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Trading is a business, but to me, it is also a game. There are winners, there are losers, and there are spectators.
Last Saturday I was asked to help out a friend’s cricket team which didn’t have enough players for a match. I love cricket, but I hadn’t played in five years, so you might say I was unfit and a little bit “out of touch.”
I showed up to the ground feeling more than a few nerves. After all, opening the batting can be tough and even a little dangerous at the best of times, let alone when you haven’t picked up a cricket bat for five years!
Our team dismissed the opposition for a relatively small total, so at least when I went out to bat, we weren’t chasing a lot of runs. The strong wind was causing the ball to swing wildly, so batting wasn’t easy, but I figured I would hang around in a support role and let the other batsmen score the runs. I was sure I would have enough trouble just staying at the crease.
I decided to approach my innings just like I approach my trading – with a plan!
I knew that as a batsman my three best shots were drives, leg glances, and blocks. These are low risk shots, not going to score runs quickly, but not likely to get you out either. There are other, more glamorous shots, like hook shots and pull shots, but these were higher risk, so I decided not to use them in this innings.
This is just like trading. Sure, picking an exact top or bottom can make you look like a hero, but it has also caused some people to “fall in love with their forecasts” and end up wiping out their trading accounts. In cricket, the history books might show a batsman scored 100 runs, but nobody asks if the batsman played stylish cricket or clever cricket or boring cricket. The results simply show 100 runs.
If you make a million dollars from trading, do you care whether you made it by calling exact tops and bottoms, or by trading the swing charts?
In the game, my plan was to accumulate runs and slowly work my way into some kind of rhythm, while assisting the other batsmen.
Our team’s top three batsmen fell with our score only on six runs and all of a sudden what initially looked like a small total to chase was now looking a lot more difficult. I stuck to my plan, but at the same time, I realized that I could no longer depend on others to score the runs for the team. Even though I was out of form, I realized I needed to step up and take control of the situation.
I changed my mindset from being a “supporting batsman” to being a “responsible batsman.” I wasn’t the captain of the team. I wasn’t even a senior player. But in my mind, all that was required for the team to win was for me to perform. I knew that if I kept my head and weathered the storm, my team would win.
Ball by ball, I patiently stuck to my plan. I let the good balls go, and placed the bad balls into the gaps. You could say I was playing with a high probability, low risk, low reward “trading plan.”
Occasionally, I “timed” my shots well and they went for four runs. They were the same shots that would previously score me only one run, but sometimes luck just seemed to send the ball through the gaps and out to the boundary.
That’s just like trading. The same setup might work six times out of ten for you, scoring a small win. Twice it might get you a breakeven, and once a loss. The tenth time, it might make you a huge win.
I ended up batting for the whole innings, until we scored the winning runs with six wickets down. Physically, I was exhausted and could hardly walk, but mentally I was pleased with myself, because I had overcome a challenge. I had played a “Captain’s Knock,” even though I wasn’t the captain.
When you are trading, there are no team mates out there to help you. Sure, you can contact a Trading Tutor, but ultimately your success or failure rests with you. Don’t see it as something intimidating – see it as a challenge to bring out the best in you.
Whether you are batting or trading, set yourself a mental challenge of performing to the best of your ability. As David Bowden says, “make each trade your personal best.”
Work out the trades that are likely to return profits to you, and not likely to “get you out”. In cricket, the saying goes that if you stay at the crease long enough, the runs will come.
The same goes in trading. If you protect your capital and stay in the game long enough, your profits will come.
Be Prepared!
Mathew Barnes
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