Strike Zone
Hi!
I wanted to share this post about similarities between baseball and investing/trading. Gentleman on the left side of the
picture is Ted Williams, the legendary Red Sox left fielder. He batted .406 back in 1941 (since then he has been last player to bat above .400).
I am from Europe and baseball is not popular here but it is a good sport to compare with investing because it is very statistically based game
(among other similar traits).
Gentleman on the right side of the picture is Warren Buffett, legendary investor. He has quite good 'batting' average over his investment career
and it's monetary result can be counted in tens of billions of dollars.
In my opinion these pictures above describe pretty well how investor/trader should approach markets:
1) It is very important to have patience and discipline. These traits are needed to separate real opportunities from fake ones.
2) Investor/trader should know what is his 'Strike Zone'. Nowadays there are so many different asset classes and instruments to trade.
It is quite hard to trade them all efficiently. Finding out what suits you takes time and practice (assets, timeframes, trading styles etc.)
For example I have found out that I like to trade stock market openings with 1-minute chart, but with Crypto markets my preferred timeframe is daily/weekly.
Few times in my trading career I have sold out my portfolio (here I am talking about long-term holdings) and then started to rebuild it again.
At first it was quite stressful because I felt that I was always rushing and did not had enough patience. To help myself I made a little modification
out of that picture presented before (see below):
Financial markets are moving mechanisms that constantly change. Market throws every day different situations and emotions in front of you.
Patience and discipline is needed to filter out 'false promises'. Knowing your 'Strike Zone' increases your changes to 'swing' with higher percentage.
Yes - higher percentage - with trading losses are part of the business (unless you are some High Frequency Trading Firm that has maybe 1 losing day in several years).
Keep in mind: Ted Williams achieved batting over .400 - it means that for every 10 bats, he missed 6 times. He was still a great player.
This picture helped me to visualize markets and develop patience and discipline. Probably your 'Strike Zone' is different than mine as all traders are different in some way.
And of course 'Strike Zone' can change in time. As markets evolve in time, we as traders and humans evolve as well :)
Now that year starts to end it is good time to look back and analyse, how was your 'hitting'? But more importantly - how would you like to 'hit' next year :)
Feel free to get discussion going in comments about your thoughts.
Thank you.
Merry Xmas and & Happy New Year :)
I wanted to share this post about similarities between baseball and investing/trading. Gentleman on the left side of the
picture is Ted Williams, the legendary Red Sox left fielder. He batted .406 back in 1941 (since then he has been last player to bat above .400).
I am from Europe and baseball is not popular here but it is a good sport to compare with investing because it is very statistically based game
(among other similar traits).
Gentleman on the right side of the picture is Warren Buffett, legendary investor. He has quite good 'batting' average over his investment career
and it's monetary result can be counted in tens of billions of dollars.
In my opinion these pictures above describe pretty well how investor/trader should approach markets:
1) It is very important to have patience and discipline. These traits are needed to separate real opportunities from fake ones.
2) Investor/trader should know what is his 'Strike Zone'. Nowadays there are so many different asset classes and instruments to trade.
It is quite hard to trade them all efficiently. Finding out what suits you takes time and practice (assets, timeframes, trading styles etc.)
For example I have found out that I like to trade stock market openings with 1-minute chart, but with Crypto markets my preferred timeframe is daily/weekly.
Few times in my trading career I have sold out my portfolio (here I am talking about long-term holdings) and then started to rebuild it again.
At first it was quite stressful because I felt that I was always rushing and did not had enough patience. To help myself I made a little modification
out of that picture presented before (see below):
Financial markets are moving mechanisms that constantly change. Market throws every day different situations and emotions in front of you.
Patience and discipline is needed to filter out 'false promises'. Knowing your 'Strike Zone' increases your changes to 'swing' with higher percentage.
Yes - higher percentage - with trading losses are part of the business (unless you are some High Frequency Trading Firm that has maybe 1 losing day in several years).
Keep in mind: Ted Williams achieved batting over .400 - it means that for every 10 bats, he missed 6 times. He was still a great player.
This picture helped me to visualize markets and develop patience and discipline. Probably your 'Strike Zone' is different than mine as all traders are different in some way.
And of course 'Strike Zone' can change in time. As markets evolve in time, we as traders and humans evolve as well :)
Now that year starts to end it is good time to look back and analyse, how was your 'hitting'? But more importantly - how would you like to 'hit' next year :)
Feel free to get discussion going in comments about your thoughts.
Thank you.
Merry Xmas and & Happy New Year :)
כתב ויתור
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