Can a person who is not gifted in mathematics become a great trader?
I do not have the gift of being an adept when it comes to mathematics and doing advanced calculations. It would seem to me that being able to calculate risk, understand probability, and calculate pip value and translate that back into your account currency, all take an exceptional grasp of mathematics. Is being a math wizard necessary for good trading if so what are some tools someone can use to develop their understanding of the principles needed, and if not why?
I think it only [U]seems[/U] like it would have to be “exceptional” to people who just aren’t familiar with it. Familiarity brings confidence, though it’s doubtless also true that [I]some[/I] initial understanding is necessary, in order to get as far as “familiarity”. I’d say that those things require only a “[I]competent[/I] grasp” of the relevant parts of mathematics.
I don’t think so. I think only competence is needed, rather than wizardry.
The rest comes with practice.
These terms are all a little subjective, and relative, I suppose. I see that some people have a [B]real[/B] blind spot with anything numerical, and I think it’s probably true that trading just isn’t, ultimately, going to suit them … but I think that such people are probably few and far between.
This book may help you greatly: [I]The Mathematics of Money Management: Risk Analysis Techniques for Traders[/I] (Ralph Vince).
And on a simpler level, regarding working out things like position-sizing and so on, the books [I]Profitability & Systematic Trading[/I] by Michael Harris and [I]Trade Your Way to Financial Freedom[/I] (especially the second half of the book) by Van K. Tharp can also help.
I’m going to hold my hands up here and admit that I am not gifted at maths - at least in the form of mental mathematics [the ability to perform math solutions in your head].
Throughout my life this has always been my flawed weakness. However, I fully understand the logic behind creating solutions to mathematical problems. Give me Excel or a pen and paper and I will solve most questions.
I remember at school we always had two maths exams:
Mental Arithmetic [no calculators allowed]
Non-Mental Arithmetic [calculators allowed, because of the complex nature of the questions]
It’s fair to say I always out performed on the ‘Non-Mental Arithmetic’.
Being good at Maths always used to mean that you were quick at performing calculations in your head, as time has moved on being good at Maths now means that you understand the logic, how to apply it, and what calculations to make. Let’s face it, the FX market [other finanacial markets] are all about logic, knowing how to solve the problem of making a profit is what matters.
Slightly off-topic, perhaps, because I can’t claim it’s directly related to trading, but this little puzzle might amuse or frustrate you (I’m not sure which! :8: ).
in short no. If you want to trade not to gamble, its all about math, all Wall Street is a fight between algo traders.
And its a wrong perception that math is so hard. Just patience and hard work.
As D’Alamber said “solve solve solve and understanding will come later”
Good lukc
This may be true for ‘Wall Street’ in today’s age, however it’s not true for retail trading from home!
I dare to say that no retail traders use Algo’s at home in the sense of what is used on Wall Street - for one we retail traders cant even get access to servers for the speed required for algo trading! If we do manage to have access then you’re talking big money, and you’re certainly not trading with retail brokers.
I’d also like to add that trading is gambling, in any phrase you may choose. Trading is based on probabilities as you know, the probability of being profitable whilst remaining rational.
