What Can We Learn About Forex Trading From Crocodiles?



It might sound funny to some, but we must have all heard several references from the animal world whenever talking about trading and finance in general. Bulls and Bears, Wolf of Wall Street, Loan Shark etc. are famous and popularized references made for the world of finance and trading.  Joining new in the list of references is the apex predator, the Saltwater Crocodile which is viewed by many experts as a perfect role model for a successful forex trader. It might also be worth noticing that the terms forex traders and apex predator even sort of rhyme with each other. Jokes apart, there are several things a forex trader can learn from a crocodile.

1. Value of Patience and Discipline

We all know that a successful hunt might involve hours of waiting before a prey comes in perfect range and is ambushed by the predator.

Most people are unaware of the fact that being patient and minimizing their trade is the best way to achieve success in the forex market. Like a crocodile can wait for days without eating before a perfect opportunity comes by, forex traders should practice total discipline and not resort to high frequency trading.

2. Analysis and Adaptation

Crocodiles have existed since the time when dinosaurs walked on the earth and have survived through the various cataclysmic events while maintaining their status as a formidable and apex predator. The major reason for its survival is credited to its acute learning skills. A forex trader like a crocodile should properly analyze and adapt to the changing situations in the market to make constant profits. A crocodiles effectively analysis the situation and often avoids the one with higher risks and fewer rewards.

3. Conservation of Energy

With more than 5 feet in length and nearly 2,000 kilograms of body weight, the saltwater crocodile is indeed a behemothic killing machine which has been known to have enough power to drag an equally powerful royal Bengal tiger and young ones of the Asiatic elephants into water. While their size makes them an extremely formidable predator, they often wait for long hours before they go in for the next kill to conserve energy. It is important for forex traders to wait for long periods before they go in for the next trade. High frequency trading can make you lose more money than you made and it is often better to wait and not lose money than over-trading and losing more.

4. Maintaining a High Strike Rate

The reason of the crocodile's survival through millions of years is its high success rate when it comes to hunting. A saltwater crocodile has a bite force of around 7700 PSI, and is enough to break bones and shatter the spinal cord of the prey. There might be a situation where a gazelle would outrun and escape a cheetah or a Lion, but it can never escape the powerful grip of a saltwater crocodile. The crocodile assesses the situation carefully and waits for the prey to come in a perfect position before striking. A forex trader should also wait for as long as possible before making a move to ensure a high rate of success. A high rate of success would ensure benefits over a long term and lead to higher profits.

But Why Crocodile?
Most experts view the forex market to be similar to fishing, where the most expert trade hunters wait to reel in the catch i.e. the trades, in a volatile market similar to a gushing river. Humans have been known for their unparalleled learning skills and have survived since ages picking up their hunting skills from the various predators and utilization of various tools. When it comes to fishing or hunting, we all know that nobody beats the predatory skills of the Saltwater Crocodiles. While some might want to consider a Great White Shark for this comparison, but since it's already taken by financing organizations, (Loan Shark, remember?) we shall settle with the second best option.

By Luke
Luke Peters is an avid reader of various books related to trading, finance and financial management, and is also an active forex trader on Cornertrader. He has also written several articles across various blogs and websites related to finance, trading, marketing etc.

Copyrighted 2016. Content published with author's permission.

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