Super Gann Trader Academy which conducts share market training in Mumbai, offers free trader awareness lessons.

Once upon a time, Palestine and Israel were locked in major battle occupying opposite sides of a ridge. As part of ancient warfare tradition, Palestine challenged them for a single combat (one warrior from either side) to settle the dispute without incurring bloodshed of big battle.

Palestine sent their mightiest warrior Goliath for this combat. Goliath was a 6 feet 9 inches tall, well-built warrior. He was fully armed with his armor and weapons. The Jewish soldiers were afraid of Goliath. Then a little shepherd boy David volunteered to fight Goliath. He brought his sling and some stones for his slingshot.

When Goliath saw the challenger, he laughed and asked him to get close. David looked small and carried only slingshot, but he was an expert in use of sling. He remained at a distance and put a stone in his sling and flung it. The stone hit big Goliath in the center of his head. He fell to the ground. David quickly pulled Goliath’s sword and killed him. David had saved the Jewish people!

Strengths and weaknesses:

  • Goliath was armed with sword and protective armor. His main strength was in close combat and he could not move very fast, considering the fact that he was wearing complete body armor. He asked David to come close to him for fight.
  • David was expert in slinging stones at high speed from a distance. He did not go near Goliath and attacked him from a distance with his accurate slingshots. He managed to kill Goliath because he knew his strength and Goliath’s weakness.

What can traders learn from this story?

Big institutions (Goliath) have the advantage of getting direct information from company’s management. They have deep pockets and better infrastructure. But their main disadvantage is that they trade in big sizes and cannot buy and sell such large quantities easily. They also need to remain invested all the time irrespective of market conditions.

Small investors/traders (David) have the big advantage that they can buy and sell easily on any given day as they trade in small quantities. They can also wait for the right time to enter the market as they do not have to remain invested all the time.

They must use this advantage and trade only when conditions are favorable to them. By using a tested trading system, they can wait for the right time and trade only when system indicates that they have good chance of being successful.

By playing the game, only when it suits them, a small trader/investor can beat even big institutions and generate superior returns.

We train traders in use of trading systems and help them set up a profitable trading business. Join our share market training courses to become a top trader.

Here the List of Blogs in this Series 

  1. What is Money Management?
  2. Following a trading system can make you rich more?
  3. Is your loss aversion costing a fortune?