The Financial Pugilist Part Two

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Boxing is a primal and brutal sport.  It is human conflict boiled down to its most pure essence.  Two men enter a ring and one exits as the winner.  In order to win the boxer must hurt, pummel, and assault his opponent more then he himself is hit.  There are no metaphors, similes, or descriptive comparisons for the imposition of one man’s will over another.  Boxing is a real, literal, and primal example of one man beating another into submission.  And this is what makes boxing a perfect sport to learn from as a trader.

Trading is one of the most simplistic ways of making money.  Every trade ends up as either a profit or a loss.  A trader extracts money from the market or the market deals the trader a loss.  Very simple.  Hit or get hit.  A trader has two choices: take money from the market or have it taken from them.  There are no do-overs, there are no mulligans, there is no way to spin result.  Every trade either makes money or loses money.  Brutally simple.  Hit or get hit.

Here we are on the day of the biggest boxing match of the 21st Century.  So it is time for us, as traders, to learn from boxers.  Yesterday, at the official fight weigh in, the greatest fighter of the era gave a beautiful interview that a trader can learn volumes from.  Floyd Mayweather, love him or hate him, is A) undefeated, 47-0, B) a master of defense in the ring, and C) the highest paid boxer of ALL TIME.  When he speaks, I listen.  Here is the interview:

Q:  “What did you see in Manny Pacquaio’s eyes when you looked at him today; the last time you’ll see him before you are in the ring tomorrow?”
A:  “I can’t really say.  Like I’ve said before, he can look a certain way today and do something totally different tomorrow.  My job is to focus on what I have to do.”

LESSON:  Who cares what the market did yesterday.  Or the week before that.  Or last year.  Tomorrow is a new day, a different day, a day wrought with new challenges and new price action.  The only guarantee in trading is that things will constantly change.  Today’s price will change.  Tomorrow’s action will be different.  The only thing a trader can control is themselves; focus on the job at hand and react to a changing market.

mayweather hit


Q:  “What are your keys to victory for a fight that has so much riding on it?”
A:  “Be smart.  Be Floyd Mayweather.  Make calculated moves.”

Q:  “Nerves, tranquility, what’s going through your mind as this huge fight approaches?”
A:  “I’m not worried at all because I know what I bring to the table.  At the end of the day, no matter what anyone says, I can fight when its all said and done.  And I have a real good DEFENSE so I’m not really worried about anything.”

LESSON:  These answers can be construed as the height of arrogance; what a jerk, he thinks the key to winning is just be himself?  Well, in all reality, Mayweather’s answers are the only true answer for the key to victory.  Be smart.  Make calculated moves.  Have no fear because you, as a trader, know that you can trade.  You the trader know what you bring to the table.  All you have to do is be the absolute best you can be and victory/profit is yours.  CONTROL YOURSELF and you control the fight.  We, as traders, can’t control anything except for ourselves.  But if we focus on showing up as the best trader we can possibly be each day we have already won the fight.  CONTROL YOURSELF.  Make smart decisions.  Calculate each move.  Come in to the day with the confidence that yes, you really can fight.  You have this already won; now all you have to do is react in the correct way.  And of course, always always always always have a good defense ready.  Defend yourself at all times; attack ONLY when it is prudent to do so.  Confidence in yourself, defense against the market’s unpredictable nature, smart and calculated offense.  This strategy wins fights.  This strategy makes a trader profitable.

One last comment on defense.  It is essential to a trader’s success.  A major key to trading success is not getting hit.  Defense leads to a great offense.  Minimize losses and let winners pay in full.  Yes, in that order.  Defense, in the form of small losses, always keeps a trader in the game.  Then offense finishes the fight.  The picture below is the perfect metaphor.  Heat of the fight, Mayweather’s opponent throws a thunderous punch.  The punch misses by just an inch.  But it misses.  And Mayweather is coiled and ready to deliver a massive winning trade/punch.

mayweather defense two

Q:  “Respect for Pacquiao?”
A:  “Respect for any fighter.”

LESSON:  No matter how well we are trading, no matter how many winning days in a row we have experienced, we must, absolutely must, respect the market.  Lose respect for the market for even a second and the market will deliver a crushing blow.  The market is fully capable of doing anything at anytime; we must respect that.  The minute we believe we are bigger, smarter, and more powerful than the market is exactly when the market will deliver a loss that erases a day, week, or even a month worth of profit.  Respect the market every single day.

We are financial fighters.  We are the few that are bold and confident enough to risk our own money each and every day.  We are combatants in the most pure form of capitalism.  We either make money or lose money; there is no gray area.  We are TRADERS.

Here is the link to The Financial Pugilist Part One from 2012: