What Traders Can Learn from Virat Kohli

7 min read

In the world of trading, where uncertainties are as prevalent as market fluctuations, there’s much to be gained from examining the success stories of individuals who have mastered the art of thriving under pressure and have learned to think in terms of probabilities instead of certainties. One such individual, exemplifying the probability-based decision-making in cricket happens to be Virat Kohli, the celebrated Indian cricketer and former captain of the Indian national team.

Beyond his cricketing prowess, Kohli’s journey holds valuable lessons for traders navigating the dynamic landscape of financial markets. In this post, we will focus on some of the formidable qualities of Virat Kohli and what traders can learn from him in getting better at their decision-making and process-building.

Cricket & Trading-Not Too Far Apart

Trading and cricket have much more in common than many realize. Achieving success in both fields is uncertain, and while predictions can be useful, excessive reliance on them can be detrimental to both a cricketer and a trader.

Frequently, we witness batsmen falling victim to their attempts to anticipate the next ball, only to discover that the bowler had a different plan. This scenario isn’t exclusive to batsmen; bowlers, too, sometimes concede boundaries when they preempt the batsman’s moves. Interestingly, this parallels the behavior of traders who, akin to batsmen and bowlers, make the mistake of trying to predict and time the market rather than allowing the market to reveal its direction organically.

You see, both in cricket and trading; success belongs to those who know how to react to changing possibilities and accordingly, excel in the skill of making calculated risk decisions.

When it comes to taking calculated risks in batting, there is no better example in the contemporary cricketing world than Virak Kohli! It is no secret that he is so skilled that he can play the same delivery in several ways and directions. And yet every shot he selects to play is based on a complex decision-making method that primarily focuses on reducing the probability of getting Out. Because he knows that the key to peak batting performance is rather simple, ‘Don’t Get Out’. Just like the key to longevity in trading is to never let your account be blown away by losses in a single/few trades.

Whether you are facing a lethal bowler or trying to navigate the market volatilities, know that the key to success in both would be your unwavering focus on survival even if that means letting go of a few opportunities to score BIG.

Certainly, it’s not solely Virat Kohli’s prioritization of survival that enhances his effectiveness; it’s a spectrum of his abilities that individuals in the trading community, like us, can assimilate and derive value from. This can be accomplished by integrating these skills into our decision-making process with the same degree of discipline and consistency exhibited by the accomplished batsman.

Let’s delve into the qualities of one of the world’s greatest batsmen and explore the invaluable lessons we can glean and apply to our trading endeavors.

Lesson 1: Risk vs. Reward Assessment

Virat Kohli refrains from taking unnecessary risks while batting. Because he has fully understood the risk associated with attempting a maximum, where the maximum gain is confined to six runs, while the potential loss is his valuable wicket. Consequently, there are seldom situations where he opts to pursue a six when the price of failure is jeopardizing his wicket. He chooses his shots wisely, playing to his strengths and the ask of the situation.

Kohli’s shot selection is not impulsive but rather a result of careful consideration of his rewards in shot selection vis-a-vis the risks he’s taking in attempting them. He assesses the risk and reward associated with each shot. He understands the importance of balancing aggression with caution, ensuring that the potential gains outweigh the risks involved.

Similarly, successful traders realize the importance of focusing on risks rather than rewards. They only enter a trade if the potential returns far outweigh the potential loss.

Lesson 2: Longevity in Performance

Virat Kohli’s strategic approach in cricket revolves around the principle of Longevity. Recognizing that small rewards, such as singles and doubles, are attainable consistently, he prioritizes these over big hits. This deliberate focus on incremental gains allows him to stay in the game for the long haul, a lesson that traders can draw parallels from in the financial markets.

While singles and doubles may not have the immediate allure of sixes, Kohli understands their cumulative impact on the overall score. Similarly, in trading, the consistent accumulation of smaller profits over time can contribute significantly to long-term success. By prioritizing stability and sustainability, traders can avoid the pitfalls of high-risk, high-reward strategies that may lead to being ‘caught out’ in the volatile market environment.

Kohli’s emphasis on staying at the crease, avoiding unnecessary risks, and building a solid foundation of runs reflects a mindset geared towards enduring success. In the trading arena, this translates into a disciplined approach, focusing on steady, manageable gains to fortify one’s position and navigate the challenges of the market over an extended period.

Lesson 3: Situational Awareness

Much like Kohli’s adaptability to the changing dynamics of a cricket match, successful traders navigate the complexities of financial markets by staying attuned to the prevailing conditions and adjusting their strategies accordingly.

In Cricket, Kohli meticulously considers factors such as pitch conditions, the strengths of the opposition, and the current state of the game before making tactical decisions. Similarly, traders must be acutely situationally aware, considering economic indicators, geopolitical events, and other external variables that may influence market behavior heavily.

For instance, not every market scenario is adept for generating double-digit returns, sometimes, it is prudent to aim for single-digit profits in trades. There are occasions when one should swiftly enter and exit, accumulating modest gains. Conversely, there are instances when one should initiate a position and hold, aiming for higher returns, ranging from 20-35 to potentially multifold returns if the circumstances justify it.

Traders must be able to discern the nature of the markets they are navigating. In bear markets, hallmark trades often involve collecting smaller gains with shorter trade durations. On the other hand, in a bull market, particularly in its early phases, traders should swiftly seize opportunities and endeavor to ride most of the upside gains to generate exceptional returns. However, note that to achieve those exceptional returns, traders must also be mentally disciplined enough to ride the waves of market volatility to attain the ultimate targets.

Whether on the cricket field or in the financial markets, the art of strategic adaptation while staying laser-focused on the goal remains a key determinant of long-term success.

Lesson 4: Building a Winning Portfolio

Kohli’s career record is a testament to his mastery across all formats of the games. There’s a valuable lesson for traders and investors here — ‘the importance of crafting a holistic financial portfolio’.

For instance, certain investors lean towards the perceived security of blue-chip large caps rather than pursuing the dynamic nature of small caps. Likewise, traders frequently find themselves uncertain about the types of products they should trade, such as stocks, futures, options, and so on.

One of the key reasons behind Kohli’s versatility is his deep understanding of all three formats and what it takes to succeed in each one of them. Similarly, every accomplished market participant must also educate themselves on the benefit of exposing themselves to all asset classes and products. Instead of fixating on means and methods, traders and investors should concentrate on maximizing returns within their portfolios while managing risk optimally.

Lesson 5: Creating Opportunities

Before Kohli’s breakthrough in 2010, batsmen typically defended balls outside the off stump, prompting bowlers to maintain a solid line there. Kohli, however, introduced the jab down to third man with an angled bat while defending. This innovation revolutionized the game, prompting batsmen worldwide to incorporate this shot into their arsenal. The result was not just an expanded range of strokes but also an enhanced ability to rotate the strike and keep the scoreboard active. Kohli had not merely seized opportunities; he had created them.

Kohli’s lesson teaches us that by following the herd, one gains access only to known opportunities. However, investing in self-learning can empower you to create unique opportunities. These opportunities, often overlooked by others, can become the catalysts that propel one closer to financial goals.

Lesson 6: Emotional Resilience

Kohli, like many other batsmen, is no stranger to experiencing a loss of form and prolonged periods of underperformance. Whether it was the slump in his performance during the 2014 England Tour or the challenging drought of centuries over an extended period, Kohli has encountered his fair share of lean patches. However, rather than yielding to pressure and criticism, King Kohli has consistently showcased remarkable composure. He faced challenges head-on, scrutinized flaws in his technique, and dedicated himself to improving his game. As a result, he not only overcame slumps but also emerged as a more formidable batsman.

Likewise, traders encounter periods of market turbulence, unforeseen losses, and sudden events that can test their emotional fortitude. Rather than making impulsive decisions, traders must learn to step back, reassess market conditions, and accordingly adjust their strategy.

The Bottom Line

In unraveling the success story of Virat Kohli, traders can find a wealth of inspiration and valuable lessons. From consistent performance and adaptability to emotional resilience, the parallels between Kohli’s approach to cricket and successful trading strategies are striking. By incorporating these lessons into your trading practices, you can aspire to achieve the same level of success in the unpredictable and exciting world of financial markets.