Article Defense Wins

[T2W Bot]

Why do people trade?   For most, their primary motivation is to make money.  Sure, there are secondary reasons however they all stem from the undeniable urge to make money. 
Ironically, this would have to be the main reason why people fail.  With most of our trading decisions, it is only natural that we focus on making money because this is the main reason we consider trading in the first place.
Whilst I concede the idea of making money is important, it is not as important as protecting the money that you have to trade with.  I think Paul Tudor Jones says it best when he said, ?Don?t focus on making money, focus on protecting what you have.?
Stephen Waugh is a former Australian cricketer and was the captain of the Australian Test Cricket Team from 1999 to 2004.  He is credited with a quote that can be applied to trading.  He said the best advice he was ever given about batting was to ?Not get out!?  That was it ? in other words, how can you score runs if you have been dismissed. ...

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[Physicsman]

To add one further analogy from US sports to trading - from the world of (gridiron) football, the well known aphorism: "Offense wins games, but defense wins championships!"

In terms of trading, offense will get you some winning trades (winning games), but it is your defense that will produce a profitable and hence, winning trading business in the long run (the championship).

 

[Spam Man]

Many thanks for that wonderful analogy my scientifically-minded friend. I would like to crowbar in one of my own from the world of UK sports - the well known phrase "Don't forget to warm-up before kick-off my son!".

In terms of trading, if you fail to warm-up (turn on your computer) prior to the referee blowing the whistle (the market opening) you may well suffer a career-threatening injury (go back to bed for the day, or possibly down the pub).

 

[Physicsman]

Thank you very kindly Mister ham in a can! I used to play some GB sports - sounds like you are referencing soccer, but not sure that I ever heard that one before as an aphorism. However, it is good sound advice!

 

[Spam Man]

I have many more. From the unfathomable world of cricket, I bring you : "Get out of that pedalo, you p*ssed fool, you're fired!".

In trading terms, if you get drunk (get drunk) and head off to sea in a pedalo (start placing trades at random) then you may well get fired from your job as vice-captain of England (blow your account).

 

[peto]

I have many more. From the unfathomable world of cricket, I bring you : "Get out of that pedalo, you p*ssed fool, you're fired!".

In trading terms, if you get drunk (get drunk) and head off to sea in a pedalo (start placing trades at random) then you may well get fired from your job as vice-captain of England (blow your account).

Very deep Spam Man, many thanks. Sea = waves me thinks, riding on the undulating market, sharks bobbing just below the surface. 'Blow' reminds us of the wind filling the sails of our little boat (account), the apparent anomaly of a pedalo not possessing sails just heightens the dichotomy between the own-account trader and the institutional one with all the connections and 'sails' she may have.
Clever choice of words too in "you're fired" with all the dual symbolism of kilns and potteries, truly the markets are a seething hot morass which serves to meld and set the fortunes of all its participants. And of course fired, shot, targets aimed at and missed...sporting metaphor indeed.

 

[nine]

OK then. I won't try to be amusing.

IMHO the article has some merit. One element of defence is waiting until you get the best possible opportunities. I found that cutting out "ok opportunities" and just defending my capital until they occurred (waiting, for a daytrader) really smoothed my equity and emotional curves.

If a newbie can learn to wait until really clean setups come along they will save themselves a lot of pain.