. If you encounter any issues before trading, contact our team for guidance. We’re here to help you with trading strategies, platform functionalities, or account management.
Take the first step towards trading success by opening a live account with WisunoFx today.
Contact Us
Visit our website to register: Wisunofx Live Account
Note: Trading financial products involves high risk and may not be suitable for all investors. Ensure you fully understand the risks involved and take appropriate management measures.
