5 Ways Basketball is Similar to Trading
Hey Real Life Traders! Are you doing splendid? We talk about sports pretty often here at Real Life Trading. We are probably the only company who has a day trading room that focuses on day trading, but also has fun side discussions on sports, movies, jokes, stock puns and myriads of other rabbit holes we go down from time to time. We keep it fun in our rooms for sure!
Each July is sports month at Real Life Trading. We encourage traders to get out and enjoy the weather and try to play a sport they have never done before. I'm an avid sports fan and I find myself having to reach down into the deep confines of the Internet to find new sports, but every year it happens!
This article, we will focus on a sport that everyone has heard about: basketball.
This year we saw the Cleveland Cavaliers win a basketball Championship for the first time ever. They defeated what seemed to be the unstoppable Goldenstate Warriors. I watched game 7 from Brian Bode's new place after we enjoyed an amazing weekend and a great RLT pool party and meet up just the Saturday before.
As I watched that game and many others, I saw some similarities between the game and trading. (Yes, I know, I'm a true stock market nerd). It's almost as if the stock market is my hobby, job, business, career and mission. I love it! Here are some similarities between the two.
1. If you want to truly be a professional, someone who makes money consistently, expect to work at it for years.
2. You can be 50% and make a living. Over the last 3 years, my calculated win:loss ratio is 43.6%. As long as you lose less money than you make, you will be profitable. Risk mitigation truly is so important in trading. In basketball, if you hit 50% from the floor, you're in the same ranks as Kobe, Jordan, Iverson, Bird and many of the other greats.
3. It's very fast paced. One of the reasons people enjoy basketball so much is because it's so fast paced. Every 20 seconds or so, there is usually a team scoring. Spectators like that. When day trading, hundreds can be made or lost in seconds or minutes. Indeed, it's fast! You've got to be prepared.
4. You can catch fire. In 1993 the break through video game NBA James, your player literally caught on fire if he hit 3 points in a row. Then he was more or less, unstoppable for about 60 seconds. It's kind of like that in basketball. We saw that this year, at Kobe Bryant's' last game when he scored 60 points against the Jazz. He was on fire. Sometimes in trading, your entire account will be green and every trade you place is smooth like butter. It's during this time when you should be really careful, because a change is coming. It's happened to me at least 10 or 11 times that I can remember, and only recently have I begun to sense when it's happening - see the really solid P & L and lock in gains, pull out profits and make the gains 'real' by putting them in my bank account. I encourage you do the same in these moments.
5. Find your spot. In basketball, there are various different positions to fill. The abilities likely vary between a point guard and a center, or power forward and shooting guard. Usually there are also differences in size. In trading, you kind of have to find out what you're good at. The good news is, you should recognize it very quickly. The hard news is, you've got to stick with it a while, because there will be times you lose. There will be moments, days, maybe even weeks where things just don't go your way. We can always makes tweaks and changes from time to time, but having a plan of what we do and how we do it, is very important. Removing variables in trading is often times a commonly overlooked objective of trading. Variables can simply be the human errors like shorting when we should go long (or vice versa), inputting the wrong amount of shares or contracts, randomly deciding to increase or decrease risk size, getting emotional, getting anxious, the time of day, or randomly changing strategies. These are all things we can control. In basketball, players can control when they shoot, from where they shoot, or if they pass the ball to a teammate. If you know lay-ups and rebounds are your specialty, why do you keep trying to shoot from behind the arc? Sure, lay-ups might not get a lot of glory and might not make the highlight reel, but they are a crucial part of basketball.
Personally, I'm pretty terrible at basketball. I'm 6'4â€ so most people think I should be great at it. Well, I'm not. HAHA! I am good at trading and I am great at teaching people how the stock markets work and how to use the markets as a great cash generation tool. If you love basketball, then you should learn day trading. The similarities are remarkable and I assure you, the financial impacts can be so exciting!
Thanks for reading this article! Feel free to share it with your friends and if you ever have any questions, let me know!
Jerremy Alexander Newsome.
CEO of Real Life Trading and energetic but overall terrible basketball player