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Education

Trader... Cricketer & YOU: Part 2

NSE:NIFTY   Nifty 50 Index
A batsman’s (trader’s) approach to his batting (trading plan) depends on

Whether he is playing:
- Test match (Long term investment)
- One day International ( Medium term)
- T20 match ( Short term / Leverage trade)
- Or for that matter a Rain hit T20 match ( Intra day High leverage high risk trade)

While playing a test match a batsman’s
- Focus is on avoiding temptations
- Keeping patience & willingness to leave a lot of deliveries
- Looks to hit when the ball is in his area of strength
- May score at slow pace but focus is on scoring big over period of time as he is aware & relaxed that time is on his side

While playing a T20 game
- looking to score at high strike rate but overall runs per match still restricted due to limitations of just 20 overs per match
- willing to take very high risks sometimes almost every delivery
- risks losing his wicket often

In ODIs
- tries to have a balanced approach
- looks to build his base & take calculated risk
- Unlike T20 match, batsman knows he has more time & hence can focus on planning, preparing and attacking at the opportune moment & revising his plan if there are deviations (after reading & getting a feel of the pitch, fall of wickets, targeting supposedly weaker bowler or last 10 overs, etc)

So what’s the similarity from trader’s perspective
Let’s see

A Test match trader / investor can
- Avoid the temptation of trading every trade
- Keep patience & should be willing to leave a lot opportunities he is unsure of
- trade when the price & trade set up is in his comfort level where he understands the risk & knows reward potential is far higher than risk involved
- focus on sustainable trades & stay in the market for a longer time

A T20 trader
- intraday / short term / leverage trader
- looks for higher leverage trade for higher reward potential on relatively less capital
- but overall profits per trade gets limited as leverage trades have a daily / weekly / monthly cut-off time
- hence many a times a high leverage trader cannot take full advantage of the complete potential movement in the stock
- often he also risks his capital (Wicket) as even a slight movement in the opposite direction can lead to Capital erosion

Medium term trader
- Looks to capture a decent opportunity & is willing to give the trade set up the time it deserves
- Uses trailing Stop loss to adjust as per markets movements
- Leverages only when he understands risk :: reward ratio and considers it to be favorable
- Does not risk by over-leveraging

Some food for thought…

I leave you with some numbers & stats, you decide what exactly you are looking for from trade…
- In T20 matches Virat hits a 6 every 24 deliveries on an average
- Compare this stat with his innings in the on-going IND vs SL test - scoring 243 runs in 287 deliveries but no sixes at all in such a big inning
- Although Virat’s ratio of scoring 6s in Test is very less
- he has an impressive 19 centuries in just 62 Test matches with a high score of 243
- compared to just 4 centuries in 226 T20 games with a high score of 113
- in the balanced format i.e ODIs, he has 32 centuries in 202 ODIs with a High Score of 183


Player is the same, ability is the same, capability is the same… but game format is different & players adjust to different format with different mentality and different strategies

If we analyse these numbers further, to score a big hundred, on an average, Virat requires
- just 3 matches in Tests,
- 6 matches in ODI format
- but requires a massive 56 matches in T20


So what are you looking for scoring 6s (taking higher risk) or scoring big over time (taking less risk)

Remember it is not about which format is good or bad, it is more about adjusting & blending yourself to fit in different time horizons and having realistic expectations with understanding of risk involved

Understand and be clear with your objectives before you enter a trade

Take care

To be cntd…
Hatts of Sir....Very well explained....This kind of thing i have tasted many times from the 1st day in market....Most of the time i have beared losses when i saw the trades are mouthwatering or say got tempted about trade by going outside by comfort zone.
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Continuing with the analogy that everyone understands is a great way yo convey the ideas. So congratulations on that.
Unlike first part where the one entering the trading world and is serious bout it. there is no_choice but to focus on the improving the skills from gully to state to dulip trophy to ranji to Team india . Once they reach that level, this part 2 comes intoplay where there is CHOICE that once can make. Choosing from one or two or all three formats of the game . What i think was missing was the metaphor of frequency of the tests/onedays/t20 thats being played. Thus affecting the ammount of centuries one can score in tests is not equvialent to ones in T20s. Like withiin one year they can play10 tests but 30 onedays and 50 t20s. so 30 odd runs avg in T20s can make more runs than 100 in 5 tests. Thts why the Batsman;s Statsin t20 displays 50s instead of 100s. Even ifthey take more risk on every ball, the quantinty if innings balances the eqation.Tests are more on quality innings, while t20 are more on quantity.

Thanks for your time and effort for doing it for others!
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Interesting.....driving the point to be a long term investor rather than a short term trader
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amazing
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@RaviDubey, Thanks
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