Forex Trading Tips: A Game of Inches

A Game of Inches

It’s been more than 15 years that I last took the number 7 train to the US Tennis Open in Queens, New York, but this past Wednesday K and I played hooky from work (courtesy of our very nice boss) and had chance to see some world class tennis from the very luxurious view of a courtside box. The weather was great, the tennis was glorious and the company very enjoyable. As I sat there, in midday New York sun casually checking FX quotes on my Blackberry , watching world class athletes battle it out on center court I couldn’t help but notice some striking similarities between tennis and trading.

Tennis was always my favorite sport to play. I spent countless hours whacking balls on the hard cement courts of my high school playground as a member of the team. I would walk through my school hallways shadow practicing my backhand and during the more boring classes would often day dream of glory on Wimbledon courts as I combined the power of Borg with the touch McEnroe on my way to winning the final.

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Years passed, I got busy with work , had lasik surgery , lost my sense of depth perception as a result and hadn’t played a set of tennis save for WII in more than a decade. Therefore sitting there last Wednesday, after a long absence from the game I looked at the action on court with a more mature point of view.

When I was younger power tennis was everything. Hit it hard, hit it deep and drive your opponent off the court. The guys with the fastest serve and biggest groundstroke won. However, the more I watched the modern game the more I realized that placement was far more important than pace. While the crowds went wild for every backcourt winner, the players who usually won the match weren’t necessarily one with the biggest game but the most accurate shot making.

In that respect trading is very similar to tennis. Direction is far more important than execution. How many novice traders waste their time trying to time the trade to the pip only to miss the entry and watch the move take off without them? The rule in trading as in tennis is that it is far better to be approximately right rather than precisely wrong. In tennis it doesn’t matter how hard you hit the ball if it ultimately ends up in the net. In trading it doesn’t matter how well you executed your entry if the overall direction of your trade is wrong.

However, perhaps the most interesting lesson from our outing occurred during the last quarterfinal match of the day session between Fernando Verdasco and Novak Djocovic. The Spaniard and the Serb were slugging it out in a tight, tense match all tied at one set each. Verdasco was up 5-4 in the third with advantage to him when a ball he hit was called out by the umpire. At US Open each player has the right to call for a video replay, but for some reason Verdasco chose not to question the call. Had he done so, the video replay would have shown that the ball was in. Game, set and possibly match Verdasco. Instead he let the umpire’s call stand giving Djokovic a chance to rally and win the crucial third set. After that it was just a matter of formality as the Spaniard hobbled by a stomach cramp went down for the count and lost in four.

They say tennis is a game of inches, but so is trading. How many times have we seen a trade got to within one point of our profit target only to reverse and stop us out? If you’ve traded for longer than a day this has happened to you more than once and can no doubt destroy you mentally. What unifies winners in both trading and tennis is their ability to overcome life’s little bad breaks. No competition is ever perfectly fair, no game is always just. Bad bounces and bad trades will always happen. Don’t let them determine the final outcome of your match.

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