Forex World Cup
I wrote an article recently entitled Why American Baseball is Like Forex Trading. This got me thinking about whether I could draw an analogy between World Cup soccer and forex trading. Before I go on, I must admit that I am not a soccer expert. However, I watched quite a bit of it during my three years working in Singapore as a chief dealer of an American Bank. I also coached my daughter’s 8-9 year old girls soccer (aka football) team for two years. So, I have enough experience to draw the following analogies:
Protect the Midfield
Before I could begin as a coach I had to attend coaching school. I had no clue about the fundamentals of soccer and was not sure what strategies to employ. As I was heading for my first game, I ran into one of the instructors and he gave me one piece of advice. He said, “Protect the midfield.” I followed his advice, stacked the midfield and it kept us in every game. We wound up coming in second and first place in the two years I coached by being in every game.
In trading, the midfield is your account. You need to protect your capital. We all have limited resources and you need to guard it to live to trade another day. This requires prudent money management and avoid getting sucked in by the lure of high leverage or the temptation of trading without a stop. In other words, protect your capital so you can stay in the game.
Stay Disciplined, be Patient, and then Attack
In soccer, it is important to be disciplined and stay in your lane so an offensive player cannot get a breakaway through the defence. In this way, you can stay in the game by not giving up too many easy scoring chances. Then it comes down to patience, biding your time until you see a scoring opportunity and then attack the goal.
This is no different from trading.
- Stay disciplined so you can stay in the game. Avoid Dumb Trades and Dumb Stops. Stick with your trading approach if it is one that works for you.
- Be patient and take what the market gives you, not what you hope it will give you. In other words, don’t force the issue.
- Then wait until everything lines up for you and attack the market when you see a good risk/reward for a trade.
So we can learn from soccer as there are analogies to forex trading. As I noted, I am not an expert on soccer and would to hear your thoughts on how it can relate to trading. I would be glad to publish a follow up article with your thoughts so send them to me at jay@localhost
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