Preparing like an Athlete
Confessions Of A Market Maker co-host Ray continues his Trading Essays Series
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I believe I was fortunate in being an athlete growing up in respects to preparing me to become a trader. I think akin to soldiers and the preparation they undergo: becoming a high-level athlete, trader or any activity that is performance based requires a discipline lifestyle. As the adage goes “discipline is freedom”. Yea, you have the outliers who reach pinnacle heights off of shear talent alone, but studying outliers isn’t all that beneficial. Outliers by definition are truly rare and the probabilities you’re one isn’t on your side. Besides, I believe the best of the best are the combination of talent plus the hardest of workers and live a disciplined lifestyle. In this article I’ll discuss how we can take the model athletes use to prepare for gameday and adopt it for ourselves to be operating at our max potential for the opening bell.
One of the most important parts of any performance-based activity is review. Athletes call it film study, we as traders call it trade review. I suspect this is one of many areas that separates a pro from an amateur. There have been many stories of athletes that flamed out of their respected leagues due to laziness in this area and many who punched above their weight because of their dedication to self-review. Now, trading has its own nuances, but I believe athletes and how they prepare themselves for the season and gameday isn’t so different. They not only study film for self-critique, but equally important, to study the opponent. To take it even a step further, coaches and organizations are using analytics to help aid decision-making, giving a mathematical lens to strategical options. We as traders review our trades very carefully and study our “opponent” as well- the market. As a coach or a player would use analytics, we as a trader can back-test or look over relevant market data to help aid our market approach.
As an avid football fan, I think of the likes of Peyton Manning and to an even greater extent Tom Brady; I emphasize Brady as it is well known that he wasn’t highly touted coming out of college. No metrics would have pointed to him going on to become the most decorated QB of all time. Now perhaps his skill set was overlooked, his drive and intelligence not accounted for, but what is evident from his historically long career is his study and preparation. His knowledge of not only his skill set and what he could and could not do on the field, but he’s recognized for knowing an opponent’s defense so well; Peyton Manning also legendary in this area as its said he was like having a coach out on the field. This is what you see out of all great QB’s. You can be a great talent, but talent only takes you so far. In trading, which is highly competitive, you need every edge you can get. Be on the look out for the next article where I take a deeper dive into the intricates of self-review and trade review as it applies to trading specifically.
The physical preparation should be evident for an athlete, but for some people, this fact is missed on for a trader. Physical well-being is something we all should highly regard- physical and mental wellbeing are correlated but perhaps it isn’t obvious to some. Performance experts would back up this statement without a shred of a doubt. Better physical and internal health equals better brain health; now for nothing our brains reside inside our bodies. Exercise, nutrition and prioritizing good sleep will be crucial elements in an attempt to optimize your performance. Not saying you need to necessarily train like a pro athlete- though not a bad idea in my opinion- but you need to make time out of your day and week to get some exercise. It is vital to your success and longevity as a trader. Other than the actual physical training, this section wouldn’t be complete without the mention of nutrition and sleep- equally important components to the physical health equation. There is plenty of research and experts who speak to these areas, so I won’t drone on, but I want to note something specifically to trading and sleep. Decision making experts have done studies on people who are sleep deprived and how it affects decision making: you don’t perceive risk the same as when properly rest. You perceive situations as less risky and are prone to taking more chances. Clearly a dangerous proposition for a trader. If you think upon the times you’ve traded on little nights rest, I believe this will resonate.
The last correlation I’d make with athletics and trading is determination and sheer will. I use to snicker at phrases in sports such as “you got to have the will to win”, “he won that battle because he wanted it more”. There is something to be said for having the “will to win”, though I think that is almost a bare minimum to compete at the highest of levels. Point being, you must be extremely determined to succeed at trading; it’s a tough endeavor. It’s an activity where most of the time you’re NOT going to feel good. You lost a trade; didn’t let it run long enough; watched the trade go green to red; got stopped out of the trade to just watch it run immediately afterwards. Trading is going to conjure up a lot more negative feelings than good ones and even on your winning trades and green days! Theres always a lingering sense you could have always done something better or traded perfectly. Since trading more often than not is going to leave you with a unpleasant feeling, you have to really want to succeed in your attempt to become profitable, and if you are, you want the will to continue to push yourself further to see how far you can take it- or perhaps your fine where you’re at profit wise and that’s OK. Your determination will help you push through the difficulties that inevitably arise. Just to note, determination is not attachment. There is a sharp distinction between determination and attachment, though the line can be thin. Attaching your self-worth and identity to trading is fatal. Attachment is what leaves you prone to negative emotional flare ups when things don’t go your way. Determination is dedication to the craft, the love of it and the self-transformation that comes with.
Hope everyone enjoyed this article. As always, feel free to reach out to me on twitter- discord if you’re a member of the room. Good luck in your trading.
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-Cannoli Fingers (aka AllxDayxRayx)