The Loop
Nine ways golfers and traders are alike
By Peter Finch
They're guys, for the most part, and a little older than average. They're affluent. Competitive. And they care deeply about their pastime. Really, really deeply.
Sound familiar? I'm not talking about golfers. These are the characteristics of many stock-market investors, says Kelli Keough, senior vice president, client experience at Charles Schwab Corp.
Keough, who grew up playing golf with her father in Northern Idaho, sees a lot of parallels between the best golfers and the best traders. In a recent interview, she walked me through her 9 Ways Golfers and Traders Are Alike.
Take it away, Kelli.
"First and foremost, both have a strategy. Active traders always do. It's actually critical for success in the markets to have a plan for how you're going to attack the market and then stick to that. I know that in golf, if you go in without understanding how you're going to navigate a course, your game may not be quite as strong.
"Using that plan, that strategy, will help you control your emotions, not letting frustration and anxiety take over. We know that happens in golf. In trading, it's actually really important too. Good traders are people who can control their emotions regardless of the way the market is going.
"Another similarity: Traders really focus on the terrain, just like a golfer. You can't be a master of the market overnight but you can do your homework, understand patterns, what has happened historically, and then adapt your game to it. That's very similar to what a golfer will do.
"Technology matters both for traders and golfers. Golfers are always looking for the latest driver, the latest and greatest clubs that will fit their games and their style. Traders are also on the search for the best trading platform that works best for them, the best tools, the best research. Technology turns out to be a very important part of the (trading) game.
"Traders aren't afraid to learn from experts. Our clients are very avid consumers of education, just as good golfers know they can learn from the experts. The commonality there is good golfers and traders really love to learn.
"Focus on the whole game. With some golfers, the tendency is want to focus on woods, long irons, clubs that will give you distance. But we know that in golf, success is really driven by the short game. Same with trading. If you focus just on how you're going to buy a stock and forget the exit - the sale side of it - you're ignoring an important part of the game and that can actually hurt your success.
"Play one shot at a time. You can't get down on your last shot. Taking the last shot into the next is very hard on you and can hurt your emotional control. We see that with traders. We really try to help them focus their attention on that as a key way of managing their emotion. Along with that is knowing when it to call it a day. Sometimes your swing isn't there. Some days it's just not working as well. For traders, there might be some market conditions that their strategy doesn't work as well in or they don't understand. One of our biggest pieces of advice to clients: When in doubt, wait it out.
"The final two really play into the learning and the journey and the fact you're not doing it alone. Golf can be a solitary sport. You can spend a lot of time by yourself. But we get a lot more enjoyment out of having a playing partner, having someone who pushes your game. My dad has a foursome he's played with about five days a week for the past 10 years. He gets enormous pleasure. Same with trading. It helps really bring that enjoyment out when you don't view it purely as a solitary adventure.
"Finally, enjoying the journey: golfers love the journey, getting better, always trying to master it. That is so important for traders. They really love the journey of trading. They're passionate. They love continuing down the path of learning."
Ok, I'll buy it. There are at least nine good similarities. If it were my list, I would add a 10th: Golfers and traders can both be delusional about their abilities at times. Which comes in handy on the golf course as well as Wall Street. There's a saying in golf that goes, "Every shot is good for somebody." That applies to trading too.