Lessons of Good Golfing Applied to Trading
Lessons of Good Golfing Applied to Trading
A long time ago (before I was married and had kids), I would love spending Saturdays on the golf course. Being outdoors, competing, and challenging one's physical and mental abilities has always appealed to me, and the game of golf certainly fit the bill. There are many lessons from the golf course that can be directly applied to being successful in trading. Let's go through some of the most important ones and draw the parallels with trading.
Get a Grip
All golfers know that one of the essential elements to a good golf swing is how you grip the club. There are different variations taught, but no matter what grip you use, being relaxed is a must. Tension is a big no-no when it comes to holding a golf club. Similarly, in trading, one must have a grip on the emotions that are inherent in all of us as human beings. This means not flying off the handle every time we lose, miss an entry or exit too early. This leads us into our next lesson.
A Bad Short-Term Memory
When Phil Mickelson hooks a drive into the trees, does he dwell on his mistake, or does he figure out a way to work his way out of the pickle? Of course, you know the answer. The trader has to do the same when he faces adversity. When a stop loss is triggered or poor execution causes him to miss a trade, he must try to put it out of his mind quickly since the negativity will cost him future opportunities. This mental fortitude is what separates the winners from everyone else.
The majority of amateur golfers don't hit their scores for various reasons, but one of the primary ones is that they don't finish their swings. In other words, at the point of impact, the face of the club isn't square, and the velocity needed to carry the ball its desired distance has diminished. Consequently, the trajectory of the ball is nowhere near the intended target. Traders will usually have the same results (or lack thereof) if they don't execute their strategies from the initial setup to the exit. This translates into following the rules with unwavering resolve until the desired results are achieved.
No Instant Success
For those of you that have been playing golf for a while, you know that improving your score (or just shooting a respectable one) will not happen overnight. It will take time, focus and motivation. This entails many hours at the driving range, perhaps private lessons, and finally, good execution. If I substitute the words profits and simulator for score and driving range in the two previous sentences, I would be speaking of a trader, wouldn't I? You get the idea.
Another key component to a good golf swing is balance. The body has to be in proper alignment if one is to hit the target. In addition, mastering the different stances for the various facets of the game (driving, chipping, and putting) will assist in improving results. In trading, balance relates to not letting the markets consume your entire life. We must remember that there is a fine line between unhealthy obsession and passion. I encourage students to pay themselves with family vacations. The time away from the markets will only serve to reinvigorate. Moreover, I often see novice traders directing their passions to making as many trades as possible. They feel the need be in the market all the time. I would redirect that passion into mastering a viable strategy, working on self ñdiscipline and furthering their education about how the markets really work.
Take a Mulligan
The Mulligan is a golfer's way of saying "do-over". Obviously, professional golfers don't get to retake a bad shot, but for us amateurs, it's sometimes needed. In trading, you get "do-overs" if you trade in simulator mode, and if you keep losses small in your live account. However, if you're reckless, don't have a viable strategy and are undercapitalized, you probably won't get a Mulligan.
A Mental Game
The skill level and talent it takes to become a professional golfer is remarkable. Most professionals can drive the ball 300 yards consistently and make par on a majority of the holes they play, yet some of these players still miss the cut after the first day of a tournament. I believe that at that level of play, it comes down to the mental game; how they perform in pressure situations. In the same way, a professional trader will shrug off a bad trade, seize the next opportunity with aplomb and reach their goals, time and again.
In short, trading and playing golf are similar in many respects. They are both extremely challenging to gain competence in, as well as requiring a certain mental toughness. Thankfully, for many of us, though, the only physical exertion required for trading is pressing keys and clicking a mouse.
Until next time, I hope everyone has a great week.
- Gabe Velazquez
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