The Capital Business
Ginni Chauhan
Mapping the intersection of market structure and trading psychology.
Trading is a tool to increase the capital one has, to whatever proportions match his skill and patience. Let’s not mention luck. Everything is a function of dire probabilities, especially the good ones, so luck is paramount. It should not be confused with other factors; for example, laziness or ignorance are often counted as bad luck, effort or practice as good, and so on.
Trading signifies, in a person, his acceptance (or a lack thereof) of certain systems around him. Yet, this is not an attempt to explore the philosophies or psychology related to trading. Trading can increase (or decrease) capital in an organized and pre-calculated pattern/manner. But it should not be considered as a tool to generate new capital. Capital is a function of value. Its generation involves the exchange of value over suitable and agreed-upon currency. The capital garners dividends/rents/royalties based upon the principles of conducted business.
In trading, capital is exchanged/transacted as the underlying asset/good/service. So, without capital, no trading can happen. With a net capital of 0 (zero), no trader, no matter how skilled, seasoned, or famed, can generate unit=1 (one). No funny multiplier can multiply with 0 and give 1.
No funny multiplier can multiply with 0 and give 1.
⟹ 0 × ∞ ≠ 1 *
Hence, in this business, Capital is paramount to make/generate a return upon the capital.