Golf and trading: Why golf is more like trading and investing than you may think!

Golf and trading the financial markets have much more in common than you may think

Golf and trading: Why golf is more like trading and investing than you may think!
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Maybe you play golf, maybe you don’t. Either way, there is much to learn from those that play the game well. I have played golf for years and there are many similarities to trading that are just too hard to ignore. Although it will be easier for golfers to relate to some of these concepts, I invite anyone interested in trading to continue reading. One of the first things people say about golf is that it is a “mental game”, a game between you and the course. Just how well you manage yourself and how well you manage the course will ultimately help your score. Is this sounding familiar?

Golf course management

Golf Course
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“Course management” is a term you hear good golfers talk about. Another way to say this would be “risk management”. The golf course is wide open with many hazards and it leaves club selection and shot selection up to you. There are no set rules on when to go for it or when to lay back. This is solely up to you. The markets also have no set rules of when to go for it and when to lay back. The only thing we can rely on is when the bell will ring each day. The rest is up to traders and how they manage risk day in and day out.

Play to your strength

Golf Sand
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“Play to your strength” is another term used on the golf course. My ball flight has a natural tendency to fly from right to left. When given the chance, I will most often rely on the shape of that shot. There is no reason to force a left to right shot if I don’t absolutely need to. For the want of a few extra yards off the tee, I will not change my natural swing as the risk vs. reward is just not there. If you are a trader who prefers to play the short side given the chance, then trying to force long trades on a day where the market is range bound may not be worth the risk. Instead sit back and look for your perfect short setup. It just makes things easier when you play to our own strengths.

After the bird comes the turd

Play Golf
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On the course, I have heard people jokingly say; “After the bird comes the turd”. In other words, after a really good hole where everything went right, beware of a false confidence on the next tee. Don’t misunderstand me; there is nothing wrong with having confidence. It’s how you manage that confidence that really matters. Never let your guard down. It’s very easy when trading to let your defenses down after a good trading day and give money back the very next day. If that happens, go back and look at that particularly bad day, it may have been a dose of careless trading due to overly high confidence levels. I have learned over the years to be extra careful the day after a stellar trading day.

The next hole is a fresh new start

Golf Ball / Hole
Image Source: Golfer – / License: CC0 Public Domain

One of my favorite golf quotes that also pertains to trading is; “The next hole is a fresh new start”. The last score does not have an effect on the next hole so tee it up with confidence and swing away. If you choose to think about the last hole and carry that with you, then prepare for another bad score. I try to remind myself that each trading day is like a golf hole. After a bad day, you get a fresh start the next day and everything starts over again. The same could be said after a bad trade. A bad trade should have no effect on the next good trading setup that comes across your screen.

I like to say that there are only 2 things you can control as a trader; your position size, and your attitude. Drawing on the parallels of golf, helps me to manage my attitude when needed. What about you?

About Steve Gomez
Steve Gomez is a professional trader and mentor from San Diego.

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