In this article, we will break down what chess & the stock market have in common.
In chess, success can be boiled down into 7 fundamental skills: visualization, calculation, tactics, evaluation/analysis, strategy, openings, and endgames.
What is amazing is that this sounds exactly like how we execute trades in the stock market.
Comparing chess and how we setup and execute trades:
- Visualization – reading charts and identifying patterns
- Calculation – determining how much we can gain and lose from a trade
- Tactics – what strategies fit into this situation to give us the best chance of winning
- Evaluation – which strategy gives us the best return on investment
- Strategy – what are the contingency plans in case the trade goes the wrong way
- Openings – actually executing the trade with the correct setup and alerts
- Endgames – knowing when to exit the trade at the target return on investment
Winners don’t pick battles they can’t win. They choose the battle, they choose the battlefield, and they choose when they fight the battle. This is how we choose to trade in the stock market. If you aren’t following this same thought process, you may be playing checkers instead. Chess & the stock market have a lot in common, don’t you think?