Daily Speculations

The Web Site of Victor Niederhoffer & Laurel Kenner

Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter;  a forum for us to use our meager abilities to make the world of specinvestments a better place.

 

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7/14/04
Sports and Markets by James Sogi

Losing is an essential part of trading. That is why sportsmen often make successful traders, for losing is an integral part of sports competition. Just as every trade has a winner and a loser, so every sports contest has a winner and a loser. Sports for young people provides a valuable lesson, the ability to take a loss under stress. In sports, the consequences are low, but the lesson in handling the loss mentally is invaluable for the growth process. The agony of defeat! The top winners not only accept loss, but embrace loss as an integral part if their success.

Take Kelly Slater, 6 time World Champion surfer, arguably the best surfer in history. He lost every single contest in his drive to the 6th world title! He came in second or third in every contest. A Loser! Consistency gave him the total point edge over the other competitors at the end of the year. The NFL teams spend hours studying videos of their defeats to cure their mistakes. They learn the cycles of change, the tactics of the winners.

The top traders are a losers too! There is no trader without loss. Money is always left on the table in every trade. Stops are always hit. Yet undoubtedly the losses are controlled, and are outbalanced by the winners, and results in a net increase in wealth over time. The losing trades are embraced, as lessons to show the methods that work, the methods that fail, to show the changing cycles in a learning adaptive process. The sportsman learns to pick himself up after a loss, dust himself off, train and compete again. The trader must learn to lose consistently, to be a winner.