How the market work?

To do something, the first thing you need to know is how it works. For example, if you want to ride a bicycle, you need to know what its components are and what you need to do with it for it to take you to different places, or in other words, how it works. A bicycle has wheels, handlebars, a chain, pedals, and… To make it work, we need to pedal, which makes the chain rotate, and the chain then turns the wheels, allowing the bicycle to move. We also need to control the handlebars and maintain balance while riding to reach our destination. If any of these are missing, we can’t travel. For example, if we stop pedaling or lose balance.

Above all else, you need the determination to pedal, a body that is ready and suitable for the bicycle, the road conditions, and the environment on the day you are riding. And what if unexpected events occur, such as encountering a red light, a car cutting in front, a pothole, a speed bump, a wet or slippery road, or a vehicle driving against the traffic? And many other things! What is most important to control well: the bicycle, balance, or your mind?

In the money market or the capital market, if we want to stay in it and draw money from it, we need to know how it works, what its mechanisms are, what obstacles there are, and what to do if unexpected events occur. That’s what we need to prepare for. If you are a good driver but don’t wear a seatbelt, and someone crashes into you, what will happen?

It’s the same in the market. Risk management is the most important thing. If things go the wrong way, get out quickly and preserve your principal to wait for the next opportunity.