Entering the market is like entering an entirely different world. This world functions nothing like modern society.
Modern society has laws and social norms in place to protect you. If you screw up, you have a safety net. People will generally reach out and help.
Modern society is cushy. Even people who are disabled, suffering mental illness or are unable to care for themselves in other ways still get by. (Maybe not as well as we’d always like but far better than at any other time in the past.)
Markets aren’t like modern society.
They’re much closer to being like the world in its most natural state.
The strong prey on the weak.
You live or die based on your own ability.
While the system can sustain a vast array of life and species for large spans of time, each player constantly faces the risk of death. Markets are unforgiving and brutal yet incredibly abundant places to thrive –Â just like natural ecosystems.
In this world traders are the modern hunter-gatherers.
Hunter-gatherers sustain themselves by staying in sync with the large, complex ecosystem of which they’re a part. This ecosystem is full of both opportunities and threats. The hunter-gatherers don’t control anything but instead seek to achieve harmony with the changes around them.
A key component of long-term survival in the wild is adapting and evolving. Failure to adapt to the changing landscape means you won’t be fed.
The same goes in markets. Markets trade a lot differently now than they did in 1980. If you don’t adapt your strategy along the way you’ll become irrelevant. You’ll starve.
Hunter-gatherers don’t try to extract every last bit of value from a situation. They wouldn’t kill all the deer in a herd even if they could. What would they do with all that meat? There’s no fear of “leaving money on the table” as long as they get what they need to thrive.
Instead of maximizing return, hunter-gatherers seek to achieve satisfactory returns while minimizing risk. They focus on risk-adjusted return. Risk is easily forgotten in a civilized society where nearly everything is already idiot-proofed, but risk has to be at the front of a hunter-gatherer’s mind.
Hunter-gatherers don’t have to win all the time. They just need to win often enough to stay fed. In the markets, you can make billions by calling it right just 55% of the time.
Since the world is abundant, hunter-gathers’ time frames are shortened. Unlike farmers or industrialists, hunter-gatherers focus on the next season (or maybe next few if they build up stores to ride out the lean times). But beyond that, why worry? The world will provide endless opportunities for someone who can live off the land. There’s never a “fear of missing out.”
As a trader, embracing this hunter-gatherer mindset will align you with the reality of markets. Doing so will help you take your returns to the next level.
(The above passage is straight from Operator Biren, a member of the Macro Ops Hub.)
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