Profitable ETF Trading Strategies – Trading and the Law of the Jungle

I have written in previous articles about the power of metaphor in trading. Our evolutionary brain makes powerful use of analogy to reason about new situations to find effective behavior.
 To see in a flash that this situation is like that situation and that what worked for success over there might work over here, gives our species a powerful evolutionary advantage.
Like everything in trading, not even metaphor is a risk-free solution for success and it is a wise man who understands the limits of his story. We remember that the map is not the territory and that the poetry does not always equal the prose.
Provided that we understand the limits of a good image or story however, there is much that we can learn and apply from other domains and narratives to our trading practice.
As an example, consider Rudyard Kipling’s great novel The Jungle Books and the story of Mowgli.  How much are the life and adventures of that young boy like the inventors of a new trader trying to learn the way of the jungle, staying alive long enough to make a way for himself in the world?
Mowgli, the naïve, enthusiastic impressionable young boy, full of hope and promise and sadly lacking in worldly experience wanders into the jungle where his fate is unknown and in the hands of those people meet on his journey. He’s fortunate to come across a wise old mentor in Baloo the bear and the crafty sensei of jungle survival, fierce Bagheera the panther,
The panther does the wisdom of getting locally into the wolfpack, the tribe that will raise and teach the young boy and equip him for success in the wild.
Together this band of brothers has success. The boy not only survives but thrives and grows into a powerful young man, full of himself. He is tested by his arch nemesis and faces his moment of truth in the form of Shere Khan, the tiger. It comes down to the young man by himself, armed only with his strength and wits, to overcome his relentless foe. His success comes from planning, preparing and executing in a way that relies upon his strength and takes advantage of the weaknesses of the tiger.
Mowgli comes through his experience transformed into the fullness of manhood.
Now we know that trading is not like a 19th Century English novel and that we are not babes in the jungle raised by wolves and that we lack a wolfpack to come when we whistle. It may often feel like we are being stalked by Tigers in the market.
We certainly don’t take the metaphor of the jungle literally as we try to understand the market and trading, but there are more than a few lessons that can be found in that powerful book and it is well worth reading by traders everywhere.
Consider who your mentors are. Where is your loyal pack and to whom are you loyal? Who is your skilled teacher? Where is the tiger that stops you in the night? How will you use your wits and determination to come through the dark night?        

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