How does basketball exactly relate to golf and perhaps trading successfully? Well, you’re going to soon find out!
In this article, Michael provides 10 rules for maximizing competitiveness and if you’ve been trading for any period of time, you’ll instantly recognize their value to trading successfully. In fact, here’s my personal take on how Jordan’s rules directly relate to making us all better traders:
Focus on the little things. It is true, if you focus on the little things (finding and exploiting attractive entry points, proper position sizing, sticking to stop loss levels, unbiased chart analysis, etc.) they’ll all add up to contribute to your big picture success and bottom line. When the pressure is on and tension and stress is high, traders must rely on the basic skills they’ve developed through constant practice to make the tough trades. That practice and constant dedication to improve oneself will make a world of difference when opportunities are the most plentiful.
Have total confidence in what you can do. As Michael says “If you have 100 percent confidence that you can pull off a shot, most of the time you will.” I couldn’t agree more. While we all make trades based on imperfect information and conflicting data, at all times we must be 100% confident in the trades we make. There’s a good reason why so many traders say you must always “trade to win” instead of “trading not to lose.” There’s a huge difference. In addition, the only way to have confidence you really need in the trades you make is to actually do the work the leads up to making those trades in the first place.
Don’t think about the prize; think about the work. Novice traders focus on how much money they stand to gain or lose from trading while great traders focus simply on the process of trading well and to their best of their ability. That’s a key difference. Sometimes a good trader will be very unhappy even if they make money in a particular trade because they didn’t trade it well or the trade violated their strategy and they got away with it whereas a novice trader will simply focus on the profits or losses no matter how and why they earned them. Money, and the rewards the flow from successful trading, are a low priority to the successful trader – instead trading well and trading even better the next time are the two top priorities.
Keep it simple. All traders go through the process of thinking that the more complex and sophisticated the strategy the more successful it will be. The truth is that simple works. Simple gets the job done. The key, as Jordan says, is to “stick to things you know you are capable of doing and focus your attention on those.”
Control your emotions until the round is over. This is a good one and something we can all learn from both when making good and bad trades. If you can delay your emotional celebrations or harsh criticisms after the trading day (or trading week) is over, that’s to your own advantage. Far too often traders fall trap to what I call “trading on tilt” where they try to wreak revenge on the market by making more bad trades after the first bad one to get back to even. In addition, if you’re doing really well and making great trades, put your guard up. It is true that the times we are most vulnerable to catastrophic losses usually follow the times we’ve experienced a very hot hand and have convinced ourselves that everything we touch turns to gold.
Use tough losses for motivation. Every top trader I know has used bad trades as motivation to get better and improve their skills. The losers, on the other hand, don’t use tough losses for motivation but instead either 1) look for excuses to justify those bad trades or, 2) even worse they look for someone else to blame for their mistakes. Turning negatives into positives in this game is vital and using bad trades as motivation to work hard is something you’ll find in every successful trader.
Competitors always want to have something riding on the outcome. Although I’m a big advocate of using simulated “paper trade” programs to develop basic skills and to test various strategies, the truth is that unless we have something of value (money, pride, honor) resting on our hard work and effort, most of us simply won’t perform to the best our ability. As Jordan says, you should play “for whatever makes you nervous.” By doing so, you’ll have a enough motivation that will drive you toward success. By the way, one great way to do this is to work with other traders who are smarter and more skilled than you are and compare your results (even simulated trading portfolio results) with them on a weekly/monthly basis. In fact, this is something we do in my mentorship group. By doing that, your competitive nature will force you to learn, adjust, and ultimately improve or die trying.
Nervousness is not a bad thing. We all have to make tough trades and there are some markets that will really test your nerves and positions. The key, as Jordan advises, is to “accept it and stick to your routine when the pressure is on.” When markets go crazy, most traders will quickly abandon their daily routine. They start watching more TV, they worker longer hours, they eat more, they don’t sleep well, etc. Most of the time they don’t even realize it until the losses start rolling in. First, recognize that you’re under stress and then make every effort to stick to your routine and/or adopt healthy coping strategies like working out more often at the gym when your level of stress is high. As traders, this is so important to follow because market conditions can change in a New York minute and good positions can rolll over and move against you in a blink of an eye.
Be competitive like Tiger. Ask yourself this question – are you willing right now to do anything and everything in your power to beat the other person on the other side of the trade? If not, you’re in the wrong profession and you shouldn’t be trading. Losers look for easy short-cuts (advice, hot tips, etc.) while winners won’t hesitate to do everything and anything in their power to gain the upper hand over the herd in every trade they make. As they saying goes – winners do things that losers simply aren’t willing to do. So are you up to the challenge? As Jordan himself once said “Some people want it to happen, some wish it would happen, others make it happen.”
Jordan’s advice here is sound and its application to trading is helpful. I hope the sharing of these words of wisdom with you are helpful in your quest to become better at whatever you do.