Nick McDonald 's Opinion

A markets and trading columnist for the NZ Herald

Nick McDonald: Success in the face of adversity

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All Black Aaron Cruden attempts a penalty kick. Photo / Richard Robinson
All Black Aaron Cruden attempts a penalty kick. Photo / Richard Robinson

Last week I happened to attend an outstanding talk in Tauranga by All Blacks Mental Skills coach Gilbert Enoka. Gilbert talked about a couple of things that really got me thinking. One of those things was the come from behind victory that the All Blacks pulled off over Ireland last year to complete the perfect season. The mental strength required to complete such a comeback is quite astounding.

The other point was how the All Blacks had promptly sacked every single RWC losing coach, until that is; they decided to stick with Graeme Henry after 2007. Enoka stated that the fact they gave that one coach the chance to learn from past mistakes for the very first time, was one of the key reasons they finally won in 2011. It makes sense.

How does this relate to trading and financial markets? There are enormous parallels between sport and trading, particularly when it comes to the mind-set required to perform. Both require structure, routine, discipline, preparation, focus, mental fortitude, evaluation procedures and more.

Every successful sports team loses. Every successful business person made mistakes that ultimately made them stronger. Every trader worth his salt has lost a lot of money. The best traders simply have the ability to make more than they lose. And the thing that all of these successful people have in common - they learn from their mistakes and they never give up. Never!

"I have missed more than 9,000 shots in my career. I have lost almost 300 games. On 26 occasions I have been entrusted to take the game winning shot...and I missed. I have failed over and over and over again in my life. And that's precisely why I succeed." - Michael Jordan

There are many stories of business people, sports teams, traders and numerous individuals who have capitulated under pressure and lost, and these mistakes of others can help us along a learning curve more quickly. Their stories help us particularly when studying how they came back, if they came back at all. This applies not just to you as an individual but equally to your sports team, your club, your business or someone you generally back and support. If you can learn from your own mistakes and fears as well as those of others, the learning curve just gets better and faster.

Think about this... there is simply no better feeling than winning when you should have lost. Winning when others told you that you would lose is particularly sweet. Losing at first and then picking yourself up for one more attempt and succeeding... wow that tastes good! Coming from behind and succeeding in the face of adversity, that's where the lessons truly happen. But never getting started for fear of failure; that sucks. Giving up after one failed attempt? This is not something that many people are likely to be proud of on their death beds.

"My heroes are the ones who survived doing it wrong, who made mistakes, but recovered from them." - Bono, U2 front-man

I have made a huge amount of mistakes trading the markets and the turning point for me was learning how to learn from them. In trading it is easy to blame someone or something else. "It's the markets' fault", "my broker took out my stop", "you need money to make money" , "I would make money if I traded full-time but I can't because I have a day Job" - these are typical of the excuses we hear traders make regularly. The point whereby I accepted that it was me pulling the trigger, me in full control and no one or nothing else, the day I realised that the buck stopped with me and that if I was going to succeed in trading then that power was in my hands alone... that's the moment I started to trade well.

I recall a day when a stock position that I was in had bad news released overnight resulting in a significant gap against me when the market opened the next day. I opened the day down somewhere in the region of 4 per cent of my capital - a BIG drawdown in trading terms for one trade. Now I had two options:

1) punt and gamble like a madman, take on excessive risk and try to make that loss back quickly, or;

2) Bring my A game and find that calm, steely resolve of a wolf stalking his prey whereby I stick to my rules, stay calm, focused and determined and do what it takes to win.

I took option 2, I came back from behind and that was one of my best and most memorable trading days. I still lost money but it was close and I almost got back to profit. What was most rewarding though was coming from behind, staying unruffled under pressure, remaining calm, focused and relying on the experience of years that preceded this moment. It all led to me doing the right thing at the right time in the heat of the moment and doing it well.

Think Aaron Cruden lining up his kick from the side line after missing his first shot, with tens of thousands watching and the pressure on him to put the All Black team in the record books with a perfect season... or not. Then nailing it! I aspire to that kind of mental preparedness and resolve.

Win or lose, there is no sports team better than the All Blacks to learn from. Whether it is sports, business or trading, there is a lot to learn from the failure as well as the success of others. For both us and them!

Nick McDonald is a New Zealander teaching everyday people how to trade the worlds markets via his company Trade With Precision.

Nick McDonald

A markets and trading columnist for the NZ Herald

Nick McDonald is a leading independent trader and trading trainer with a global following via his company Trade With Precision. It started back in 2004 when Nick left his 9-5 job while living in London and within 3 months of discovering technical analysis became an independent full time trader. He founded Trade With Precision in 2006 born from corporate requests for him to train retail trading clients of large brokers and exchanges worldwide. A specialist in technical trading strategy for any market and any timeframe, Nick cuts the 'nonsense' associated with traditional technical analysis.

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