What 'The Tortoise & the rabbit teaches us about trading

Most of us are familiar with the story of 'The Tortoise and the Rabbit,' but there are some surprising and insightful parallels that can be drawn between this famous fable and the world of trading.

The story begins with a tortoise and a rabbit setting out on a race. The rabbit is of course much faster, so he zooms off ahead while the tortoise slowly plods along.

There are some variations of the story but thinking he has plenty of time to spare, the rabbit stops to enjoy some carrots and take a nap.

Much to the rabbit's chagrin, the tortoise has been gradually making his way towards the finish line, overtaking the napping rabbit and winning the race.

A story of consistency

The basic message to take from this is that consistency and hard work often lead to greater achievements than physical advantages or privileges of some kind.

This also illustrates the importance of remaining mindful of "the long game" rather than focusing solely on potential short-term gains.

So how exactly does this relate to traders?

Slow and steady wins the race

If you're honest with yourself you have probably already figured out whether you are a rabbit or a tortoise when it comes to your trading approach.

A rabbit may typically rush in with high-frequency trading, over-leveraging their account and ultimately making decisions that are based on emotion rather than patience.

After a couple of successful trades, rabbits become overly confident, increasing their risk while placing too much emphasis on their imagined trading abilities.

This decreased risk aversion may lead to increased losses, which may end up with rabbits either spinning their wheels or getting knocked out of the 'race' altogether.

A tortoise, on the other hand, will remain patient in the face of tempting trades.

This means the tortoise will adopt a long-term trading strategy with a lower overall frequency of trades. This also means never over-leveraging his account or doubling up his risk because of a sudden surge of confidence off the back of a few lucrative trades.

Channel your inner tortoise

As silly as it might sound, there is a lot to be learnt from this children's tale.

Consistency coupled with a clear grasp of long-term thinking may help to greatly preserve your trading capital.

If you do enjoy a string of successful trades, don't let this go to your head.

While you may feel excited and extremely confident, it is still wise to hold fire until you see obvious trades.

You might feel like luck is on your side but when this happens, channel your inner tortoise and your portfolio will thank you in the long term!

Trading is not a sprint, it is a marathon, so avoid making rash short-term decisions and instead remember that consistency is the number one factor that will allow you to gradually increase your capital.

Tortoise trading might be what will keep you in profit quarter after quarter; year after year!