Analogies and metaphors can be a great learning tool. At first glance, trading and boxing not to have much in common – two guys hitting each other with heavy blows vs. making sophisticated decisions on the financial market – the underlying principles shows many similarities.
1. You can’t avoid to lose
Even if the best boxes have good reflex and is very fast on foot, they will still get beaten many times during his career. It is impossible not to be beaten at all. To trade does not mean that you will lose; It is a part of the game.
It is not possible to avoid losses and they will happen often. It is not even necessary to avoid the losses and try to prove that your decision is a disaster. A professional trader takes his losses and looking straight in front of him. He does not lose his focus and waiting for the next blow.
2. Avoid the most important battles
Recovery is completely normal. But at the same time you must avoid the big shots. You have to be quick. A moment of inattention can mean an end.
You must control your risk all the time and define your worst-case scenario. Use an appropriate positioning, protect your trade with SL and never allow the trade to beat you down.
3. You do not need to go for the knockout
In addition to winning by knockout, you can also win on points. The best boxers know that you need to meet with effectively and landing effective clean punches.
More difficult than it shouldn’t have to be. Regular and well-winnings will be added up.
4. Control your emotions. To step up in the ring = the mental fight
The thoughts moving in the wrong drawing in the case that you deviate from the goal and act emotionally.
As traders, you have no real opponents. It sits between your own ears and control your own mood and condition, and is important to the success of your trading. A loss may cause a downward emotional spiral, where traders lose a lot more than necessary.
Each plan, and the preparation is different because each opportunity is unique. A boxer must first analyze the opponent: find out his strengths, weaknesses, and unique characteristics, in order to then come up with a game plan. He can’t just use the same preparation.
A common mistake among traders is to use a method on different markets and timeframes. Volatility and momentum are changing all the time; different markets move in different ways. Therefore, the traders adapt their trading system every time he enters the trade, and evaluates the market conditions.
6. You need to react
Even if the boxers are preparing a game plan, he is always ready to change your speed. When his opponents behave differently than expected, or shows weakness, he is ready to change his game plan directly.
Traders are too static. As soon as something unexpected happens to change their trading plan (even if you follow their rules) or face financial disaster.
7. Set yourself up
Tyson, Holyfield, or Ali is a name you probably recognize. They worked hard without knowing how their future career would look like; They fought every day.
A trader need to follow a similar path. You can’t just decide yourself to be a winning trader. You will likely go through several accounts, losing money for months and sometimes even years; you have to work 7 days a week, 12 hours a day, without knowing if all your efforts will pay off, but you can never forget your goal.
8. A master
The best boxers are those who have perfected the basics of boxing; The best boxers do not need to develop special techniques or tricks; they are just masters at what really means something.
If you have mastered the basics, you have a chance to succeed. In order to perform an analysis, you must been able to the basics, understand the basic principles of statistics, and variance, have a stable position-sizing and risk management strategy; remember: Trading is not just about new and better indicators.