There is a substantial risk of loss associated with trading Derivatives . Losses can and will occur. My methods will not ensure profits

Tuesday, April 3, 2012

Rubik's Cube and Trading

Rubik's cube,the mechanical puzzle invented by Erno Rubik, was the international rage during early eighties. Over 100 million Rubik's Cubes were sold in the period from 1980 to 1982.

I was a student that time . I spent a lot of time on this. But the only way I could solve it was by removing the coloured stickers and refixing it to restore the original appearance. In our town only two guys could do this and they kept their methods secret.

The "Aha!" moment came when I met a senior scientist from ISRO on a train journey.He told me that Solutions follow a series of steps and include a set of algorithms for solving each step.Basic solutions require learning as few as four or five algorithms.He taught me a method with which I could solve it .

The method he taught me was not very efficient. It needed around 200 twists and took more than five minutes to solve. But it was more than enough to beat my home town wizards.I was really surprised to see these guys who turned a blind eye towards me earlier, approached me to discuss the methods.

Trading is not different. Most of the thinking is done before hand.The Logic is converted to a method or system involving different steps and these logical steps are executed as per the situation. Earlier,I wondered how these experienced traders are able to take split second decisions while trading. Now I know they are just reacting to the situation by just executing a well thought out,well defined,logical step

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