Trading Educators Blog
Chess and Trading. What do you think?
Although I haven't the faintest idea of how to play chess, it certainly seems like a great idea. I imagine you can improve stock and futures trading by learning how to play chess. It might also help to develop an interest in physics. Every trader should learn to develop his problem-solving and pattern recognition abilities. I've been told that nothing does this better than learning how to play chess. Some of the first computer algorithms were designed to play chess. Just as chess taught the computer how to think, it seems likely chess can teach traders how to think more logically and effectively. Chess is something that might be taught in the first grade through high school in all schools to help children develop problem-solving abilities, and to create self-confidence and self-reliance. Chess, when taught to under-privileged children, was responsible for the greatest overall grade improvement for all students on all levels. Of course no one knows for sure what the social impact of such a plan might be. What about the kid who really has trouble seeing ahead; kids who have dyslexia like me? Pattern recognition is the key to understanding bar chart structure. Variations of similar patterns are constantly occurring in the markets. Prices move either up or down 100% of the time. Truly, prices do not move sideways. Markets move sideways, not prices. If a price moves, by definition it is either up or down. If a price ticks sequentially more than once at the same price, it hasn't move at all. Sideways for the market indicates virtually all price movement within a certain range. A key to correct technical analysis is simplicity; breaking the market down to its basic price structures for comparisons of highs, lows, opens and closes within various time periods. Profitable trading can be derived from recognition of simple recurring price patterns based on the action, reaction, and interaction of market perception.