It just occurred to me that trading and scuba diving have a lot in common. I was thinking about how traders must follow their plan while in the midst of a trade and realized that’s what I do when diving, especially deep diving which is my favorite sport.
When I’m on a dive boat, planning to get in the water, I gather as much information as I can about the ocean beneath me. I refer to marine charts, dive guides and anyone in my group who’s been to this area before. Then I make a dive plan, before I jump in the water.
When I’m trading, I gather information, use my charts and consult my system rules then make a trading plan; before I put the trade on.
When I’m at depth, I have to make adjustments for the conditions – which way the current is running, how much visibility we’ve got, if there are any other divers in the water, how my ears feel, what my dive buddy is doing, the creatures we’re sharing the water with and the topography I find. I consult my instruments, review my plan and then relax and have some fun!
When I’m in a trade, I monitor the situation, looking to see what’s as I expected and what’s different. Is the market trend continuing or has it reversed? I take a look at my plan and follow my system’s signals (which is also a lot of fun for me).
When you’re a couple hundred feet under the ocean, you’ve got to trust your gauges. You know, based on your training, that the pressure impedes your decision making ability so you train yourself to follow your dive plan even while you respond to unexpected events.
Trading’s the same; you’ve got to trust your system and the signals it gives you. You recognize the emotions of fear and greed will cloud your judgment and so you must follow your map while assessing the territory and how it looks compared to what your advance planning prepared you for.
One of the things I like most about deep diving is the encounters with big fish, rays and whales. These guys weigh hundreds, even thousands of pounds and can kill you with a flip of their tail. Make the wrong move and you’re dead meat. Not because they’re out to get you but because you didn’t have enough respect for the big fish.
Individuals trading their own accounts are never going to be the big fish in the markets. Consequently, we watch and emulate certain behaviors the hedge fund guys and Mutual Fund managers do and guard ourselves from any sudden moves they make (and yes, sometimes they are out to “get” you or at least your stops).
The other cool thing is this is often blue water diving meaning there’s no reef or ocean bottom to see. It’s easy to get disoriented and if you don’t check and believe your instruments and dive the plan, you can make the wrong decision under pressure and kill yourself. Trading isn’t usually a life-or-death situation but you do venture into unique situations where you’ve got to have confidence in your system and signals. Making a wrong decision under pressure in the markets can cost you your trading account.
At the end of the dive, when I climb back on board the boat, I’m tired but excited. It’s a great time to recount the adventure, jotting down key elements in my dive log so when I encounter the same type of dive or return to this spot, I’ll be even better prepared.
For those same reasons, I like to keep a trading journal. Keeping a log of what happened, what I did and why helps me constantly improve my trading and document my growth.
So, if you’re interested in deep diving I suggest you seek some professional training and realize you’ll need to set aside some significant amount of time for learning and building your experience– don’t expect to start off diving with the Hammerheads off the Galapagos on your first dive trip. But when you do get there, you’ll know you’ve gone where few have gone before and you’re entitled to feel the thrill of deep diving with the big fish.
We can say the same about our trading. Find a program you can have faith in, follow your instructor’s guidance and build your experience. Give yourself time to grow and stay in the game long enough to experience the thrill of a big trading win.
Helping you retire on time,
P.S – If you did not check out my f.r.e.e mini course yet I encourage you to. The link is in the upper right of my homepage.
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