Let's think about the following question.
How many trades will I make throughout my lifetime?
If you believe you can make an enormous profit from twenty perfect trades and walk away from this business for good, then you probably don't need probabilistic thinking.
But if you reflect on your experience, you'll probably realize that isn't very realistic.
Otherwise, you probably wouldn't be reading this.
Over time, we will make hundreds, perhaps thousands, of trades.
That's a very large number.
Whether we like it or not, we will repeat ourselves.
Trading without probabilistic thinking is therefore not so different from the TV company we talked about earlier, producing 100,000 TVs without preparing for failures despite knowing the failure rate.
Or, more realistically, running a non-standardized TV assembly process without even knowing its failure rate.
And there is another frighteningly large number.
The number of market participants.
This number dwarfs the number of trades above.
Unfortunately, within this huge crowd, a single decision of mine has almost no impact on the market.
So how can I, a single drop of water, navigate the waves of a market that is an ocean far beyond my control?
In the end, what I can control is very small.
My trading method, and the way I repeat it.
So how do I use that small degree of control to create one direction, upward, amid the waves of the market?
Two things are needed.
Reduce the size of the waves,
and keep the drop moving consistently in one direction.
In the next post, I'll explain how we create these two things in investing and trading, as simply as possible.
This is educational writing about trading. It is not investment advice or a recommendation to make any particular trade.