First, a story.
I’m a huge track and field fan having run at UNC back in the day (Go Heels!) and coached high school cross country and track for many years with my wife Joan.
So a couple of months ago, we were both glued to the coverage of the U.S. Outdoor Track and Field Championships when the most incredible story unfolded.
During the steeplechase, a 3000m race over barriers and a water jump, a relative unknown named Kenneth Rooks fell early in the race.
What terrible luck for someone who has worked for years (perhaps their entire life) to prepare for this moment. It’s a rarity – I never fell in a race in my entire racing career – so to have it happen at the national championships really sucks.
But that’s not what I want to draw your attention to.
When most runners fall during a distance race, their immediate reaction is to panic and SPRINT back to the lead pack as quickly as possible. But that never works. The energy you expend doing that leaves you with nothing for the finishing sprint when you need it most.
Instead, over the course of the next 3 laps of the 7.5-lap race, Kenneth steadily and methodically clawed his way back to the leaders.
But that’s not what I want to draw your attention to.
Despite this enormous stroke of bad luck, Kenneth Rooks ended up winning the race (the national championships!) and ran a lifetime best – an outcome that nobody was expecting even if he HADN’T fallen.
But even THAT is not what I want to draw your attention to.
What I DO want you to focus on is his post-race interview where he is asked about the fall.
Kenneth calmly explained that he had actually prepared for this incredibly rare event, even visualizing before the race exactly how he would react if it happened.
My jaw hit the floor.
I’m bullish on Kenneth Rooks – anyone who goes to this level of detailed preparation realizes what it takes to be great at something and will be really hard to beat.
How can you apply this to your trading?
Here are similarly rare trading scenarios that you should prepare for and visualize your plan of action for each:
- Your power or internet goes out during a trade and stays off for an extended period
- Your hard drive or some other component fails on your trading computer
- Your broker has an extended outage and you can’t access your account
- Heavy market action brings you 10X the number of signals as normal and you don’t have the buying power to take all of them – how do you decide what to trade?
- Your trading strategy has 10 losing trades in a row and the next signal comes – what do you do?
- You receive signals from two different trading strategies for the same symbol in the same direction
- You receive signals from two different trading strategies for the same symbol but one is long and one is short (it’s happened to me!)
Every good trader has a plan for specific trades, but the great ones think about the risks of extremely rare events just as Kenneth Rooks prepared for his national championship.
