April 13, 2009 at 1:58 pm | | Comments 0

7 Trading Lessons from the Masters

championgAs a trader who loves my job, I find it difficult to witness any big event without looking for some parallels to trading. The sports arena is one of those places, and it doesn’t take much of a stretch of the imagination to recognize frequent lessons that are applicable to trading.

Just about anytime someone’s talent or emotions are being tested, you’re likely to also gain some insights which can help your trading.

This past weekend in watching the Masters tournament, I couldn’t help but notice a few things about some of the players.  Here are some of the things which caught my attention and the corresponding lessons…

1.  Some days you don’t have your best game, but grind it out anyway. Tiger was a little off all week.  He verbally discussed it, but it was also easy to see if you’ve watched him at all when he’s at his best.  But in spite of not having his “A” game, he chose to grind on every shot and concentrate as much as possible.  He came up a little short, but he had a chance on the back 9 on Sunday – which he admits is all he ever wants.  What if you’ve done the same all week with your trading by the time Friday afternoon rolls around – do you think you’d be satisfied?

2.  Stick with your style and be confident in your approach. Jim Furyk isn’t a long hitter compared to the guys he’s competing against, so he of all people is not going to overpower Augusta National.  He had to lay up on some of the par 5’s, but he kept to his strategy and it put him into the mix with a chance to win come Sunday.  Waiting for your setups to come along as a trader means not attempting unfamiliar approaches or those which don’t work for you.  Trust your method!

3.  When you’re hot, ride it – and enjoy the moment. Anthony Kim at age 23 is just one year older than Nick Adenhart, the Angels pitcher who died tragically last week.  Recognizing the similarities of not only their ages but careers as professional athletes, Kim was touched by Adenhart’s death.  Thinking of how brief life can be, Kim decided to enjoy himself and put life into perspective.  After reading about Adenhart on Friday, Kim went out to set a Masters record by making 11 birdies in a round.  He got out of his own way and allowed his talent to take over.  When you’re reading the market well and your trading is on track, trade a little bigger and see what happens.  It’s only trading.

4.  Take your lumps with maturity. During the second round on the 15th green, Padraig Harrington addressed a short birdie putt when a gust of wind moved the ball.  In accordance with the rules, he replaced the ball to its original position with a 1-stroke penalty, and made his par putt.  Having won the previous 2 major championships and having been in good shape on the leaderboard Friday, Harrington would have had plenty of reason to be upset or shaken.  But he went on about his business, not allowing a bad break to rattle him.  When a good trade suddenly reverses on you or unexpected news costs you money, accept it like a mature trader.  Keep plugging away with unflappable confidence.

5.  Embrace opportunities with confidence. Kenny Perry has been close before in a major, having been beaten in ’96 in a playoff during the PGA at Valhalla in his home state.  He’s won a number of times on the PGA Tour, and worked himself into the lead during the Masters.  Success would have meant he’d become the oldest winner of a major championship, as well as his first major win.  Facing the opportunity which Sunday brought along, Perry knew he’d either succeed or fail.  And he relished the chance to walk that fine line.  Trading afraid or scared won’t bring the success you crave.  View every chance as an opportunity to build greatness, and face it head-on.

6.  A little bit of nerves are good. Chad Campbell found himself right in the mix all week as he searched for his first major victory.  When asked by the press about his nerves being on such a big stage and facing such a huge opportunity, he openly admitted that he had been and would be nervous.  He also noted that having some nerves are a good thing, that they show you’re intense enough to care.  When you find yourself nervous over trades, is it because it matters to you or is it because you’re afraid?

7.  Don’t let a poor start steer your day. Angel Cabrera struggled early on Sunday as he found himself playing in the final group.  At 1-over par through 5 holes, he was playing worse than everyone else on the leaderboard, losing ground and clearly uncomfortable.  But he settled himself down and played solid for the remainder of the day, finishing with 3 birdies in his last 6 holes to get into a playoff – which he eventually won.  Allowing your first few trades of the day or the week to define you isn’t the best course of action.  Even if your year is off to a poor start, you can still salvage success.  Stick with your game plan and trust that your experience and effort will pay off.  Your attitude is a weapon – either you hurt yourself with it or you use it to your advantage.

I hope your trading week is a great one!

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]


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