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Opportunity Cost

Opportunity Cost

All trading decisions should be viewed through the lens of opportunity cost. You want to maximise the amount of money you make by spending your time in the most useful manner. The concept of opportunity cost comes from the field of microeconomics so some of you may be familiar with it already. Opportunity cost is just a fancy word for trade-off. When we do one thing we won’t be able to do something else. It is the cost of missing…

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Circle of Competence: Avoid What You Think You Know

Circle of Competence: Avoid What You Think You Know

The concept of circle of competence has been used by the best professional traders for years as a way to focus on only trading in areas they know best. Most people will be familiar with this concept if they’ve ever read any of the shareholder letters of the famed investor Warren Buffett. But the concept applies just as much to trading as it does investing. As traders we all build up our own unique skill sets in the markets. Through…

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