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Trading: Art or Science?

InvestorEducation / Learn to Trade May 06, 2008 - 02:29 PM GMT

By: Nazy_Massoud

Is trading an art or a science? This is a conversation that I had with a very successful trader:

Nazy: Do you believe trading is an art or a science?

Trader: Definitely a science.

Nazy: How do you trade?

Trader: I use an automated system so there will be no emotions attached.

Nazy: How did you come up with that system?

Trader: I have done my homework. I really know my markets. In addition, I learned the system inside out and understood its assumptions. I constantly test it and push it to its limits.

Nazy: So, you are not relying on the system formulas alone. Are you?

Trader: No. I come up with my own angles and formulas.

Nazy: Your own formulas give you the edge.

Trader: Yes.

Nazy: How do you come up with your own formulas?

Trader: It is based on my knowledge, experience and ideas.

Nazy: How do you define it? Do you consider it your feel and intuition for the markets?

Trader: Yes. It is something inside of me. It is a gut feeling that I have.

Nazy: So, that is when the art comes into play? Doesn't it?

Trader: Yes.

This is how he understood that trading is more than a science. It is also an art.

If trading was purely a science, you wouldn't need traders. Everything could be done through program trading. However, to be successful, to have that edge, not only you do need the science of trading, but you also need to develop the mental edge and the art of trading.

The art of trading is the reason that one person can make money with a given system and another person cannot. It is about understanding your system and tweaking it to suit your purpose and your personality.

So going back to the original question, is trading an art or a science? It is both. You need to develop the skills and then the skills become your habit. In the process, you develop a feel for the markets and trading becomes an art.

You cannot develop your feel for the markets by reading books or studying alone. You need to be in the game and understand the market behavior. You need to listen to the market and learn from it, rather than impose your views on it.

When you develop your feel and intuition for the markets, you build your confidence. By doing that, you trust yourself more and you do not feel the urge to follow others. You talk to them and seek their advice, and you are comfortable with your own conclusion even if it goes against the norm.

Remember, your success is not about what is happening in the markets. It's about the choices that you make and how comfortable you are with your choices.

Norman Vincent Peale said, "Any fact facing us is not as important as our attitude toward it, for that determines our success or failure."

Here is to making trading success your habit™,

By Nazy Massoud

PS. For more Mental Edge tips and reports on how to have more profitable trades, go to www.MentalEdgeTrading.com .

Copyright © 2008 Nazy Massoud

ABOUT THE AUTHOR : Nazy Massoud, a Wall Street Insider, shows traders, investors and hedge fund managers how to develop the mental edge to execute trades more profitably. For more tips and a FREE report on "The 3 Biggest Psychological Triggers That Can Make or Break a Trader," go to www.MentalEdgeTrading.com .

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Comments

Smack MacDougal 06 May 08, 17:07

Trading is The Art of Exchange Gambling Trading is the Art of Exchange Gambling based upon skill, art and often hard lessons never learned. If trading were a science, all would know the same and thus, no profit could be made. The first known use of the word science can be found circa 1300 in Old French whose speakers took the word from the Latin word scientia meaning "knowledge" from sciens (gen. scientis), prp. of scire "to know" probably originally "to separate one thing from another, to distinguish" related to scindere "to cut, divide." Man can attest the Modern sense of "non-arts studies" from 1678. The distinction is commonly understood as between theoretical truth (Gk. episteme) and methods for effecting practical results (tekhne). The modern restricted meaning of "body of regular or methodical observations or propositions ... concerning any subject or speculation" comes from 1725. The first known use of the word art can be found circa 1225 in Old French whose speakers took the word from the Latin word artem "skill as a result of learning or practice; art, skill, craft." In Middle English speakers said the word to mean "skill in scholarship and learning" (c.1305), especially in the seven sciences, or liberal arts (divided into the trivium -- grammar, logic, rhetoric -- and the quadrivium --arithmetic, geometry, music, astronomy). This sense remains in Bachelor of Arts, etc. Meaning "human workmanship" (as opposed to nature) is from 1386. The first known use of the word skill can be found circa 1175 from the Old Norse meaning "power of discernment; distinguish, separate."