Trading tip from a tennis legend

Life of a Trader 11 Oct 2023

Today, we take some lessons from Novak Djokovic, one of the greatest tennis players of all time and apply it to the world of trading.

Transcript:

Today, we’re drawing wisdom from Novak Djokovic, one of the greatest tennis players ever. While some argue he’s the absolute best, that’s not our focus today. Instead, we’re diving into a video clip where he talks about those moments when he loses focus during critical matches. Djokovic’s approach is not to avoid losing focus – he understands it’s part of the journey. He’s more concerned with how he recovers. When he senses his focus slipping and affecting his game, he uses techniques like conscious breathing to regain his concentration. This approach is about acknowledging the lapse, addressing it, and refocusing on what’s necessary for success.

This lesson from Djokovic mirrors our trading journey. We all face periods of losses or drawdowns, which can be especially tough after enjoying a string of successes. The key is to accept that losses are part of the picture and implement a process to shorten the duration of this tough phase. Just like Djokovic, who quickly works to regain his focus, traders should trigger measures when their portfolios dip beyond a certain percentage. This might involve risk reduction or stepping away from the markets briefly to regain objectivity. 

Remember, in trading, the goal is not to win every day or be right all the time; it’s about making more than you lose over the long run. Unlike a Grand Slam final, the markets are always open, and it’s okay to take a step back and return when you’re in a better state of mind, more objective, and better prepared to seize market opportunities. In both sports and trading, we can’t control everything the market does, but we can control our reactions to it. So, when you’re going through a tough trading spell, don’t hesitate to reduce risk and come back to fight another day.