by Sam Seiden, Online Trading Academy
Online Trading Academy Article of the Week
Occam’s Razor, a scientific principle that suggests the simplest answer is typically the right answer to a given question. This is truly a principle I have lived by simply because it works.
I am always fascinated with the origin of things and specifically, the simple thought process behind the idea. For example, have you ever wondered about the origin of numbers? I mean, the numbers 1 – 10 are a part of our everyday life. We see them everywhere, on street signs as we drive, at every store we shop at, on television, in every room in our home whether they are on a clock, in a book, on a kitchen appliance, a scale in our bathroom and so on. Numbers are everywhere, but do you know why they look like they do? Another interesting everyday item is money. Have you ever wondered where “currency” started and how?
Foreign Currency (Forex) trading traces its history centuries back since before the Babylonians. While they were the ones credited with the first use of paper notes and receipts, forms of currency had existed for quite some time already. In the beginning, the value of goods and services was expressed in terms of other goods and services, also called “the barter system”. Limitations of this system were the catalyst for establishing more generally accepted mediums of exchange.
The evolution of means of payment and a reliable store of value began with stones, teeth and feathers. This gave way to metals such as gold and silver. Next, it was governmental paper money. Before the First World War, most Central Banks supported their currencies with convertibility to gold. However, according to some, the gold exchange standard had its weakness of boom-bust patterns. As economies moved more and more to paper money not supported by gold other problems arose. I could go on and on but that is the origin of money in a nut shell. As you can see, money started out very simple with gold, silver, and so on… Of course, leave it to people to complicate things but that’s another story.
Let’s take a look at something even simpler than money; let’s look at how numbers started and why they look the way they do. The number system we use today (1, 2, 3, 4, 5…) is called the Arabic Numbers System. We also have the Roman Number System (I, II, III, IV, V…) which is rarely used in everyday life. While Arabs popularized Arabic numbers they actually date back to Phoenician merchants, according to most historians. Why does one look like 1, two look like 2 and so on? The answer is extremely simple. They are all “angles”.
When it comes to successful buying and selling in markets as a trader or investor, how this actually works is also quite simple yet most completely over complicate it.
March 30th, 2016 – Supply Demand Grid
S&P Income Trading Profit: $1,084.00
Price charts clearly show us “wholesale” (demand) and “retail” (supply) price points in any and all markets. News, indicators, opinions, economic reports and so on are not what Wall Street uses to make successful trading and investing decisions. They simply focus on buying at wholesale prices and selling at retail prices, like I did on the chart above.
Whether it’s trading, or numbers, or how you tie yours shoes, the simple approach is typically the right one to take.
Hope this was helpful. Have a great day.
