subject: On Qualifying Trades [print this page] Did you know that the Cheetah, the fastest land mammal clocked at 72 MPH, will sometimes wait for days stalking a herd of wildebeest, waiting for just the right prey? Do you know why?
Because the cheetah's respiratory rate climbs from 60 to 150 breaths per minute during a high-speed chase and it can run only 400 to 600 yards before it is exhausted (low margin); at this time it is extremely vulnerable to other predators, which may not only steal its prey (run its' stops), but attack it as well (reverse the short-term order flow). And, if it springs too often without making a kill (string of losses) it will die from starvation(loss of capital) because of how much energy it burns (dollar loss) each time. So, the cheetah waits, quietly conserving its' energy, for the best opportunities, with the highest probability of success. Sometimes for days at a stretch.
As traders, we must husband our resources as carefully as any predator on the African plains. If the cheetah were to spring at every potential meal, it would starve very quickly. In trading, a failure to be selective in entering trade opportunities can quickly reduce a trader's account to unsupportable levels, possibly even resulting in margin calls.
So, consider that what has been successful for thousands of years, in one of the most efficient of the predatory mammals that nature has designed, might just be beneficial to a trader in the forex jungle where other predators' would be all too happy to take your money at the slightest opportunity.
On Qualifying Trades
By: Stan Hoffman
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