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CHESS AND TRADING
I came across an interesting article the other day, that neatly ties in the game of chess, wIth the game of trading. First I’ll quote the article and then explain what I mean:
In his article, The Role of Chess in Modern Education, Marcel Milat wrote, "Adrian de Groot, a psychologist in the 1960's, became very interested in the use of chess as an educational tool. He began studying the thinking behavior of chess players in Russia. In particular he observed that there was a significant difference in approach between those who are highly skilled and experienced in chess, to those who were new to the game. Initially de Groot assumed that the Grandmaster's superiority lay in their ability to organize well and to memorize concrete lines of play. What de Groot found was quite different: Grandmasters did not rely on superior memory skills. Grandmasters were not any better at recalling randomly placed pieces than novice chess players were. The Grandmaster however was able to take actual chess positions and in an astonishing 5 seconds recognize a complex chess configuration and decide on a successful move. How were the GM's able to give accurate, well thought out evaluations in so little time? It seemed that GM's (but not novices) were able to recognize familiar configurations, and associate them with appropriate moves and plans."
Many traders believe that analysis means prediction. It is exactly the other way around. Prediction rely’s on proper analysis. To be able to “recognize familiar configurations and associate them with appropriate moves…” is an important concept to remember. Proper analysis results in successful trading. First you must analyze, then you must trade. The results are dependent on how well your preparation is, and how well you carry out your trading.
Success comes from first being a Boy Scout, and then becoming a banker.
GO WITH A WINNER………………END UP A WINNER.
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