Good decisions in the markets

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Whether we trade or invest in the financial markets (call it commodities, crypto, currencies, stocks, etc.), it is very clear that good decisions are the key to success in any case.

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Good decisions give higher profits and lower losses

Of course, when talking about investments and trading, success in the markets is merely economic, and it is understood that it consists of maximizing profits while minimizing losses in each of our operations.

This can be seen as an art, because not even reading all the trading books, nor taking the best courses, nor attending the best conferences on the subject, can anyone teach us exactly how to make the best decisions in the markets. What they can teach us is the basis for making reasonable decisions that allow us to have a better understanding of the market and ourselves in order to improve our chances of winning through our decisions and operations.

So, in the end we are all alone in the markets, because that is how it should be, because the money we are risking every time we operate and invest is ours (not from anyone else); therefore, what we will do in the markets will depend on us (on our abilities, skills and knowledge). One bad decision and all our money can go down the drain, and one good decision can make us a lot of money; and what will determine if the decision turns out to be good or bad, will be what happens in the market, so only time and the market know the final and certain answer to the question of whether our decisions and operations are correct or not.

Good decisions are not the result of chance

But do not misunderstand anything I have just said up to this point, because the good decisions that we may or may not make in the markets are not the result of chance, but of various factors.

That is to say, despite everything he has expressed so far, we must to clearly understand that the good decisions that we can make in the markets are not the result of chance, but neither are they based on knowledge beyond all reasonable doubt. Because what we can make in the markets at all times are reasonable decisions that, in our opinion, can give us greater chances of winning in them.

Because if we understand the financial markets as if they were a mere game of chance (where there is no cause or effect), we will end up making mistakes and losing all our money in the process. The trader or investor who has the compulsive gambler syndrome is not capable of analyzing the markets under any reasonably logical point of view; and therefore, its is only a slave to its compulsion that leads its to operate in the worst way every time its does.

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On the other hand, it is true that success that we can get on the markets, it is intrinsically linked to the decisions that we make before them, are the result of doing, they are the result of causality, then, everything is cause and effect. And even knowing that everything is cause and effect, we must have the good sense to also know that in the markets we do not know exactly all the causes that have originated what is happening in them. We only see the effects and draw conclusions, and based on that, we try as traders and investors to anticipate what is most likely to happen in the next moment.

But this attitude also implies being aware that we can never know exactly what factors (people or institutions) are buying or selling at a given moment in the market, nor what they are thinking of buying or selling from one moment to another. So this determines the unpredictability of the markets.

So, the decisions we make in the markets must then take into account their unpredictability, because there is no perfect logic in trading and investments, just reasonable logic.

As we make good decisions

So what we can make are decisions more or less based on what we believe that we know and also on what we see happening in the market moment by moment. This creates a state of attention that leads us to notice important things in the events and situations of the markets that allow us to improve our chances of success respectively.

All this by managing our trading and/or investment capital well, and fully knowing that in the markets we can be right with our decisions but we can also be miserably wrong. So the markets are like exactly like a currency; We have a 50% chance of being right and a 50% chance of being wrong. How we handle statistical probabilities will depend on the wisdom that we acquire over time.

Because as we make decisions in the markets we lose the fear of being wrong and the impetus to be right, and therefore, we acquire skills that lead us to make better and better decisions, and as we make better decisions we become even more insightful, which ultimately leads us to be successful traders and investors.

Something curious about good decisions

So, there is something really curious about good decisions in the markets, and that is that, at first, we never know exactly what will be a good decision and what will be a bad decision; that is, we can never make a decision that is beyond all reasonable doubt of being good or bad (right or wrong), precisely because there are always, even in the best of cases, risks in the markets.

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And this applies to all people who express themselves about the market, because even those who claim to be experts only give their opinion when they express themselves about the markets. So be careful when making your decisions, because whether you rely solely on your own analysis or someone else's (or both), everything is logically subject to hit and miss and fails.

So when someone says that this or that cryptocurrency will be worth millions of dollars in 2025 or 2030 or 2050; he is simply expressing his opinion about the market. And this opinion can be based on a reasonably serious analysis of the market or simply on a fanatical and gambling view of trading and investments. We don't everknow what exactly motivate every opinion, so we always need to be very careful with all this.

Knowing everything explained so far, we will realize that good decisions in the markets do exist, but they are only possible when we understand that they are not infallible, nor are they the result of analysis or perfect conditions.

So, good decisions are not made because conditions in the markets are perfect, they are made even though conditions are never perfect. And although they are not perfect decisions either, we will realize that by taking them in this way, from this perspective, we will reasonably increase our level of success in the markets.

What do you think about the topic discussed? Please comment.

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