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Tuesday, December 18, 2012

How chess influenced my trading decisions

Most of my friends do not know that I was once quite a reasonable international chess player.  After representing Singapore in the Olympiad, in Yugolavia, 1990 (Chess games, Low Pe Yeow ); I played my last tournament in the Nationals in 1991.  At 21 years old, I "retired' from Chess.
About 4 weeks ago, after more than 20 years of "seclusion", I returned to tournament play, playing in Toa Payoh West Open.  I was seeded 7th, and eventually also finished 7th place.



From age 13 to 21, playing chess was my life.  In this short period of about 8 years, I probably clocked in more than 10,000 hours in chess.  This makes me quite an expert in Chess, according to Malcolm Gladwell in the book, Outliers.  Playing chess "professionally" has helped me with my trading.  My trading system that I created is based on my Chess style.  Let me explain by giving a few examples:
  • I very much prefer to play games with longer time control. => It is not surprising that I prefer to trade using longer time frame.  I definitely prefer not to scalp.
  • I prefer to play a solid defensive game based on classical principles, and attack only when opportunities presents itself. => I prefer to use classical FA to search for solid stocks, and to use traditional TA to time the entry and exits
  • I am willing wait for opponent to make mistakes rather than attack all the time => I prefer to stay out of the market and only enter when opportunity arises.
  • I like to press for a win, even at the cost of losing the game => I prefer a system that allows winning trades to run, even at the cost of retracement (prefer trend following system without trailing stops)
The point that I am trying to make is that your trading system must suit your personality, style, and psychology.  Only then, can you discover your personal trading system within yourself.



3 comments:

  1. What's your take on Ho Bee ? I don't see any recent announcement or news but yet it keeps trending up. Would you hold or take profit soon ?

    ReplyDelete
    Replies
    1. I think ho bee is an excellent stock. I value it at $2.45. It has strong fundamentals. Morever, the property sector is still red hot.
      I am a trend follower. my plan is to ride the trend till it ends.
      The first stop is a cut loss at $1.47.
      I have 2 types of profit target. take which ever comes earlier.
      1) Stock specific profit target. For ho bee it is $2.45.
      2) general market timing signal to close ALL open stock positions. I will give this signal in my blog.

      Delete
  2. Ok, and I realized I commented on the wrong post. Anyway, you know what I mean... 8)

    ReplyDelete