The nerve to win
As a huge sports fan, the beginning of August was a great time of the year, because two of my favourite sporting events got underway - the English Premier League and the Champions’ League.
First, the EPL finished last season with top four teams having a chance to play in the Champion’s League. And then there was the ever changing position with EPL champions slipping to the near bottom of the log. That’s fascinating and has presented nail-biting moments for all supporters, though I have seen a group of newly-formed Arsenal haters.
Secondly, the masters’ golf tournament is played in the middle of April and as is the case in most of these events, this year’s tournament was as competitive as ever. I’ve always loved competition and find great fun in watching these competitions.
Recently, there was a game between Arsenal and Manchester United, where Arsenal was defeated by a goal to nil. To Manchester United fans, it was like winning the league and I understand why, because they have a physiological advantage over Arsenal. For those who are soccer critics and don’t think with their emotions, the first half belonged to United while the second half mostly belonged to Arsenal. What separated this team was that Arsenal had a negative memory of Old Trafford and that led to nervousness. This is sports, you can’t win everything. The same Manchester United has a weakness and becomes very nervous when playing its neighbour, Manchester City.
This competitiveness can be directly translated into the trading arena, as most successful traders are intense competitors who love to win. However, just like in sports, they know they can’t always win. Traders need to have that competitive spirit, as trading is an exchange of money between those who have a plan to execute with discipline and even those who don’t. Unfortunately, lots of new traders don’t realise this until they’ve lost all their money to their competition. Trading and investments are like sports, particularly soccer .
There are many analogies in trading that we can draw from the game of golf. Trading, as in golf, can be a solitary endeavour (just you and your wits). In both undertakings, the end result is directly attributable to one’s individual efforts. There is no one to blame for poor results other than the practitioner itself. Conversely, a job well done is also because of good planning and execution. We can seek advice from others but at the end of the day, we are the ones to pull the trigger and live with the results.
While watching the match between Arsenal and Manchester United, one commentator said in the end, the players who could hold their nerves would win that match. In other words, the team that kept its cool under extreme pressure would come out victorious.
We’ve seen this often; extremely talented professional players buckle under tremendous pressures that come with a championship setting in golf. They end up missing a short three-foot putt, or a seemingly routine drive into the fairway ends up in the water hazard. All the great champions have this quality; keeping a cool head while everyone around them succumbs to the pressure of the moment. Last Sunday, Arsenal failed to keep its cool in the first half and indeed, it lost to an underperforming team.
This can also be said of great traders; they stay focused and are not deterred when faced with the evitable setbacks that are part of trading. It’s like a great golfer who returns to birdie a hole just after double-bogeying the previous one. It takes the same mental fortitude to bounce back from a string of losses. It also takes mental strength to stay with a trade for a big profit rather than bailing out too soon with a small profit.
Consistency is also one of the hallmarks of a great golfer. In a golf tournament, you have to play well in all the four days, not just one, or two - to win. Similarly, in trading, one has to stay consistent with a proven strategy, day in, day out.
The lesson here is, no matter what you do for a living, if you want to do it great, you have to have the nerve to win. This can mean different things to different people but in its essence, it means taking risk, doing things that most people won’t - being accountable and staying calm when things are not going well.
Not all this can be done alone, some coaching and mentoring can be helpful. Most people don’t realise Tiger Woods — arguably the best in the world to ever play the game — still utilises three coaches. Learning to trade is a skill. As such, it needs to be continuously honed much like a golfer’s. Therefore, for those of you who want to be better traders, a good start would be to get some lessons from a pro, as you would at your golf club when seeking to improve your swing.