Trading is a performance game and there are a lot of similarities between trading and sports. Sports,like Tennis/Cricket/Soccer offers a variety of concepts that can be translated to trading. The mentality, the thought process and the preparation that comes with professional sports illustrates nicely how a trader should approach trading and what to do in order to increase trading performance.
What you don’t see makes all the difference
A boxing match usually does not last for more than 1 hour,Tennis Match 3-4 Hours and soccer matches go for 90 minutes. The audience admire the skills of professional athletes who make it look so easy and effortless.As Wimbeldon is going on, many people wonder How Roger Feeder is able to play such a phenomenal tennis at 33. What the spectators don’t get to see is the work that is required to make it look so easy. Professional athletes start their careers when they are still kids and by the time the public gets to see them, they have been practicing daily for years or decades.
“If you fail to prepare, you’re prepared to fail.”– Mark Spitz
Furthermore, professional athletes never stop working on their skills. Each and every day they practice the fundamental concepts in their fields in order to make them even more effectively and efficiently. But professional athletes, not only work on their physical skills, but they also do mental training to create a complete athlete.The only difference between a normal player and Champion is his/her mental skills. Same thing can be applied to trading, great traders are mentally very strong and series of looses do not make them weak emotionally and they get back on their feet and make big.
Is your trading routine and the preparation professional? Be honest with yourself and judge how you approach trading.
Every opponent is different
In sports, every match is different because the opponent changes and each opponent comes with a different skill set, attitude and way of playing. Therefore, in order to maximize your chances of winning, you have to adapt to your specific opponent. You can’t just use the same strategy for every match and expect to win using shortcuts.
In trading, every instrument, timeframe and market has different characteristics. Every day is different some days we have gaps /trending/choppy/ high volatile /low volatile so as a trader you need to develop skills in identifying different days and have strategy to play with different days.
To increase your trading performance, monitor closely if certain setups and trading strategies consistently lose on specific market conditions. The way you set stop loss and take profit orders has to change, based on different market conditions as well. If you want to become a professional trader it is not enough to pick a trading strategy and blindly applying it to different conditions.
Over the course of a season, losing a single game is not important
Over the course of a season, teams play 10, 20 or 30 different matches and although no one likes to lose, professional athletes know that they don’t have to win every single match in order to be number 1 at the end of a season. Like IPL Mumbai Indians were at Bottom of POint table at one point of time but emerged as Winner by the end of season. .
You can easily see that a hit rate of ‘only’ 50% is not even necessary to be the #1 in any field. Focusing on winrate alone is an amateur mistake because it is absolutely useless when analyzed by itself.
“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.” – Michael Jordan
You can be a profitable trader and generate a great income from your trading with a winrate of less than 50%. Whether you can make money as a trader or not depends on a variety of factors, for example, how you use the concept of risk reward ratio, your risk and money management and your mindset – just to name a few.