|
 A young boy, Rudy, and his
elder brother would play outside after school. The elder brother
would ask Rudy to throw small rocks at him and try his best to hit
him.
Of course, Rudy thought his brother was crazy, but no matter how
hard he tried, he just could not hit him. His brother would dodge
left and right, duck up and down. He was simply too quick. Rudy's
elder brother would later become one of the world's greatest boxers
- Muhammad Ali.
As traders, we all do things that keep us from optimal profits.
I learned early in my career to study past patterns of performance.
Successful people, whether they are athletes, celebrities, or
traders, have patterns which if deciphered and followed can lead to
similar results.
As traders we don’t dodge rocks but there are times when we may
want to dodge markets which appear to be moving too fast, or too
erratically, for our own personal trading style. While we want to
trade for profits, we must also remember that the market may throw
trades at us that we need to avoid to protect our capital. At other
times the market will throw gift trades, which we simply take
advantage of.
Reviewing my past trades helps me to understand what I did at
the time to help me become a better trader. What were my thoughts
at the time of analysing the trade? What were my thoughts once the
trade had been placed? How did I deal with the outcome of the
trade?
Ali would study his opponents and their moves to improve his own
fight, outwitting them physically and mentally. Trading is a mental
game. Just working on trying to find the best strategy is not going
to achieve overall success and consistency. There are many
components required for trading success. Having the right frame of
mind and learning to have a winning mindset will help you become a
better trader.
Markets need to be approached with an open mind. Learn to trust
your methods and strategies. Accept that the market is just doing
what it is doing. Learn to think about probabilities. Winners think
about protecting their capital whilst losers think about how much
their next trade will bring in. Each trade is just a
probability.
Like Ali and other professional athletes, practise on improving
your skills. Learn to recognise when to be in the market and when
to be out of it. Learn to think like a professional: they are
usually playing defensive strategies. They only play offensive ones
when the odds are in their favour.
Happy trading!
Tom Hougaard
Please remember spread betting is leveraged
and can result in losses quickly exceeding an initial outlay. It’s
not suitable for everyone and you should make sure you fully
understand the risks involved. If you have any doubt, please seek
independent advice.
|