Close  |  JAN 2009

At The Close by Adrienne Toghraie

At The Close by Adrienne Toghraie When is it too soon or too late? How much is too much or not enough? Some of the most important questions that a trader must address have to do with getting the timing and the amount just right. There is an art to finding the right balance in life between too early and too late, and between too little and too much. For a trader, finding the right point to enter and exit a trade is critical to making money and limiting loss. Exercising the right amount of risk is also critical. Too much risk brings the possibility of losing too much money to keep you in the game. Taking on too little risk means that you will severely limit the amount of money you can make as a trader. So how do you find that point of balance? POINT (T) ON THE LAFFER CURVE If you have studied economics, you are probably familiar with the Laffer curve. For everyone else, the Laffer curve shows the relationship between taxes and tax revenue. As tax rates increase from low levels, people work harder and the government collects more taxes, but after a certain point (T), as tax rates continue to increase, people stop working harder and the revenues drop off. So governments want to find that point on the curve that simultaneously maximizes effort and tax receipts.

by Adrienne Laris Toghraie