What Lions and Cheetahs Have to Do With Trading

The lion was less than ten feet away from my face.

The steel frame of the 2012 Toyota Land Cruiser offered some protection. But even then, it was impossible not to be afraid.

If it wanted to, this apex predator could have closed the distance in one powerful leap and made its way inside the car through the open roof.

I was on a safari expedition trekking across the plains of the Serengeti. After seeing zebras, giraffes, antelopes, and even a few cheetahs, I was getting anxious. While those animals were beautiful in their own ways, it was the mighty lion that I was most excited to see.

The tour guides were confident we’d spot quite a few lions, but that it would probably be on their own terms. There was nothing to do except stay patient.

That patience quickly paid off, as the next day we came across a full adult male. His mane was majestic, and he was entirely unbothered by our presence.

Even from outside the truck, he radiated this absolute sense of confidence. There was no doubt that it was us that happened to be in his domain.

That moment will stay with me for the rest of my life. It was genuinely one of the most humbling experiences I’ve ever had.

Traders Will Have a Ton of Humbling Experiences

And believe me, when you’ve been trading for any length of time, you’ll have no shortage of humbling experiences.

Here’s the lesson I took away from that particular trip to Africa.

That lesson is all about knowing what kind of trader you are. You see, in the savanna, there are many predators. Cheetahs, for example, will hunt antelope and other smaller animals like birds and rabbits.

Lions on the other hand, prefer larger game when it’s available. They’ll carefully stalk zebras and wildebeests. These larger animals have more meat on their bones. They’re also slower than an antelope or gazelle.

When you’re getting ready to take a trade, you have to know ahead of time whether you’re a cheetah or a lion.

Cheetahs are day traders. They’re not looking to be in the market for very long. Their key to success is accumulating a number of smaller wins while keeping the losers few and far between.

Lions, on the other hand, are swing traders. They’re not interested in capturing tiny intraday moves. They’re hunting for big game. The risk for swing traders tends to be a little bit greater… but so are the rewards.

Here’s why it’s so important to know what kind of trader you are…

Are You a Lion… or a Cheetah?

If you’re day trading with a swing trader’s mentality, or the other way around, you’re going to be courting disaster.

For example, swing traders make their money by finding big winners. The reason they can bag those big winners is because they’re usually willing to take on a bit more risk.

But if a swing trader cuts their winning trades too short and starts piling up nothing but small gains, they’re really going to feel the pain when they take a losing trade.

Let’s say a swing trader has a $5 stop loss and a $15 target. But instead of waiting to collect that $15 gain, they end up closing their trade too early and only grab a $3 gain. Then on their next trade, their stop loss is hit. They lose the full amount they were risking.

If this pattern continues, the math just won’t add up. The trader will struggle to be profitable as their losers will be bigger than their winners.

The point is, no matter what kind of trader you are, make sure you’re hunting the right kind of game.

Happy trading,

Imre Gams