What can traders learn from Extreme E?
It’s an exciting time for racing fans. Following an explosive end to F1, the new series of Extreme E has kicked off with the Desert X grand prix in Saudi Arabia.
The gripping start to new series got me thinking. This new form of racing highlights some valuable lessons for traders. After all, trading the markets is much like a race. As soon as the markets open, it’s “lights out and away we go”.
But theses similarities go far beyond the hustle involved in beating the competition. The fundamental laws and strategies that govern both are the same, so traders should look at the long-perfected methods of racing teams to optimise their abilities. And while having the best kit available makes a huge difference, it still comes down to individual performance.
Looking at the format of the series, the new frontiers of the race are much like the new frontiers of trading. The markets are certainly more complex than they used to be, with more sophisticated products, such as derivatives, and operating systems, like algorithms, now common.
And just as a race is full of twists and turns, so too are the markets – especially at the moment. The rugged terrain that Extreme E drivers must navigate reflects the current volatility. Major factors like inflation and the Ukraine crisis are making the markets unpredictable, with some assets in turmoil. For that reason, it’s more vital than ever that traders are both well-equipped and alert.
The following are three reflections from the Extreme E series that traders should consider.
Speed, but controlled
Everybody knows racing depends on speed. Of course, speed relies on a combination of natural ability and equipment. And in the same way, traders must also have a healthy balance of good instinct paired with the best tools possible to beat the market.
But speed doesn’t equate to pure uncontrolled acceleration. While you want to be fast, you have to avoid crashing. Racers familiarise themselves with their route and think about what the best speed is at different points in the race. That’s what allows them to execute turns as quickly as possible and get ahead. Every movement is vital.
This is what traders must consider. Never rush into a trade. Act quickly, but be cautious, take stock, assess your options and ensure you are making the right move.
The new series epitomises innovation. Extreme E is the first ever electric car race, meaning the vehicles have a truly challenging and original design. They use electric engines but are a lot bigger and heavier than the cars that usually rely on batteries.
As the sport evolves, the technology will inevitably improve as the design of the cars is constantly and incrementally improved. Very slight changes can shave off all-important seconds, which can make a huge difference to results.
The same is true of trading. Traders can’t get stuck using old systems with outdated technology. Seconds in a trade makes an increasingly big difference as trading has become faster and more sophisticated.
Prioritising constant improvement using new tools, training and tactics is key to a winning trading strategy. The only way you can keep on top is by regularly updating technology.
You are the driver
Of course, no trader will succeed alone. As seen among the titans of racing like McLaren, the driver is supported by an enormous team of support staff and engineers.
However, success does ultimately come down to individual performance. In that way, the Extreme E driver is our trader, who still pulls on a range of external support such as brokers and information but are the ones to execute.
Often, that performance depends on painstaking dedication. Traders rely on their sharp focus and diligence to carefully guide where they put their money. There is no room for half-heartedness and the more time traders dedicate to trading, the more likely they are to succeed. After all, trading is a skill that is harnessed from experience, so it really is a matter of practice makes perfect.
Author：David Shayer, CEO, Vantage UK