STOCK AND OPTIONS TRADING USING BEER MATH

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How about this for a trading term?  BEER MATH.  Ever heard of that one? You probably have if you are a military enthusiast or a sniper.  If you haven’t figured it out yet my writings focus on trading as a battle, so I find myself reading quite a bit of military literature and right now the main focus is on sniper training (it is a theme of a book I am writing). 

I recently purchased a book entitled Trigger Men: Shadow Team, Spider-Man, The Magnificent Bastards, and The American Combat Sniper, by Hans Halberstadt. He includes a glossary and, you guessed it, one of the entries is BEER MATH. Here is his description:

Sniping involves a great deal of mathematics (almost as much as the art of artillery) but the problems must typically be solved under conditions of extreme stress.  The precise calculations taught at sniper school, then, are reduced to much simpler formula-so simple, snipers say, that you could get them right even if you were under the influence of a few beers (italics mine for emphasis).

I am not recommending you give trading a shot after a few beers, though some traders’ results may indicate such a habit, but what I am recommending is that you have such a simple trading plan that it could be followed even if you were under the influence. I believe that is the point of BEER MATH and it is my point here as well. Shall we call it BEER MATH TRADING?

Snipers are involved in the business of hunting people in a very calculated, methodical way requiring much attention to detail under very stressful conditions.  Seems like a very complex endeavor but it isn’t.  The complexity is really found in its simplicity.  Simple methods are sometimes the most complex because we make them that way.  We do not want to believe that trading, for instance, is really simple.  Instead we want to make it more than what it is.  It must be complicated, we reason, if so few succeed at it.  So few succeed at trading because it is really very simple.

Let’s look at just one example: charting.

Does your stock chart look something like this:

Or this:

Which is easier to read and understand?  Could you understand one better than the other if you were under the influence?  Think about it.  It may just reduce the needed calculations to much simpler formula.

TRADING IS WAR.  PREPARE YOUR WEAPONS.

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