How important is a knowledge of maths?

Hey

As title: How important is a knowledge of maths in forex trading?

(not very basic maths i mean more advanced mathematics)

Thanks

even if you can't add most platforms have colors green and red...

No i don't think you need a degree in quantum physics to be a successful forex trader.

Lol i thought so, due to the computers there must be very little use of maths other than basic stuff, right?

Cheers

price action, patterns, ect.

Knowledge in math can help you answer certain questions much quicker than trial and error. Not crazy math, but I would say if you use any indicators, know how they are calculated and how that can contribute to its strengths and weaknesses. You will also understand the relevance of picking certain settings over others. Thats just my take on it.

You need to know basic statistics. If you don't, then learn them. Most people don't know them...the first world is fast becoming innumerate.

I use addition and subtraction only. Logic is my key.

Be confident with math because your going to be put into positions when you need to make a fast trading decision. I have a strong math background but I always have a calculator within reach.

I was taking an algebra class many moons ago (don't ask) and the first lesson was that algebra can be difficult but most mistakes made in algebra is the basic 1 + 1 = 2 and so on. It did not make sense until I got back my test results and bam, it was the simple math that caused the mistakes.

If you don't have a confident math background, don't worry, you will learn it. I remember taking math class and my teacher said that math will be important to your future. She was right too!

Shrewdness and cunning are more important.

The folks who will leave this game licking their wounds are those that cannot admit they were wrong. They will stay in a trade as their Anticipation slowly dwindles down to Expectation through Hope and into Fear.

The folks who have a chance in this game are those that know when & how to admit they were wrong and got into a Bad Trade, Admit it and Get Out.

I'm not suggesting that if you are down 5 pips 5 Minutes after Entry that you were wrong and should get out. That's the study part of the equation.

You might not need to know quantum physics, but you need to know:

1) Algebra
2) Statistics
3) Calculus

My group and I generate indicators that are equivalent to 2nd order derivatives so we can see a change in concavity.

Optimization of Money Management calls for first order derivative.

How slope changes with the movement of price, is first order derivative.

If you do any options, then you have:

Vega ~ dOptionPrice/dVolatility
Delta ~ dOptionPrice/dUnderlining
Gamma ~ dDelta/dUnderlining which is (d^2OptionPrice/dUnderlining^2)
Theta ~ dOptionPrice/dTime

Which is to say, most of the trading is going to require the knowledge of at least basic calculus in order to understand what is going on.

Those who tell you, that you don't need to know higher order math in order to succeed:

1) Don't know any themselves so what they don't know they assume they don't need

OR

2) Are lying to you

OR

3) Love to do it the hard way. Yes I can calculate things by trial and error, and "technically" I can use trigonometric functions to calculate everything I do in calculus; the problem isn't the "math" portion only, but the concept portions. The math can be handled by software, but the concepts, if you never learned what "concavity changes" are, then the trader taking the position opposite from you, has a HUGE advantage over you.

Take a look at the super successful technical traders, they are almost all engineers, not finance majors. There's a reason for that...

Yes, I can get to most of these places by addition and subtraction only, just like I can get from Boston to Los Angeles by stage coach...

Basic math = stage coach, you might get there (eventually) if you get there at all.

Advanced Math = Plane

You can have the stage coach, I'll take the plane...

log(1 - DC)
N = ----------------
log(1 - p)

Just use this simple formula.

.

If you ask me, it depends. Imagine trading like a chess game.
You can play like Kasparov, or you can play like Deep Blue supercomputer
1) Kasparov - experience, instinct more like an art
2) Deep Blue - calculation, calculations, probability, optimal calculation more like science..

You can be successful becoming one of those.

The question is, which one is more suitable for you ?

math works 100% of the time.
strategy, does not.

LTCM used a lot of math and Nobel prize winners - and what did they get for it.

It isnt necessary....You can be successfull without it.

A shiny hardcover titled, "The Rise and Fall of LTCM"?

In retrospect, about 12.5%
MM = 40 %
Psych = 30%
FA = 12.5%
TA = 12.5%
Var = 5 %

IMHO only I'm sure others will have their own opinions.

Those who succeed in 4X find that it is more about development of your intuition, learning market behavior patterns, risk management and percentages in all their applications.

read Trading in the Zone by Mark Douglas

and

Sixth Sense by Laurie Nadel