The Tortoise vs. The Hare – A Trading Metaphor
Everyone knows the story of the Tortoise and the Hare, but what you might not know is that it can be a very effective metaphor to describe the differences between winning and losing traders. Like the Hare, you probably experienced a lot of excitement and success right out of the gate, as you began trading your first live account. However, because you probably did not pace yourself by being consistent in your approach, you saw your early success evaporate as time went on, just as the Hare did. The Tortoise was much slower than the Hare, but because he was consistent and unemotional, he eventually won the race as you probably know. Thus, your goal as a trader, is to trade more like the Tortoise and less like the Hare, because that is how the trading game is won…
Are you a “Tortoise” or a “Hare” in the market?
In the fable of The Tortoise and the Hare, the Hare begins the race by ridiculing the slow-moving Tortoise and then leaving him behind in the dust as he sprints off from the starting line. The Tortoise, unemotional but sure of himself, begins the race in a slow but consistent manner, pacing himself from the start. The Hare gets distracted by other animals along the way, stopping to show off his speed as he tries to impress some lady rabbits (in the Disney video version) and as we all know, stopping for a nap along the way as well. Unfortunately for the Hare, this inconsistency and emotion gets the better of him and ultimately is the reason why he loses to the much slower Tortoise, even though he started with a huge physical advantage. The Tortoise may have had a disadvantage physically, but because his mindset was more consistent and in-sync with what it took to win the race, he out-lasted the haphazard and emotional Hare, and ultimately made it across the finish line first.
This fable of the Tortoise and the Hare really does a good job of describing the primary differences between traders who consistently lose money in the market and those who consistently make money. Traders who trade with a lot of inconsistency, haphazardness and emotion, are the ones who struggle and suffer through the pain of continuously blowing out their trading accounts, these traders are trading as if they are the “Hare”. Traders who take a slower and more consistent approach, like the Tortoise, tend to do much better in the long-run and don’t experience the severe emotional and financial ups and downs as the “Hare” traders.
Anyone who has followed my blog for a while knows that I am a huge proponent of the low frequency trading model. As I discuss in my article on low frequency vs. high frequency trading, it is a pretty well studied fact that day-traders and other high-frequency traders make far less money over the course of their trading careers than lower frequency traders who take a slower and more consistent approach, like the “Tortoise”. In fact, for most people, taking a low-frequency approach to trading and trading like the Tortoise, is really the only chance they have at making significant money in the market over the long-run.
Trading is a marathon, not a sprint
Note, in the section above I ended with talking about the “long-run”, this is a key point in this whole lesson. It is not difficult to get lucky and hit a few nice winners early in your trading career, just as the Hare got off to a good start against the Tortoise. However, what differentiates winning and losing traders is not the ability to get lucky or use up all their trading capital in the first month of live trading, but the ability to remain disciplined and patient even in the face of constant temptation to over-trade and over-leverage their account, in other words, you need to pace yourself as you trade.
The Tortoise paced himself in the race against the Rabbit, and this ultimately allowed him to beat the Rabbit, who didn’t prepare properly and who clearly under-estimated the importance of mindset over ability. The Hare blew all his energy in the early-going (trading money) and got over-confident (very common among struggling traders), so much so that he literally fell asleep halfway through the race, which ultimately led to him losing to the much slower Tortoise.
Many traders tend to focus too much on the short-term, treating their trading as if it is some all-out sprint to the finish line. When they hit upon a couple of winners, they tend to then over-estimate the role that their trading ability played and underestimate the importance of remaining consistent and not doubling up their risk on the next trade. As I discussed in my article on getting back your trading mojo, traders tend to do the most damage to themselves right after a big winning trade or multiple winning trades. Like the Rabbit, they become frantic and over-excited, instead of remaining calm and collected like the Tortoise. This typically results in them over-estimating their trading ability, which causes them to start cranking up their risk per trade and over-trading, also known as burning up your trading capital.
Just as the Tortoise did, you have to preserve your energy to win the trading race. In other words, you need to preserve your trading capital for high-probability price action setups, rather than blowing it on random gambles in the market. Furthermore, I want you to think of trading as a marathon, not a sprint, because you need to pace yourself if you want to make it through to the land of successful trading and win the “marathon”. “Sprinting” has no place in the professional trader’s trading approach; slow and steady truly does win the marathon of trading.
The Tortoise reaped the big reward
Despite the odds seemingly stacked against the Tortoise at the beginning of the race, he ultimately takes home the trophy. This is exactly the same as two traders starting out with different size trading accounts, one large, one small and the trader with small account might find after 3 years of trading he has a lot more money in his account than the trader who started with the large account. This happens all the time in the market, and it’s because it doesn’t matter how much money you have, what matter is your ability to trade and your ability to manage your emotion and your money. Consistency always wins in the end.
As I discussed previously, you need to preserve your trading capital for the obvious trade setups, and not blow it all soon after you star trading live. The Hare expended too much energy in the early going, whereas the Tortoise stayed consistent. You need to save your money like the Tortoise so that you can stay in the game long enough to hit enough big winners so that you end the year profitable. Many traders do so much damage to their trading accounts early in the year that they have no chance of ending the year in profit. You need to try to have less trades but more certainty in the trades you do take, think about eventually becoming a “baller trader” with lower overall risk and higher rewards. This is how you make money over the long-run, it is not done by trading constantly until your money is gone. If you do this you will surely get passed up by trader who had smaller accounts but who had a better trading mindset and who understood the importance of trading with consistency.
Crocodiles and Tortoises can both teach us a lot about trading. As I discussed in my article on Trading like a Crocodile, we need to be patient and stealthy as traders, like a Croc, waiting for the easy “prey” and then acting on it with confidence. The theme is clear here; slow and steady wins the race. If you do a bit of research on both Crocodiles and Tortoises, you will see that both have been around since the time Dinosaurs walked the Earth; hundreds of millions of years ago. This clearly tells us that their slow yet consistent approach to life is one that pays off with great rewards in the long-run.
If you want to learn how to trade like the Tortoise and less like the Hare, so that you can have long-term, lasting success in the market, checkout my Forex price action trading course for more information.
30 Comments Leave a Comment
SOME OF YOUR ARTICLES JUST REFLECT A PERSON MISDOINGS THANKYOU NAIL HOPE WE ALL FOLLOW THE GREAT INFORM TO BE WINNERS IN THIS GAME.
im hav not started the market yet but any time i read your posting lesson,i alway hav confident to with my life account thanks a lot mr Nial
Your are simply great Nial…….hats of to you & your work…..
Thank you so much Nial.. Your articles are truly a blessing… I have been following your consistent and disciplined approach for 5 weeks now and the results have been great… in the past 5 weeks I have taken only 9 trades and made 5.5 R so far… Feeling awesome… Thankyou professor :) Godbless you :)
man you are genius,thank you so much for sharing such a valuable information
As usual very simple and focused article hitting the emotional trading problem that we all experienced at least once in our trading life.
Thanks Nial. Anything worth doing certainly takes time and agree 110% slow and steady wins the day!
As always a very good article, slow and steady do win the rice for sure. Thanks Nial.
Thanks Nial for the awesome article! Definitely one of the best that I have ever read and lots of points to be learnt from (:
Excellent article Nial and oh so true , I was doing great to start as I think I told you but have now gone into a very mediocre spell of trading …..due to over trading and general lack of patience…but at least I can accept this and know the learning curve is a big one…I know I will at times stumble and fall but with articles and mentors like yourself I know I will stay on my feet a little longer each time and eventually slow down and enjoy the scenery…excuse the metaphor …great Blog mate and very timely ! Cheers Geoff
There is no doubt about consistency in trading…. From my experience in real trading in last 2 month I was able to gain 7 R over the 1st month of trading and second month I had string of losing trades where I have come to break even, The most obvious reason was I doubled up my risk per trade after I hit string of winning trades. If I had not double up my risk per trade and stay calm approach like 1:2 risk / reward and completely set and forget approach I would have gain 9 R at this time. Pretty impressive the difference………..hah
Today onwards I force my self to remain calm and consistency approach!!!! Like U always said.
Thanks and Best regards…………. For your hard work!!!!!!!!!
Describes exactly what happen to me this week. Had the best week I have ever had last week, but this week it has all gone plus more. Over traded and was not patient after getting some good gains. Paying the price now….
I’m hearin ya Nials
Crocodile and the Tortoise/Hare story is also teaching me to realize that slow and steady wins the race but also that this wonderful approach HELPS TO PRESERVE CAPITAL. The market will always be there for the ‘Tortoise and Crocodile Trader. Thank you “Professor NIAL.
Very good article, You are the master of trading.
I look forward to each of your articles. They are inspiring! Thanks!
If I say that you are a genius don’t see it as flattery.
your articles are always special and very instructive.
I always thank God for you
Thanks Nial, I really enjoyed reading this article. It is a good learning lessons for all on how to practice discipline and develop consistent approach in the market.
Dear NIAL !! Thank you so much, for, your selfless efforts in teaching,” How to trade the market “. Its only and only through your worthy articles , that I developed the requisite skills and the proper mind-set to trade the market……Its paying the REWARDS.
I pray for you and your Family, You are doing a great service to Traders at large
GOD bless you with abundance, With best regards, AMIN MALIK
Your articles are consistently excellent. Thanks.
Use ‘Cockroaches’ as a metaphor too… they too survived as long as
crocodiles and tortoises. We can learn something out from them too… isn’t it?
I love you Nial… you are a great teacher indeed when it come to the matter of trading. Particularly in the aspect of aligning my Trading psychology. I have really been inspired by most the weekly articles you post…just want to say thank you. Keep up the good work
Nice, really nice Metaphor for serious trading approach. “Hare’s” are those people they are creating the volatility which is no good for long-term traders. As we can mention, trading in lower time frames are getting more “complex” and the only way to escape from trapping our self is following the “Tortoise” people. Nial’s strategy beside the hardship of not trading most of the time is the path that makes people love trading, improve their skills and enjoy it for many many years. If you can enjoy something you are already success on it. Many thanks Nial!!
Thanks a lot Nial.
Only your way of trading has made me a trader. I meant it.
I will forever remain gratefull nail…you can not know how much good you have done to my life and trading with your articles.when i perform my subuhi salat (early morning prayer) everyday,I always remember you in my prayer and untill my last minute i will always say GOD BLESS NAIL FULLER.
I am in forex market over 2 years … but i feel i not know anything… after visiting your website and read all article .. it seems preety easy .. but i have no patience .. this why i m still loosing money… But anyway someday i will be also good trader with patience .. thanks nial.
Nial, that’s very good article for every trader, Thank you so much
Once Again thanks nial , this article really explains the psychological behaviour of the price action trader by comparing with tortoise and crocodile, this article is one of my best among your articles and it is really good and worth to read it ……and also the main reason is that it’s interesting and very easy to understand your message and the key points here in this article thanks again for your lessons you are sharing with us …” we are blessed to be your students ” :)
Ur articles are very good as always, but this one has a lot impact on struggling traders like me.
Thank u Sir
A good article Nial, it’s all about learning how to stay out – learning how to get in is the easier part.