What Forex Traders Can Learn From Top Athletes
There's a great deal forex traders can learn from top athletes and their coaches. That may seem strange as sports are all about physical performance whilst trading involves sitting in front of computer judging when to enter and exit trades. Clicking a mouse hardly qualifies as physically strenuous. However, what both activities have in common is that they are both very psychological. From that perspective there's a lot traders have in common with long distance runners – it's a lonely and arduous activity from a psychological point of view.
Actually, top athletes pay a great deal of attention to their mental and emotional state – they know it can mean the difference between first and second place in a competition. Steve Backley, a former British world champion javelin thrower, cited his state of mind as a major determinant on his performance and devised strategies to help him cope with stress and to win. Many leading sports coaches strongly believe that when physical skills are evenly matched, as they often are in top level competitions, the competitor with the greatest control over their mind and emotions is the most likely to win.
In the gladiatorial arena of forex trading this also holds true. Certainly skills and knowledge of the markets are vital, without those any trading enterprise is doomed. But being in the right frame of mind and armed with a trading system with positive expectancy can make those skills shine along with the profits.
Among top athletes mental toughness is seen as a necessity – it helps handle the inevitable set-backs and to endure gruelling training schedules. Mental stamina is also important for successful traders. It helps to cope with those inevitable periods when nothing seems to go right in the markets. Traders who ultimately succeed realise that this is the nature of the beast, they persevere, if necessary revise their trading strategies, reduce the size of their trades, maybe take a brief step back from the markets, but most of all they don't give up.
Top sports coaches try to install in athletes a belief that they can exert control over themselves and turn a bad situation around. There's nothing worse than developing a sense of helplessness. Allied to that they teach athletes to commit to winning and a refusal to give up. Some also encourage athletes to view change as normal rather than stability and that very much applies to forex markets.
Beating the Kenyans is like beating the markets
The former Cuban-American runner and highly successful coach Alberto Salazar who trained numerous stars of the track such as UK Olympic champion Mo Farah has some interesting insights, which can help forex traders. One of his achievements was to instil a belief in European and American long distance runners that their East African opponents were beatable despite having totally dominated these races for such a long time. They're human like everyone else, he argued. Believing one can beat the markets is a crucial first step – if others can do it then so can I. It's a case of having self-belief, but also of being humble enough to respect the market and to always learn.
Next Salazar taught his athletes to focus on gradual improvement, no quick fixes and no magic bullets – reaching the top echelons of the athletic profession doesn't happen overnight – ditto trading. Constant small improvements in skill and performance eventually make the champion. This is an extremely useful analogy for trading. Far too many novices start out with the belief that they can beat the market, make huge profits and that somehow they have an edge over all those experienced and profitable traders. Those unrealistic expectations are unfortunately reinforced by the plethora of get rich quick books and 'gurus' all promising vast easy riches. Unrealistic expectations quickly sap the morale when they're not met and many potentially talented traders give up too early when a string of losses occurs.
Next Salazar observed that the Kenyans ran as a team and helped each other with their training and supported each other. With so many specialised forex Internet forums and with social media it is easier than ever to talk with other traders. Many have formed mutual online support groups to exchange ideas, swap experiences and analyse each others trades. When the going gets tough, being able to link up with other like minded traders can, if nothing else, offer invaluable emotional support.
Nonetheless, like long distance running trading is not a team sport, it is highly individualistic. Each trader has to take responsibility for their own actions, work with a trading style that fits their personality and personally deal with the psychological impact of losses, not to become too despondent, and when successful, not to become hubristic and over-confident.