Stock Market Trading is MATH. It’s not Magic!

 

 

Just in case you still can’t figure out why you need to pay attention in math class, this information may help you snap to attention.  Next time you get bored in math class just remember this simple, but powerful equation:

MATH = CASH! 

You’re probably thinking, huh, what??

That’s right, most of what goes on on Wall Street and in the stock markets involves a lot of math – some simple and some not so simple.  Check out this youtube video below:  Trading is Math. It is not Magic! 

 

Another illustration of the equation  MATH = CASH can be found in this very interesting movie Trillion Dollar Bet!

We’re not going to give away the movie’s punchline here, but will quote a few  comments from the movie’s editorial reviews:

… three brilliant economists, Fisher Black, Myron Scholes and Robert Merton, discovered a mathematical breakthrough that revolutionized modern finance. The elegant formula they unleashed upon the world was sparse and deceptively simple, yet it led to the creation of a multi-trillion dollar industry. Their bold ideas earned them a Nobel Prize and attracted the elite of Wall Street.

 

One final illustration of the equation MATH = CASH can be found in a Money Magazine article entitled 3 Simple Equations All Investors Should Know.   In this article journalist Susie Popick writes:

Whether you love to buy and sell stocks or barely understand what’s going on in your retirement account, there’s a good chance you could benefit from learning more about the math behind the stock market.

Here are three fundamental equations that the savviest investors know. Relatively easy to understand, they will help you choose the right stocks and funds and, most important, keep your expectations about future returns grounded in reality.

Note:  Please head on over to Money Magazine to read the rest of Ms. Popick’s article.

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