Keeping the scoreboard ticking over

Watching the 6 Nations rugby this past weekend reminded us of an important parallel between the game with the oval ball and trading in the markets. Seeing Jonny Wilkinson return to the England camp reminded us of the England style of play several years ago – Clive Woodwood, the then England manager always stressed to his team the importance of ‘keeping the scoreboard ticking over’. What he meant was that if England were awarded penalties, allow Jonny to kick for the posts and keep taking the 3 points whenever they were on offer. This is a psychological blow to the opposing team plus builds a cushion for the England side. Then when a try came along, those points accelerated the lead and were literally the icing on the cake.

Likening this to trading, we often say to new traders that it is important to not become consumed with going for those big winners. You can keep nibbling away and take consistent profits (keeping the scoreboard ticking over) and then when a trade comes along that just flies, that’s the icing on the cake. New traders get too consumed in trying to find those big winners and forget how quickly small winners can compound in your account. Of course it is exciting to go for the big winners, but what makes the money in the long run is this alternative approach. You take regular profits but still leave some money on the table that will catch the occasional double or triple digit gainer. It worked very well for English rugby and works just as well in trading…