On its surface, it may not seem like golf and trading have much in common. After all, golf is a sport played in wide-open spaces, where most players wear funny pants and some even drink beer in the golf cart. You probably don’t trade outdoors, and you likely don’t dress funny when you’re trading, and you’re certainly not drinking beer when you’re trading. (Right?)
But like so many things in life, sometimes you’ve got to look deeper to see things for what they are. And once you’ve done that with golf and trading, you’ll see how similar they are, and what one can teach you about the other.
Small Moves for Big Results
With golf, you’ve got 18 holes and acres upon acres of land to cover. But you’ve got to think smaller than that to do well. One hole at a time. Golf is a shot-by-shot sport; a big game made of small plays that need to be considered one at a time.
Likewise, your life and/or career as a stock trader can be a big, vast thing, but it’s made up of individual trades. You should not go into each trade thinking “this single trade will make me rich, and I will retire,” just like you should not step up to a tee and think “I’ll drive this ball over the water hazard to the green for an easy hole-in-one, finish 25 under par, and be the best golfer in the club’s history.”
In golf, you hope to string together strong shots. In online trading, you look to do the same. But the beauty that both trading and golf share is that each trade or shot is a chance to make up for a bad move you had previously or that you may have in the future. If you miraculously hit a double eagle (aka albatross) on an early par-5 hole, you don’t really think to yourself, “Well, looks like I’ll be shooting a 36 today.” Instead, you think that at best you’ll build on the achievement and finish strong, or depending on how things go, you’ve given yourself some room for error in the next holes.
The reverse is also true: if a trade (or a tee-off) moves against you, and you exit it with a loss (or end up in the rough), it’s understandably frustrating. But that’s one trade. Your next trade could be a big success and help balance or more than make up for a loss.
Don’t fit your career into one execution: take it one trade at a time, just as you do on the golf course.
Take Your Time
Ironically, the point of golf is to play as little golf as possible. The less golf you’ve played in 18 holes, the better you’ve done. So with that in mind, knowing that each stroke counts, you take your time before each shot. As a stock trader, you should be doing the same.
In golf, you consider the terrain, the distance, the weather, your own strength, and even more. From there, you pick your club, and you take plenty of time lining up the shot and getting yourself set. Then, you take your swing.
With trading, execution can be nearly instantaneous. When you click “buy stock” or “sell stock” (with a market or marketable limit order) you’re usually in or out of a trade in the blink of an eye. Accordingly, you should prepare, and consider the same things you do in golf: What are market conditions like? Where does this single trade fit within my strategy and where do I want it to take me? Is this the right stock? Is this the right price? It’s not until you feel ready that you click that button, knowing it counts.
Damage Control/Emotion Control
Well, suppose you did exactly what you didn’t want to do: you hit it right into the woods. Now you’re in an even worse place than you were before you took the shot, and you’ve yet to even find your ball. And when you do, you may discover that it’s deep in the trees with very little clear sight lines.
It happens to almost everyone in golf. Trading, too: you think you’ve done all your preparation and you’ve got the trade figured out, but the market moves against you and you take a loss. It’s frustrating to say the least and our own human nature can sometimes make it worse. For many people, the initial reaction to a bad trade, or a bad lie, is to get in there and just make it go away. You’re angry, and you want to golf or trade yourself out of it as soon as possible to make up for it.
Not so fast. You may be reacting emotionally. If you walk into those woods and swing for the green, you’re liable to hit a tree and have the ball end up even deeper in the forest. Online trading presents a similar challenge. Rushing into a trade and trying to max out your profit could result in even more losses.
Instead, stop and assess the situation. It was a bad golf shot, but it was just one shot. You may not be able to reach the green from the woods, but you may be able to easily get yourself on to the fairway, and if you can do that, then you may have a nice clear shot at the green.
Accordingly, your next trade may not get you to the profit goal you first had in mind. But perhaps you can get yourself back in the right direction so that the next trade and perhaps the trade after that may get you to where you want to go.
Who’s Your Caddie?
A caddie can be so much more than just someone who carries your clubs. It can be an expert to help you understand the particular hole you’re playing and the course as a whole, who can offer suggestions on the right clubs for the right shot.
In trading, you may not want to be going at it alone. That doesn’t mean you should have someone sitting next to you, giving you advice. But it does mean that you may want to check out many the resources that are available to you by experts and professionals. For instance, at Schwab, traders have access to published research by market and industry experts, as well as a range of fundamental and technical analysis.
In other words, if a caddie can do so much more than carry your clubs, and your broker can do so much more than just give you buy and sell buttons, why not take advantage of the information and resources?
There is also the technology factor. Truly great caddies stay on top of all the available products—whether its putters and drivers or shoes and balls—so they can make personalized recommendations that fit the golfer’s style. Traders too should be aware of innovations and new technology that can help them enhance their trading. For example: looking for a way to get relevant market information along with tools to act on it in a single place? Trade Source on Schwab.com was designed for just that purpose, helping traders spend less effort getting the information they want and more time acting on it.
There are of course other ways to get outside help. Talking with like-minded traders can help you generate new ideas or at least give you someone to talk through an idea with more casually. Like playing golf in a foursome, sometimes having someone that you discuss your trades with regularly may help push your trading game and heighten the enjoyment you get out of it.
Practice Trades and Driving Ranges
As previously noted, the less you play in a game of golf, the better you do. So how do you play as little golf as possible? You play as much of it as possible, when you’re not actually playing a game.
Using demo mode on your trading platform is kind of like hitting the driving range. It lets you practice in a safe environment where no one is counting strokes, and you’re not risking your money in the market. The driving range can be an ideal place to practice that tried-and-true swing of yours, making it even more second nature. Or it can be a great place to test a new grip or a whole new set of mechanics. Much of the same can be said for trading in demo mode. For example, with Schwab’s premier platform—StreetSmart Edge®—you can test trade ideas as a way to see how elements of a new strategy may work out. If you like the results the first time, keep testing to see if the results hold up. There’s never a guarantee it will work in the live markets (or on the golf course), but it may better prepare you.
One final similarity to note between golf and trading, and really it applies to many things in life, is that enjoying the journey is key. There will be ups and downs but the more you experience, the more you’ll get used to it and the more passionate you’ll become. So here’s to your success in golf and stock trading: may you see the green in both!