True story:
Yesterday I was having a cigar perched under an umbrella in the rain - not ideal, but peaceful nonetheless. And out pops a family of birds to feast on the worms that rise to the surface in need of some high quality H2O - little did I know, this would become one of my favourite trading metaphors of all time!
The Rain = Despair/Panic
The Birds = Conscious Investors
The Worms = Unconscious Investors
Look at it like this, when there is despair in the markets and most Bambi traders are caught offside - they panic - they lose hope, and despair grips their fragile little psyche like a 1 year old baby gripping a blueberry for the first time.
They begin to pop to the surface and "show their hands" - which is completely unconscious emotional behaviour not rooted in reality, experience or indeed even their very own strategy.
They're ripe to be plucked from the market.
That's where the Bird (conscious Investor) comes in - after patiently waiting for hours, days, weeks or even months, the conscious investor enters as the worm exits their positions (either manually or automatically by way of stop loss).
The bird claims the prize...
...and the worm never learns.
This cycle is as old as the markets themselves and is just a constant reminder that, as Warren Buffet once said;
"The stock market is a device for transferring money from the impatient to the patient."
From the unconscious to the conscious.
From the worm to the bird.
From the amateur to the pro.
This is trading.
The most patient trader who can abstain from emotional and physiological urges gets to observe more data from the market, thus giving him a higher level of certainty to act on said data - and when it's time to act, fear is nonexistent in his mind.
Understand?
See you in the next episode Ninjas!
Yesterday I was having a cigar perched under an umbrella in the rain - not ideal, but peaceful nonetheless. And out pops a family of birds to feast on the worms that rise to the surface in need of some high quality H2O - little did I know, this would become one of my favourite trading metaphors of all time!
The Rain = Despair/Panic
The Birds = Conscious Investors
The Worms = Unconscious Investors
Look at it like this, when there is despair in the markets and most Bambi traders are caught offside - they panic - they lose hope, and despair grips their fragile little psyche like a 1 year old baby gripping a blueberry for the first time.
They begin to pop to the surface and "show their hands" - which is completely unconscious emotional behaviour not rooted in reality, experience or indeed even their very own strategy.
They're ripe to be plucked from the market.
That's where the Bird (conscious Investor) comes in - after patiently waiting for hours, days, weeks or even months, the conscious investor enters as the worm exits their positions (either manually or automatically by way of stop loss).
The bird claims the prize...
...and the worm never learns.
This cycle is as old as the markets themselves and is just a constant reminder that, as Warren Buffet once said;
"The stock market is a device for transferring money from the impatient to the patient."
From the unconscious to the conscious.
From the worm to the bird.
From the amateur to the pro.
This is trading.
The most patient trader who can abstain from emotional and physiological urges gets to observe more data from the market, thus giving him a higher level of certainty to act on said data - and when it's time to act, fear is nonexistent in his mind.
Understand?
See you in the next episode Ninjas!