It seems that Golf and Trading have some similar challenges. Although one will not succeed in trading without a strategy based on the markets actions (ref Dustin's posts particularly http://www.elitetrader.com/vb/showthread.php?s=&postid=1157124#post1157124 ) and (IMO) a clear set of written rules on which to base ones execution, most of us agree that the key issues are Psychology/Discipline. Patrick J. Cohn, Ph.D. wrote an excellent article "Expectations are the root of self-sabotage in golf" that explores one of the key issues for traders. I will include excerpts below but recommend the original (click the link above)..
"Obviously, golfers don't set new records unless they possess tremendous skill. Also important in scoring low is a player's self-defined belief about what he or she thinks is possible. Humans have much greater resources for success than they tend to use. Golfers often stifle their own success with self-imposed psychological limits in the form of comfort zones, expectations or preconceptions about what is a good score. " "Many of the golfers who are trying to earn their way onto one of the professional golf tours limit themselves with preconceptions and expectations about what is and what is not possible, which forms their personal comfort zones. Consequently, if playing better than expected, golfers sabotage their games with negative thoughts such as, "when am I going to make my first double bogey and screw up this round?" Positive and negative expectations are the root of self-sabotage in golf." "Most TOUR golfers don't set target scores before they play. Target scores are limiting. Durant had only one goal (not an expectation) when he shot 61. The goal was to give himself as many chances at birdie as possible. " "Target scores limit you in two ways: (1) It's frustrating if you don't reach your target, and (2) it causes you to go into what I call "protect mode" if you are playing better than expected or gain the lead. " "What was the biggest mental key for Durant when he set a new 90-hole scoring record? It was the ability to not get caught up in score and what number he could shoot. " I'd encourage you to read the article and see if it could improve your trading.
An interesting article and applicable to trading for sure. There's another thing about golf and trading that go hand in hand. Equipment matters! While a custom set of clubs will not put the weekend hacker on the pro tour, they will shave strokes off his game, and that's a fact. The right trading tools will help as much. Those that try to get by on the cheap are only costing themselves money in the long run.
Thank you for your post! That is an excellent article on Golf and very relevant to trading. As both an enthusiastic Golfer and Trader I am often seeing similarities between the two and making comparisons. And my personal experience in both, relating to "expectations" has helped me understand just how powerful the psychology is. It took me a long time to discover this, however. As a Geophysicist by profession I tend to analyze and rationalize and seek the "logic" in all things. This can lead to months and years of frustration as one tries to improve his golf game and his trading results. Durant's goal (not to score 61) but to give himself as many chances at birdie as possible is brilliant. Traders (myself included) should start every "round" with the goal of trading their system and taking advantage of the opportunities the market presents... not making $1000 or whatever. Thanks again for the post. Joe
Playing golf well consistently is all about risk management, like trading. Your overall results will be much better if you know your strengths and play within your limits - what works. Kinda similar to trading... if on every trade you traded the lot on a hopeful windfall trade, you'll eventually lose. Like golf. If you smash the ball hoping to hit a perfect drive every time, you'll slice or hook it more often than not. You can smash it on the driving range... when playing though, it's best to play safe. If you play aggressively, you may hit one good hole out of 18, but if you play conservatively, you'll probably end up with a better score than if you were to take huge risks every shot. Again same with trading... professional golfers probably see the overall picture, even though playing safe is boring - who doesn't love to smash the crap out of it? Professional traders do the same. Poor golfers and poor traders take unnesseccary risks for the cheap thrill, and it ends up costing them overall. All this talk about golf, I might go play some.