A conversation today led me to think about focus. A friend asked me:

“How can you bear to stand aside from the markets?! Look at the opportunities offered by the current volatility!”

I told him I found it easy because my first focus was to preserve my capital; my second focus was to execute consistently; and only after the first two were satisfied did my third focus step up to the plate. This focus is to attain exceptional returns.

  • Preservation of Capital
  • Consistent Execution
  • Pursuit of Superior Returns

If you have read ‘Trader Vic - Methods of a Wall Street Master”, you’ll recognize those words. From the first time I read them I told myself: “That describes my trading philosophy to a T!”

My friend then asked what I meant by focus and how that related to my trading success. I thought that a pertinent question because nowadays, we need all the focus we can muster.

Let’s start by defining what I mean by focus: “The art and skill of concentration - the ability to direct attention, efforts or activity at a desired direction or object without distraction.”

And, because focus is an art and skill, we can identify its component parts.

There are only two component parts:

  1. Attending to focus with relaxed alertness which
  2. leads to purposeful action by which we attain our goals.

A state of relaxation is critical to successful focus. I learnt this from my Goju Kai karate instructor Merv Oakley. Merv is an old time instructor who believes in the importance of a solid foundation. One of the principles he taught me was to deliver a punch or block in a relaxed state until just before point of impact - at which time maximum tension was called for. This would ensure I deliver my punch, block or kick with optimal force.

So too with focus. If we focus our attention in a relaxed state we’ll achieve our best results. In my view, focus is essential to success. Many traders I have met are either focused and uptight or unfocussed and having fun. Successful traders are successful because they are focused, having fun and relaxed.

Two other states help us achieve relaxed focus. I’ll consider these and how focused attention leads to purposeful action tomorrow.

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