TRADERSMARTS: Golf and Trading

With the U.S. Open Championship this week I thought it would be fun to look at the many parallels between golf and trading.

It seemed the most fun way to do this would be to listen to what some of golf's all time greats have to say about the game of golf. So below we have famous golf quotes followed with a note about how they correlate to trading. Since I included a lot of great quotes I have organized them by topic for convenience.

"I always thought the U.S. Open made a man out of you more than any other tournament." - Jack Nicklaus

The 2014 U.S. Open Golf Tournament is underway. Time to kick back, watch some great golf, and relive the words of some of golf's greats — applied to trading!

PRACTICE IS REQUIRED

"Simply by making the effort to start something, you will be miles ahead of almost everyone else." - Gary Player

"The best exercise for golfers is golfing." - Bobby Jones

"The harder you work, the luckier you get." - Gary Player

"The more I practice, the luckier I get." - Gary Player

"There's always stuff to work on. You're never there." - Tiger Woods

“No matter how good you get you can always get better, and that's the exciting part.” - Tiger Woods

"There is no such thing as a natural touch. Touch is something you create by hitting millions of golf balls." - Lee Trevino

"I always wanted to be the best I could be whatever I did. I didn't want to be the number one golfer in the world. I just wanted to be as good as I could be. I work hard, I push myself hard, and I probably even expect too much of myself." - Greg Norman

Do we sense a theme here? Practice is required.

"Don't be too proud to take a lesson. I'm not." - Jack Nicklaus

I love learning from other market pros. The minute we think we know everything is the minute we know nothing.

"Winning is not always the barometer of getting better." - Tiger Woods

Oftentimes when we are working on improving our process the results show up in the P/L last, but that is not the only way of measuring our progress. Related blog post: "Sports, Trading and the Psychology of Improvement."

RISK MANAGEMENT

"Golf is said to be a humbling game, but it is surprising how many people are either not aware of their weaknesses or else reckless of consequences." - Bobby Jones

I get an email at least once a month from someone who has come across my site after suffering major losses with no regard for proper risk management. It is amazing how many people disregard $ when it comes to trading. The same person who will spend 32 years researching the best gas grill before spending a dollar will routinely throw many thousands of dollars away in the market by trading irresponsibly. Be aware! Be awake!

"Golf is the only sport I know of where a player pays for every mistake. A man can muff a serve in tennis, miss a strike in baseball, or throw an incomplete pass in football and still have another chance to square himself. In golf, every swing counts against you." - Lloyd Mangrum

Don't take stupid trades. On one of my monitors I have a sign that says: "Be respectful of the trade. ONLY take GREAT trades."

“Golf is not a game of great shots. It’s a game of most accurate misses. The people who win make the smallest mistakes.” - Gene Littler

"This is a game of misses. The guy who misses the best is going to win." - Ben Hogan

The trader who learns to lose small is going to win. This is why I have found a way to keep my risk per unit to between 8 - 30 ticks max.

"Golf is about how well you accept, respond to, and score with your misses much more so than it is a game of your perfect shots." - Dr. Bob Rotella

AVOIDING DRAW-DOWNS, TRADING SLUMPS, AND TILT

"Why am I using a new putter? Because the last one didn't float too well." - Craig Stadler

Ever lose your temper when trading? Guarantee there have been many broken keyboards, and worse from people in this profession. It pays to be calm minded and level headed. Unless of course you want to go on tilt.

"My stubbornness can be boundless." - Jack Nicklaus

Every been on tilt? Enough said.

"Ask yourself how many shots you would have saved if you never lost your temper, never got down on yourself, always developed a strategy before you hit, and always played within your own capabilities." - Jack Nicklaus

Jack said it best!

"Missing a short putt does not mean you have to hit your next drive out of bounds." - Henry Cotton

Don't let one bad trade become a series of many bad trades.

"Sometimes the biggest problem is in your head. You've got to believe you can play a shot instead of wondering where your next bad shot is coming from." - Jack Nicklaus

Thoughts are things. The market is your friend, your compadre, not your foe, not your enemy.

'It takes hundreds of good golf shots to gain confidence, but only one bad one to lose it." - Jack Nicklaus

Ever been in a trading slump?

“Golf is not, and never has been, a fair game.” - Jack Nicklaus

The market is not fair. Additionally what can go wrong often will. Accept that and the playing field starts to level.

"These guys who keep on playing but aren't winning, you've got to sit them down and let them figure it out and perform a little gut-check on themselves.' - Payne Stewart

Sometimes you need to take a break. A day off away from the markets can do wonders for breaking the cycle of a losing streak.

"I'm trying as hard as I can, and sometimes things don't go your way, and that's the way things go." - Tiger Woods

Sometimes we do everything right and the trade just doesn't work. So be it.

PATIENCE

"A good golfer has the determination to win and the patience to wait for the breaks." - Gary Player

Patience is the # 1 quality of top traders.

EDGE

"Golf is a game of precision, not strength." - Jack Nicklaus

To me this applies to edge. My edge is based on TS #'s and Execution/Target Zones and understanding how to react to them and execute around them in real time. I can't buy my way out of a position. I am not that strong. So I must use precision in my entries and exits. It is why I risk 8 - 30 ticks max per unit per trade in YM 6E CL GC. I have found a way to execute with the lowest possible risk. You don't need to risk 2 points in oil to make 6 points. You only need to risk 8 - 30 ticks and get in at the right time and level.

"Learn the fundamentals of the game and stick to them. Band-Aid remedies never last." - Jack Nicklaus

Find your own style. Find your own edge. Sure it can be based on something you learn from someone else. When we first start out we know nothing and we have to learn somewhere. But we don't bounce around to every room, to every service, to every method, indicator and strategy. Price. Volume. Those are the two things that make a market. Then we add from there.

"The secret of golf is to turn three shots into two" - Bobby Jones

This only applies to Goldman Sachs. And in the reverse.

"There's going to be places where you can attack the golf course and there's going to be times where you've got to kind of bite your lip and play conservative and hit to certain spots on the green, get out of there with a par and move on." - Jim Furyk, on the discipline required to play Augusta National

Knowing when to press and knowing when to be conservative are equally important.

"Hitting the ball is the fun part of it, but the fewer times you hit the ball the more fun you have." - Lou Graham

Trade less. Make more.

"There are plenty of fellows here who hit the ball better than I do. To beat them I have to out-prepare them. That is the only advantage I have." - Jack Nicklaus

There are plenty of market participants with way deeper pockets then me. That is why I don't trade without doing my preparation (TS TradePlan) ahead of each new session.

"A shot that goes in the cup is pure luck, but a shot to within two feet of the flag is skill." - Ben Hogan

This speaks to all the people that say picking tops and bottoms is a fool's game. Check some TS TradePlan Charts. That being said I did alter my method in early 2011 to add momentum into my trading. Related blog post: "Sports, Trading and the Psychology of Improvement."

"If, if, if -- that is what this game is all about" - Jack Nicklaus

We never know what the market is going to do but all good traders have plans to do something if the market does either X, Y, or Z. Just like good chess players are planning ahead if certain scenarios unfold, good traders do the same. It is why I have the Execution/Zones, three different areas on each side of the market to consider executing trades at and targeting trades to. I like to know in advance what I am likely to do if the market moves to X, Y or Z.

DECISIVENESS

"Be decisive. A wrong decision is generally less disastrous than indecision." - Bernhard Langer

Decisiveness is the second quality of top traders.

ENDLESS PURSUIT

"Golf is a science, the study of a lifetime, in which you can exhaust yourself but never your subject." - David Forgan

There is no holy grail.

"One reason golf is such an exasperating game is that a thing we learned is so easily forgotten, and we find ourselves struggling year after year with faults we had discovered and corrected time and again." - Bobby Jones

As in golf and in life...in trading we often have to learn a different variation of the same lesson over and over and over again.

“No one will ever have golf under his thumb. No round ever will be so good it could not have been better. Perhaps this is why golf is the greatest of games.” - Bobby Jones

We can always improve our trading.

"As we all know... golf is a puzzle without an answer." - Gary Player

"There isn't a secret to golf, of course, but no real player will ever believe that." - Jack Nicklaus

We know there is no holy grail, but we as traders are still always seeking ways to improve our edge.

"Golf is deceptively simple and endlessly complicated; it satisfies the soul and frustrates the intellect. It is at the same time rewarding and maddening - and it is without a doubt the greatest game mankind has ever invented." - Arnold Palmer

LOL. Every try to "figure out" the market?

PSYCHOLOGY

"Don't ever try to tell me golf is not 99.9 percent a mental game." - Jack Nicklaus

"You swing your best when you have the fewest things to think about." - Bobby Jones

Another one that I could expound on forever. When the trade is on all outside distractions are off. Are you using 15 different indicators and signals to make decisions? LOL shall I go on...?

“A leading difficulty with the average golfer is that he totally misunderstands what is meant by concentration. He may think he is concentrating hard when he is merely worrying.” - Bobby Jones

Classic.

"My failures have made me look at myself in a way I've never wanted to before." - Tiger Woods

Trading makes us examine every aspect of ourselves.

'Many shots are spoiled at the last instant by efforts to add a few more yards." - Bobby Jones

“Professional golf is the only sport where, if you win 20% of the time, you're the best." - Jack Nicklaus

"I'm a firm believer that in the theory that people only do their best at things they truly enjoy. It is difficult to excel at something you don't enjoy." - Jack Nicklaus

"Maintain a childhood enthusiasm for the game of golf." - Chi Chi Rodriguez

This is key for anything we wish to excel in.

"You attack a golf course mentally, not with your swing." - Jack Nicklaus

This applies to everyone except @MarketPlunger who is allowed to attack the market with his mouse.

"We create success or failure on the course primarily by our thoughts." - Gary Player

Thoughts are things. In life and in trading.

"It will always be the ball and me." - Tiger Woods

Wow. This says a lot and applies to everything. I could write about this one forever.

"Reverse every natural instinct and do the opposite of what you are inclined to do, and you will probably come very close to having a perfect golf swing." - Ben Hogan

Ha! Every trader has felt this way at one time or another.

"If you try to fight the course, it will beat you." - Lou Graham

We aren't competing against the market, we are trying to become one with the market.

"Every golfer scores better when he learns his capabilities." - Tommy Armour

As a trader you must determine the best trading style for your personality type.

"I'm not out there just to be dancing around. I expect to win every time I tee it up." - Lee Trevino

What is your expectation at the start of each trading session?

"One of the most fascinating things about golf is how it reflects the cycle of life. No matter what you shoot - the next day you have to go back to the first tee and begin all over again and make yourself into something." - Peter Jacobsen

You are only as good as your last trade. No, you are only as good as your next trade!

"For this game you need, above all things, to be in a tranquil frame of mind." - Harry Vardon

Every have a great day in the market when you are agitated and irritable? Me either.

"You don't know what pressure is until you play for five bucks with only two bucks in your pocket." - Lee Trevino

"Most putting troubles stem from being scared or indecisive, or both" - Jack Nicklaus

Scared money never wins. You have to be willing to define and accept risk. If you step up to the trade and you can't afford to lose...you are sure to lose. The same way if you step up to a putt that you can't afford not to make...you are sure to miss it. If you have played golf before you can sense the pressure increasing right now just reading this. Scared money never wins. You have to be willing to both define (I am going to risk X amount on this trade) and accept (If I lose I will be okay with it) risk!

“Golf is the loneliest sport. You’re completely alone with every conceivable opportunity to defeat yourself. Golf brings out your assets and liabilities as a person. The longer you play, the more certain you are that a man’s performance is the outward manifestation of who, in his heart, he really thinks he is.” – Hale Irwin

Wow. This describes trading and humans perfectly.

"Well, the biggest rival I had in my career was me." - Jack Nicklaus

Without a doubt the biggest hindrance to people's success in trading is the inability to get out of their own way.