“Although the cheetah is the fastest animal in the world and can catch any animal on the plains, it will wait until it is absolutely sure it can catch its prey …it will wait for a baby antelope, and not just any baby antelope, but preferably one that is also sick or lame. Only then, when there is no chance it can lose its prey does it attack. That, to me is the epitome of trading.”
Stan Weinstein
Hello Traders,
I found this interesting article about how the cheetah is the ” epitome of trading” and thought I’d share it here with you. The source of the article is mentioned below the post.
What makes the cheetah a powerful hunting animal is not just its speed but all of the 6 characteristics mentioned below when its starting to hunt its prey.
Here’s the 6 forex trading lessons which you can learn from the Cheetah…
#1: SURVEY
You will see the cheetah in a typical sitting position in a very special location or position. If you will notice, this location will be a position of perspective which can be a treetop, a mound or hilltop overlooking the watering hole or valley.
This may look like laziness, but actually, its far from it.
The cheetah is actually very busy mentally. And what it is really doing is analysing a herd of potential food.
It is surveying the territory, like a forex trader tracking a group of currency pairs on a long-term chart, calmly watching the progress of price and time.
Like the trader looking for emerging patterns, the cheetah is looking for particular movements in the herd.
#2: THE STALK
The cheetah’s next phase is the stalk, which is a patient stroll to more closely examine a particular opportunity more closely, perhaps a group of animals which may have separated from the herd.
The cheetah leisurely walks toward or alongside that part of the herd, checking out the potential prey, focusing on such details as size, strength, nervousness and position.
This is like a trader taking a closer look at the currency pairs, following major trendlines & support and resistance levels and observing cycles and getting down to smaller timeframes to look for the best opportunity to buy or sell.
As a cheetah nears this smaller group of animals, he starts watching for motion, focusing intently on the weaker members of the group, much as a trader watches for the first price formation or trendline breaks or support or resistance levels breaks that could indicate the start of a move for a currency pair.
#3: THE SPOOK
The cheetah is waiting for its prey to become fearful and panic, just like a forex trader waiting for other traders to build up fear or desire and go into a buying or selling panic.
Every trader knows you make your big money when a currency pair moves fast. Both cheetah and trader are looking for the initial twitch that signals rapid motion. Both are waiting for the target to spook.
#4: THE CHASE
As soon as an animal stalked by the cheetah selects itself, the chase is on!
The cheetah kicks in the afterburner and sprints up to 70 miles an hour. At this point, the cheetah is in full control, driven by desire, while the target animal is in absolute flight, controlled entirely by fear.
The cheetah feels confident that it can catch the prey, but also knows it can abandon the chase and select another animal.
For the trader, this is validating the move and entering the trade, selecting a stop loss position and setting the take profit targets.
This phase requires absolute confidence in your own skills, something that gives me and many traders problems. If a trader becomes fear-driven, the trader may become the victim and not the victor.
The cheetah has a distinct advantage over the trader here, in that it is dealing with energy and not money.
Many traders believe that their own self-worth is measured by the money they make, so that a loss triggers inner doubts, and may put the trader into the fear mode.
This drains even more internal energy, hampers judgement and can lead to the inability to act. Even to stop the loss. I find it very helpful to tell myself that money is just the grease for the skids of life, and only determines how fast I can move, just as the cheetah’s energy level determines how fast it can move.
#5: THE KILL
The next phase is the kill and the cheetah kills its prey very cleverly. Since the lightweight cheetah does not have the jaw strength of big-boned cats, it kills by pulling up alongside its prey at 70 miles an hour, reaching over and tripping the animal with one smooth kick. The prey crashes to the ground, usually breaking its neck.
In the worst case, the cheetah will have to pounce on the prey and clamp its jaws on the throat of the already damaged, weakened and nearly dead animal.
This is just like the trader who waits for a fast move to crash into a channel top or Fibonacci resistance point or or a support or resistance level, waits for the change in momentum, and then closes out the trade.
#6: THE REST
The final phase is the rest. After having a hearty meal, the cheetah rests.
The trader, I believe, needs a rest after a series of intense trading period, similar to the cheetah after a period of intense chase.
Neither can run at high speed constantly. After the kill, the cheetah eats, celebrates and rests. I believe the trader should do the same.
A good practice is to always reward yourself with a special lunch or dinner, paid out of the trade’s profit, then rest from trading for a while. You may decide to create a rule that says after a good lose or a good win, don’t trade for a time. This will allow you to refresh yourself, stabilize your thoughts and return invigorated to the hunt.
Think like the cheetah when you trade. Break your trading into the same six stages.
Remember it is absolutely essential to be in control, and not in a state of fear or panic, during the excitement of the chase. What gives you the confidence is doing the homework, the technical analysis, so you understand what is happening and can plan your approach.
If you achieve all this, you can be a clean, lean, mean trading animal.
Source:http://cheetahtrader.blogspot.com
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