Trading is like playing Golf

Trading is one of the hardest things to do. It is comparable to Golf – a sport which many (that never tried it) consider to be quite easy. Like trading. But that at the end is one of the hardest sports one can get started in. A comparison is not only quite interesting, but can also help an aspiring trader to better judge what is awaiting him – and maybe convince him to give Golf a try.

Surely, there is a private reason for this post

And it is that the author of this post is for some years madly in love with golf. And I am writing this from a nice 5 star hotel in Belek, Turkey, where I spend this year’s Christmas / New Year holiday taking lessons and working on my golf swing. I originally got interested in golf looking for a sport that was compatible with my work as IT consultant. Which means I want to be outside, need a sport I can do anywhere and it must be something I can do without coordinating with other people. If I get out of the office in the evening and feel like it, I should be able to just do it – something that rules out sports like Soccer (European football) and other group sports.

I finally made my playing permit during a stay in Munich, Bavaria, Germany (Home of Oktoberfest) during the summer of 2012. Sadly I did not manage to play a tournament this year… sadly. Though I managed to do some serious training. My goal for 2015 is quite intense, playing a minimum of 10 tournaments, winning at least 2 and getting my Handicap from an astonishing 47 to better than 30.

Golf and Trading: both need discipline

Golf is about precision. And a 18 hole golf round takes a good trading day – 5 hours. You can play great, but one needs the endurance – both in the body, but also in the mind – to not lose it all on the last holes. That is a long period of concentration, mostly walking around (or driving) with intense concentration every time one has to hit the ball.

This is very similar to trading. I think many that start in trading underestimate the stress it puts both on body and mind. Yes, one is sitting on a desk, but one has to be concentrated most of the time. And a trading day is long, unless one is only trading opening and / or other defined timeframes. And it is a mental game, requiring discipline, requiring one to not make a mistake – with the ability to lose all the gains one has been fighting for all day in the last trade of the day due to stupidity.

I have seen people fail in this – over and over. Not having the right mindset and trying to force profits, only to be told a lesson from the market.

Trading and Golf: both take a lot of training

Trading is easy – you sit down, hit a button and boom you are a millionaire. Right, or? Same with golf. Take a club, hit the ball and - hole in one. Heck, the declared best golf player of the world, Kim Yong Un, managed to hit 18 holes in one during his first round of golf ever, without training. After which he declared that being too easy and went back to writing military training manuals. At least this is what his biography says. Officially. Has to be the truth, or? Maybe not.

The reality is different. Golf takes many hours on the driving range, working on the golf swing, on precision, to be able to reliably hit the ball in a specific way. They say it takes 10.000 swings to have a vague idea what one is doing. In many countries or clubs one first must make a playing permit to be allowed to play – because they do not want total beginners to block the fairways trying to move a ball forward.

Trading is similar. One has to sit down and start working on a concept. Finding setups is hard work and takes time. Hours of testing or paper trading. Paper trading because – unless a setup is proven with paper money, there is no reason to ever risk precious capital. PPP – Preserve Precious Capital. The first rule of a trader.

Traders and Golfers always know how good they are

In trading it is called account size. A nice, daily, aggregation of your success – or lack thereof. You are a great trader but not making money? Well, dream on. Unless, naturally, these are only drawdowns. As a golfer the Handicap says how good you are. It is the number of additional strokes you should take on an 18 hole golf course. When a player with Handicap 10 and one with Handicap 30 play together, the Handicap 30 player is as good in his play if he uses 20 additional strokes. This way even weak players can win an amateur tournament – by playing better than their statistical expectation. And before anyone asks – professional golf players have no handicap. They are expected to be a 0 or better.

For a trader, the daily or weekly PNL statement is a good account of his success. Similar to the Handicap it tells me how good or bad I was. And – there is no discussion or dispute around this number. Lost 10.000 USD – well, that makes it a losing week. Not a “not so good one”. A trader may have a delusion about it, but once you look at the number, there is no discussion how well he did.

Trading and Golf: Riches for the best

Golf is the best paying sport for a singular athlete or small team (the athlete, a trainer, some small number of more people) to make money as a professional. Outside a team. So, no soccer. That needs a team. No F1 racing (which have serious teams behind). Similar trading. Want to make a million dollar – without starting a large operation of some sort? Be lucky with a small startup or go into trading, where you can – as individual or associate of a fund – get a lot more than that per year. I am not saying that trading is the only way to make a lot of money. But for some people… that do neither want to do sales (a real estate agent may make a lot of money) or build up a large organization (the traditional way to make a lot of money) or turn criminal – trading allows one to make a lot of money alone or with just a smaller support team. In our case there are 3 people involved full time on trading, as well as a part of an administrative position for handling all the paperwork and accounting.

The combination of Trading and Golf– worth looking at

For any trader, like for an IT consultant, having a good outlet do to something else is important. Life needs to be balanced, and sitting in a chair, watching computer screens, is limiting. On the other hand, a trader must focus on trading. Strategy development has priority. So any sport must be one that can take a second role. One that can be done when there is time.

This is how I originally went into golf. I never liked just walking around, I wanted something that focuses my mind, puts me into fresh air and allows me to calm down. Something that gives me a reason to go to holidays (there are wonderful clubs all over the world). Something that puts me out into a large open space with fresh air.

I tried golf. Much like finance – where I got hooked with the original “Wall Street” movie back in the days mobile phones where large, heavy and expensive), I fell in love on a small trial day. Immediately signed up for a course for my playing permit. You should give it a try, too.