Mon, 13 August 2012
Let's face it you don't stand an outside chance if you don't have a good strategy. Covel plays the Turtles' pop classic, "Outside Chance", and notes that for many people, the fantasy is quick, easy money that pays off like the lottery. However, you don't stand much of a chance if you play the game like this. But how do you go about a strategy that gives you more than an outside chance of winning? The first step is to train the space in between your ears and develop a better philosophy. Covel plays a clip from "Choke", a documentary on UFC fighting champion and jiu jitsu practitioner Rickson Gracie. In jiu jitsu, everything is based on leverage. Gracie talks about momentum, putting yourself in the right position, and reacting to what your opponent gives you in the "moment of now". Your strategy must not be to anticipate what is going to happen, but to react. It's all about getting leverage on your opponent, getting in the right position, and adapting to the situation. Markets are the same way: they're going up and down constantly like a "bucking bronco", as trader Bill Dunn famously said. It's difficult to accept. Most people want to have control of their environment, but we're all in a great wave, and the only choice is to ride it with a strategy in place. Rickson Gracie teaches the philosophy, but once you move beyond that, you must know how to execute this "moment of now" strategy. Covel discusses a clip from author Malcolm Gladwell (Blink, The Tipping Point, Outliers) to illustrate this point. Gladwell's example focuses on emergency room doctors, and how diagnosing chest pain can be enhanced by simply limiting the number of factors to be considered. If you reduce the number of data points for a doctor to consider, and limit it to the four most important factors, his ability to become a better diagnostician increases exponentially. It's the same in trading, except there is only one factor worth consideration: price action. How many different data points can you actually digest? How are you going to take an action to buy or sell with millions of data points? It's simple: you must reduce the variables to something more manageable by focusing on price. Special Offer: receive free DVD delivered to your home or office: www.trendfollowing.com/win.