Trading Is More An Art Than A Science

This is a guest post from a reader

Trading is both an art and a science.  Both are important, and neither one can be ignored.  Whether you are in the equities market, bond market, forex market, commodities market or derivatives market, it takes both an analytical mind as well as an intuition that no one can really teach you.

The science part is obvious, and probably the most publicized for obvious reasons.  That reason being is that it’s actually teachable where the art part is not.  The science of trading would include technical analysis, which would include things like chart patterns, volume and moving averages.  It would also include fundamental analysis, such as looking at the earnings of a company, P/E ratio, and market cap.

The art part is the more difficult one to impart.  In fact, it’s probably more caught then taught.  Every trade will violate its technicals and fundamentals at some point, and this is where your intuition comes in.  This is where you have to hone your trading skills so that you understand how the technical and fundamental analysis works together.

There’s also a huge psychology to trading that you can’t ever learn until you start doing it.  You can learn all the analytical tools and trading systems that are out there, but at the end of the day, it comes down to your emotional and psychological aptitude.

A great way to hone and sharpen your trading skills and to figure out how best you manage the science and art of trading is to get a practice trading account.  For stock trading, you can find free tools on sites like CNBC and MSN.  You can even use Google Finance to paper trade.  If you are in the forex market, you can easily find many forex demo account offers so you can practice your system, strategies and find out what will work best for you.

There is indeed an art form to trading that most people don’t get.  In fact, this (in addition to nerves and blind luck) is what separates the losers from the winners in this game.  You should always test and practice any forex trading strategy in a demo account before you go live with real money.  It’s always the smart thing to do.