People can learn a lot about life by observing nature's
creatures, observations that can benefit every aspect of someone's life. Let us
examine a cougar and how it hunts for prey. The cougar is one of nature's
fiercest creatures. When hunting for prey, a cougar is strategic. If a cougar
fInds a herd of deer, it will wait patiently observing the entire herd looking
for the weakness within the herd. The reason for this is that the cougar can
only run at top speed for short
distances. Therefore, it is imperative to get as close to its prey as possible
before making a killing strike. Otherwise, the opportunity will be lost and it
may be some time before the next one appears.
The more days that the cougar goes without food, the slower it will be able to run, thus making it harder and harder to attack its
prey.
So why are we talking about cougars?
Playing the market is very much like the cougar's hunt for prey.
Whether you are trading the Forex market, the
Futures market, the Options market, the Equities market, and so forth, you must
have a plan before entering each trade. If you do not, it will be harder and harder to find Opportunities because each lost opportunity will take a toll
mentally, physically, and psychologically on your well-being.
Therefore, you must observe the instrument greatly before
executing a trade. A trader observes the instrument patiently until an opportunity
is seen. Once an opportunity is present, a plan is executed. Someone once told me "Trading is neither logical nor
predictable." After years of trading, I can honestly say that statement is
completely true. It is a probability game, You have to have a system to help
increase your probability of success or you are just gambling. By rolling a
dice, a person has a probability of 50 percent on the desired outcome.
Therefore, one of our goals is to trade with a higher probability of success than 50 percent.
How do you do that? This can be achieved by creating a trading system that
maximizes profits when you are right and minimizes losses when you are wrong (i.e.,
play trends instead of consolidation patterns). A trend is when price goes in a
certain direction for a long period of time whereas a consolidation pattern is where price goes "back and forth" among a
range of prices. As told by Manish Patel in his book Ichimoku trading system
