Cross-over lessons for trading

September 25, 2006

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John Forman - The Essentials of Trading author

Are you aware that I coach competitive collegiate volleyball? If not you are now!

This time of year is when the NCAA season runs for the women. As you can imagine, it’s a hectic time, with training and matches and travel. I have sacrificed my autumns to volleyball for the last nine years now (and a considerable number of other seasons of the year for even longer than that), but gladly so.

I love coaching. Through it I have had the opportunity to go beyond just teaching - and in that I mean the basic sharing information. Coaching involves motivation and the sharing of broader lessons. Those who have not been involved in athletics may not realize the value of what is learned beyond one’s sport, but they are some great life lessons.

Here’s an example.

The team I am coaching this year has more talent and experience than any I have ever work with, even those which were champions. That, though, is not enough. Championships are won, not given based on merit.

One of the attributes of a good volleyball player is the ability to forget about her errors and move on to the next play. Volleyball is a sport based on mistakes. It is very easy for a player - and a team - to get down on themselves. The result can be a nasty downward spiral in performance.

That sound familiar?

The exact same thing happens to traders. Losing trades can be demoralizing. Trading success can be predicated on how effectively one deals with losing, just as success in volleyball can be defined by how one rebounds from errors.

One of the things we coaches do to help our athletes become more resilient in the face of adversity is to put them in situations where they are likely to struggle, and they know it, but where the results matter little.

The team I coach is mid-level in Division I. We are not big enough or strong enough to really compete with the nation’s top teams, but that doesn’t stop us from playing them. This season alone the team has faced four teams likely to finish the year in or near the Top 25 in the polls, and one or two others who rank significantly higher than us.

Now that obviously seems like a recipe for losing a lot of matches. Fair comment, but we use those matches to prepare us for our conference play, which is the only thing that really matters. The players (and the team as a whole) develop the ability to handle adversity so that when it comes along later - as it always does - they can overcome it. Moreover, when they do well against very strong teams (which they have done this year), even in a losing effort, it creates a confidence that will carry forward later.

I have long been a proponent of getting in to live trading as soon as possible for the exact same reasons. A new trader who can take active part in the markets, but using only a small amount of money, will learn extremely valuable lessons for when they trade meaningfully later on.

This is just one of the observations I have made over the years in comparing athletics and trading - and by extension coaching sports vs. markets.

At the end of this season I will be resigning my volleyball position so that I can better focus on trading education, my other passion. In particular, I look forward to taking the Essentials of Trading Club in a much more aggressive direction.

Already, members of the Club get immediate free access to a growing collection of valuable trading educational materials. And what isn’t free is provided at a huge discount.

In ramping up the Club to a new level, though, I am going to have to up the membership fee. I want, however, to give you the opportunity to join now at a significant discount. Learn more now by going to:

http://www.theessentialsoftrading.com/trading-club

Best wishes in your trading.

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