2. Five Simple Questions

“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”1

—Michael Jordan

A trader must ask five simple questions about every potential trading catalyst or market shock:

Which market(s)?

Which direction?

How much?

How long?

How risky?

A sixth question might also be added: Will the price action in one market affect prices in other markets? Asking the questions is easy. Finding the answers might not be, as the following real-life trading examples show.

Which Market(s)?

Identifying the best trades entails determining which market will have the ...

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