Surfer vs Gambler

surfer-The ocean and the markets have many things in common. For one, they are both a dynamic event that is constantly in flux, and from the average traders point of view, beyond any possibility of manipulation. It is what it is; it will go where it goes.


This analogy works if we consider the mindset of a surfer. He knows that he is in a passive relationship to the sea, yet he also knows that he can develop a skill in relationship to its ever changing movements in order to reward himself. The surfer cannot demand anything from the sea, he can only wait for it to present him with an opportunity and engage it when the time is right. To go in during a total calm or a tsunami would be both equally foolish; he must wait for the conditions to be right.


From this point of view too, it would be absurd for the surfer to take anything the sea does to him personally (such as a wipe out, or even a shark attack). Just by entering the seas domain, he has accepted all responsibility for any good or bad outcomes that come his way.


The sea does not know the surfer exists – it is absolutely neutral towards him. Just so with the market. Even though sailors have been known to try to personify it (often as a “she” and in particular as a cruel mistress) we know that whilst this idea is romantic, it is not rational.


This situation is identical for the trader and the market. Consider this – it is as irrational for the trader to have an emotional reaction of anger towards the market as it would be for a surfer to have towards a wave that throws him off his board.


Now lets compare this mindset to that of the gambler. Whats the difference? The gambler feels as though his power lies in his ability to gamble when ever he wishes. There is an illusion of being in control of the situation. The gambler can pull the trigger at will, and he feels as though every pull of the trigger has a possibility of bringing reward. THAT is the difference. If we try to define clearly these two mind sets, they come out something like this:


Surfer : “I am in a passive relationship to the sea, I cannot control it – only myself. It is dangerous yet means me no harm. What ever happens to me is my own doing. I must wait for conditions to be right, and then the sea might present me with an opportunity to reward myself.”


Gambler: “I can play the game at will, and each shot has an equal chance of rewarding me. If this turn fails, it brings me closer to winning the next time. Sooner or later, a massive reward must come. It could be the very next pull of the trigger.”


These mindsets are fundamentally different. One is good for the trader, the other is a disaster in the making.