Former hockey star and current Hall of Famer Wayne Gretzky was once asked about his success on the ice. He responded by saying, “I skate to where the puck is going to be, not to where it has been.” He didn’t chase the puck. Instead, Gretzky wanted his hockey stick to be where the puck would be going next. He scored many goals with that strategy, and I believe that forex (and all) traders can better achieve their goals, too, if they follow the Gretzky strategy.
Good traders, like good hockey players, must be forward-looking in their actions. Basing your trades on what happened in the past won’t help you most times because one needs to always remember that the past, especially in trading, is definitely not prologue.
Gretzky excelled because of his ability to anticipate even though he didn’t always anticipate accurately. But that does not mean that his strategy was wrong, only that his execution needed improvement. Traders similarly must be forward-looking despite the difficulties, uncertainties, and challenges that entails.
Wayne Gretzky emphasized that anticipation was important to being a successful hockey player. Failing to anticipate in hockey means that you always end up chasing the puck and never catching it. In a similar way, traders must also anticipate and be forward-looking in their actions. Failing to do so means you’ll always be chasing and therefore be behind the curve-playing catch-up so to speak.
Taking forward-looking trades is not an easy task. There are many reasons why markets move (some known, others not) and traders with any experience know they can be quite volatile. Thus, judging the appropriate trade will always present challenges that successful traders must be willing to accept. We must assess what the current data are telling us about the future even though no one would even pretend to think this was easy.
Wayne Gretzky was not the fastest, nor the biggest, of hockey players, but no one was as gifted as he was in looking ahead and anticipating where the puck would be. Traders need to always keep one thing in mind: the market trades on two emotions-fear and greed. Anticipating when the markets will be in either mood will allow to trade to where they are going.
So, the bottom line is, the more you understand the economy and can anticipate how the market will react, the better your forecasts will be. To paraphrase the Great Gretsky, “trade to where the market is going, not to where it’s been.”