Lines of defence in trading!

Two and a half thousand years ago

Sun Tzu said

"Good fighters first put themselves beyond the possibility of defeat, and then wait for opportunity of defeating the enemy."

Anatoly Karpov, the legendary chess icon, was damn solid in defence. All he needed to do was wait for opportunity to invade and defeat the opponent's weak setup. Till then, he was sure that his defences couldn't be breached.

Great cricket batsmen like Clive Lloyd, Greenidge, Haynes, Gavaskar, Gooch, Border, Tendulkar and alike had solid defence. All they had to do was wait for a lose delivery to punish.

Every boxing coach first builds his trainee's defenses. He knows it very well that it is sheer stupidity in going for the offensive without first ensuring good defence. Going for attack always opens a window for counter attack.

Every football coach makes sure that first the defence is strong.

'Attack is the best form of defence' is true only when you are severely cornered and losing very badly.....when you are in a near hopeless situation.

Otherwise, you are only inviting the professional opponent to come and help you in committing suicide.

This is so true in stock trading as well.

Their are three fierce opponents against you in the market:

1) other trader

2) the very nature of the market itself, and

3) you yourself

What a pity that new innocent overconfident entrants walk straight into the trap with little or no defence.

All they think about is attack (trade).

Little or no focus on defence (when-what-how-why not to trade)!!!

Since there is no tradition of "coaching" in trading unlike in boxing, cricket, football etc. the new traders understand it too late

that adequate back-up funds is the first line of defence

that a 'method' (and not 'wishful trading') is the second line of defence

that patience to wait till the opportunity is the third line of defence

that not taking anti-rally anti-trend position is the fourth line of defence

that trading with one's own understanding is the fifth line of defence

that mental toughness and emotional stability in volatility is the sixth line of defence

that experience whether bitter or sweet is the cushion layer of defence

that 'stop loss' is the last and most reliable line of defence

As they say,

in stock market,

all you have to do is ensure that you don't lose

profits come by default if you are doing the right things.

"To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself." - Sun Tzu