Successful investing takes all the talent and discipline of a pro athlete

As many countries slowly come out of their pandemic-driven lockdowns, the activities and public events we took for granted are gradually coming back on line. Fans are returning to sporting stadiums and the live roars of thousands are backing up the action instead of the pre-programmed cheers generated from computers.

Two such sporting events held this month, the Uefa European Football Championship 2020 and the Wimbledon tennis championship, were marvellous reminders of all of the power of sport – and also what we have missed. And we still have the 2020 Summer Olympics in Tokyo, which begins on Friday, to look forward to despite the lack of live crowds.

So why am I writing about sport rather than investing? I was reminded of the link between top-level athletes and trading and investing. Indeed, there are a number of lessons we can derive from sport that can help us to better analyse the financial trading game.

Find your own swing

No tennis player has the same serve and no football player takes the same penalty. Practised over years, the styles of executing shots in any sport are unique to the athlete. And any tweaks need to be checked to ensure the results are the same or better.

It’s the same in trading. Your trading style and strategy need to be developed over time and across all market conditions. When the pressure is on, traders have to call upon their trusted plan in the heat of the battle to benefit and succeed.

Follow a routine

As the Greek philosopher Aristotle once said: “We are what we repeatedly do. Excellence then is not an act but a habit”. Routines are powerful and athletes have certain rituals that they repeat ad nauseam.

Novak Djokovic, tied equal for the greatest men’s tennis player of all time in terms of grand slam tournaments, bounces a tennis ball a certain number of times before he serves. Traders, too, need to develop routines to create consistency. Positive rituals can help to regulate and clarify the trading environment, while negative ones are not conducive to performance.

Every opponent is different

Each opponent on the field of play will offer a unique set of challenges and attitudes. Some football teams are known for their attacking style or their organisation and structure, others for their defensive solidity. That means their opposition can’t use the same strategy for each match.

In trading, the same applies in that there are hundreds of different instruments and ways to trade. This means that a trader’s strategy has to adapt to fit with fast-moving markets. It is not enough to blindly apply your strategy to any market as this is rarely successful.

Be wary of overconfidence

Sport has the ability to make us feel like world-beaters and it can be the same for professional athletes. Overconfidence, in sport as in trading, is intense and carries momentum. Traders, especially those just starting out in financial markets, lose focus, increase position sizes and take more risk when they are doing well. And that can be the quickest way to getting wiped out.

Handle losses like a winner

We end with perhaps the most important lesson. Professional athletes are only too aware they will experience bad patches and hot streaks.

But they know that a single game or match won’t ordinarily define their career. It is the same in trading – losses are part of the job and the sooner traders can park them, keep perspective and learn to move on, the more chance they have of being successful.

Traders can lose focus and take more risk when they are doing well. And that can be the quickest way to getting wiped out