Blog › Create a solid base.

Create a solid base.

Tennis players know that the best position is in the centre of the court. At least with all the rest conditions equal. Placing yourself in the court centre, you will be in a perfect position to withstand the rival’s pressure. The distance to any point of the court is the same, and your opponent might face difficulties in choosing the best direction of his hit. Some sportsmen do not look like a grace, however, their skills are coming from experience and holding the best position is extremely important. An ability to react quickly on a change in your opponents’ tactics is also the way for the victory, and the best position in the court would help a lot.

In the market, the position is also very important. Once you’ve managed to hold a strong financial position which will allow you to have a room for manoeuvre, you will be able to use different opportunities. Sometimes it happens that the market conditions change rapidly and if you are in the market with a heavy volume and a large part of your account balance, then you would not have a possibility to use such a newest opportunity to enter the market with s different scope than you’ve been analysing previously. For example, you if trade with the British pound currency pairs, you would choose the pairs with the most trading volume such as major currency pairs like GBP/USD. However, the situation might be changed in the cross-rates like GBP/AUD or GBP/CAD and if you do not have enough free volume to add more trading positions, you would just waste an opportunity for an attractive entry level.

Learn to Play Chess Like Bobby Fischer - iStudy
Source: iStudy

You could use the example of chess grandmaster Bobby Fischer, whose favourite proverb was “I always avoid positions in which I do not have the full control over my pieces”. People who play chess understand what he meant by that. Chess is the game of strategy with the best results achieved only if the player is able to make the right forecasts and predictions together with the correct analysis of the current situation on the field. The same approach is applicable to the financial markets. If you hold a portfolio of 10-15 different assets, you can effectively control your flexibility. It’s more than enough to get all of the advantages from the diversification approach and risk management. That does not cancel the benefits of investing in index funds. In this case, several additional factors might play a role in your overall profitability. The low spending level, diversification and continuous market’s growth would work for you in the long-term perspective.

Read also

You have successfully registered

You can choose the needed type of account at any time!