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Want to be a better Trader ? Start playing chess.



Imagine cashing out Rs. 35 crore  as profit in a single day…CIS did that. The mysterious Japanese day trader who pocketed that bounty when everyone else was panicking and losing his/her shirt. Day trading is tough. Very tough. You need fast reflexes and big giant garagantuan balls.
Where else do you need them – Big balls and fast reflexes ? You need them in a war. Well day trading is like war and the markets are the battlefield. You kill or you get yourself killed. Sometimes 4 times in one week.
Logically when the result of a negative outcome of any activity is so catastrophic, one needs to practice it over and over to significantly increase his or her chance of winning.  You can’t just start a war and say – Let’s see what happens. If it doesn’t work out this way, I will change the strategy next time. And sure as hell you can’t just open an account with a broker and start trading with your real money just to see how it goes.( There is a better option, send me cheque instead ) In both cases you need some priming. Some warm up. Something to make you ready to enter the battlefield.
Playing chess is how you warm up for wat.
Apparently chess was invented in India by the scholarly Chanakya. It was called the Chaturanga  back then because war was fought on four fronts – Elephants, chariots, horses and infantry. Where did the camels come from ? Maybe we fought a few with the Arabs too when the game was being designed. Also CHESS stands for Chariots, Horses, Elephants and Soliers. ( There are many theories floating around – but I picked this one. Also, Chanakya, Chaturanga, Chess – Alliteration sounds good ) Chess was meant to simulate the war and test the strategies before the actual action started
I remember getting my first chess board at age 9. Me and my friend played it for hours. When I read about CIS a lot of dots connected. As a trader, I have taken a lot of lessons from chess. Chess has helped me be a better trader.
Chess taught me to think – What if ?
The moment you start thinking I know what my opponent is going to do next, you’re dead. What if the opponent does something which you do not expect. You are frozen. Markets work in the same way. First they freeze you ( London London statue ) then a smart thief comes takes your wallet and walks away. You can see him do that. You can watch him rob you in broad day light, but you can’t move. You are frozen.
Grandmasters think atleast 8 moves ahead and their various combinations. I do that while trading. I write it down.  I write the expected outcome, the unexpected outcome, the crazy expected outcome and the crazy unexpected outcome. It helps. Start thinking ‘ What if it goes against me ‘ . That will make you a better trader
Chess taught me – Don’t get the queen out in the first few moves
Maybe some people do. But that’s taking a lot of risk. First you build a fortress and then you get down to the attack. That’s how I do it. Don’t get the strongest piece on the board out first. If you lose it by taking unnecessary risks, you have to play the rest of the game in the defensive. Don’t take unnecessary risks at the start of your trading career. Build a fortress. Build an account. Play a lot of games. Practice. Then get the queen out if you have to.
Chess taught me how to to pull a rabbit out of the hat
The game is going well. You are up by 2 pieces. You start getting complacent and before you know it you are down by 2 pieces. How did that happen ? Happens often in trading.You have 2 great months. You think it’s your Daddy’s market. You feel you can’t do wrong. But you do. And market takes back the money because you were a bad boy. So now you have to pull off a magical trick.  You have to bounce back while your balls are still in your mouth. Your queen is in a trap, your king is exposed. Do something. Castle. Do anything. But fight back.
Study the history of the game  – it helps
Want to rock at chess. Study its history. Study the great players. Study their games. Get inside their head. That way, you will screw up a lot less. Want to start trading. Get a few good books. Read about traders. Their bad times, their good times. ( Every great trader has gone bankrupt on an average twice in his lifetime. Ask yourself, can you ? ). Learn the analysis. Take some courses.
Master Psychology – Control your brain
There is a great line in the movie “The Greatest Game ever played.” – It goes like this –
There are only two kinds of players, ones who hold their nerves and win championships and others who do not.
Chess is about nerves. Chess is about keeping the focus till your opponent has an oops moment. Then you pounce on it and devour it like a hungry carnivore. But till then, you stay alert and calm. Markets are the same. Every once in a while they offer free money. You have just go and pick it up. (Like they did in 2014) But to do that, you have hold your nerve till that moment. Don’t get sucked into the traps you opponent throws at you.
A good opponent brainfucks you
Magnus carlsen ( the current chess champion ) was 13 when this happened. He was a playing Garry Kasporav, one of the greatest players of the game. The game was tense. Suddenly he got up. Took a walk in the middle of a game. Kasparov never expected that. He was focused. Hard. It threw him off. He was so mad. But the trick worked. The game ended in a draw. Find an unfair opponent. Markets are unfair
Article by: Rahul T

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