The Western Learning

Under a hot desert sun, somewhere in the dust bowl of the western Colorado desert stand two adversaries. Twenty paces apart, feet spread slightly to balance their bodies, hands by the side, ready for the signal to draw their pistols and shoot. Their eyes squint as they focus on the adversary, the camera zooms in to capture the sweat tricking down the cheek and the tension is palpable. Both know they have but one chance to get their man. The seconds seem to drag as both play out what could be their last moments. The music builds up the tension and finally reaches a crescendo. Then you see both shooting and one of them is dead and the victor moves on in the hope that a bullet with his name on in will not find him any time soon.

This is a scene that has played out in many a Western. But there is one myth in this Western tale. While it is never clearly mentioned, the assumption is the winner is the one with the fastest draw. I say that it is a myth because the winner did not win just because he was a fast draw but because he could handle the pressure better. He won because he was the one who could remain calm under incredible compulsion to act, the one who could not only draw fast but also with a great amount of deliberation and then shoot accurately despite the knowledge that a mistake could cost him his life.

The parallels to life in general and investing/trading in particular is not obvious. The market and the trader do not have an adversarial relationship and are not coming at each other shooting. But there is one thing in common. The winner amongst investors or traders is not the one who acts all the time but the one who acts deliberately. Who will act only when it is needed and when he acts will do so with complete command of his senses and with total control. The winner in this game of trading is the one who is so in sync with himself and with his methodology that he does not feel compelled to move in haste and is willing to miss opportunities in order to take those that suit him.

So, with great deliberation, I state that I will cut my short positions and go long if and only if Nifty futures trades above 5175.