Trading Strategy: Reaction vs. Anticipation

Suddenly, a cockroach flew from somewhere and sat on her. I wondered if this was the cockroach’s response to all the glory that was spoken about it! She started screaming out of fear. With panic stricken face and trembling voice, she started doing jumping, with both her hands desperately trying to get rid of the cockroach. Her reaction was contagious, as everyone in her group got cranky to what was happening. The lady finally managed to push the cockroach to another lady in the group. Now, it was the turn of the other lady in the group to continue the drama. The waiter rushed forward to their rescue. In the relay of throwing, the cockroach next fell upon the waiter. The waiter stood firm, composed himself and observed the behavior of the cockroach on his shirt. When he was confident enough,he grabbed and threw it out with his fingers.

Sipping my coffee and watching the amusement, the antenna of my mind picked up a few thoughts and started wondering, was the cockroach responsible for their histrionic behavior? If so, then why was the waiter not disturbed? He handled it near to perfection, without any chaos. It is not the cockroach, but the inability of the ladies to handle the disturbance caused by the cockroach that disturbed the ladies.

I realized even in Traders case then , it is not the shouting of my father or my boss that disturbs me, but its my inability to handle the disturbances caused by their shouting that disturbs me.

It’s not the traffic jams on the road that disturbs me, but my inability to handle the disturbance caused by the traffic jam that disturbs me.

It’s not the market volatility or loss in market disturbs me o, but my inability to plan my trade, inability to visualize my trade which disturbs me

More than the problem, it’s my reaction to the problem that hurts me.

Lessons learnt from the story:

I understood, I should not react in life. I should always respond.

The women reacted, whereas the waiter responded.

In general, market players have been trained to think they should engage in constantly predicting the future. There is something magical about making grand calls. The folks who were lucky enough to predict major market tops have an almost mythical status, although in most cases it was just dumb luck rather than skill that led to their timing.

Reactions are always instinctive whereas responses are always intellectual and comes with lot of Practice and developing trust on your skills .

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