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As the 2022 FIFA World Cup countdown is fast approaching, football fans from around the globe are picking up the pace to gear up for the world’s most popular game. If we take a closer look, there are in fact many similarities between a pro football player and a seasoned trader.
Here are six things the well-loved sport can teach traders about.
Key Points
- Just like football, trading is unpredictable and requires quick adaptation to rapid changes, with both fields valuing the ability to pivot strategies in response to unexpected events.
- In trading, as in football, not all outcomes have to be wins or losses; a draw or breaking even can still be strategically valuable, allowing for future opportunities and growth.
- Recognising when to accept a loss is crucial in both football and trading, as it helps to prevent further damage and protect the overall position, whether it’s a team’s standing or a trader’s capital.
#1 Things Can Change By The Minute
The high intensity and unpredictability of a football game translate perfectly to the chaotic ebb and flows of the financial markets. Developing a firm understanding of this turbulency allows a trader to adapt quickly and rationally to any situation.
“Football’s beauty is its unpredictability”, as Arsene Wenger said, current FIFA’s Chief of Global Football Development.
A team might be down 1-0 at one point in a game, but the deficit could be overcome with two quick-fire goals. In the case of trading, your short-term positions could also change direction depending on the economic events that take place, as well as the shift in supply and demand.
A good example to remember would be England vs Brazil in the 2002 FIFA World Cup quarter-finals. England’s Michael Owen scored a goal in the 23rd minute and many fans were, at that point, doubtful about the all-powerful Brazil. However, Brazil tied the game just before halftime, and subsequently in the 50th minute, Ronaldinho surprised the crowd with a classic “fluke” freekick that eventually knocked England out of the tournament.
#2 A Draw Can Be Seen As A Win
When it comes to football and financial trading, many focus only on the wins, and even the losses. However, there are occasions when the match ends in a draw, or a trade breaks even. Sometimes a draw match would still qualify the team for the next round, and likewise, a break-even trade could be the right decision to pull out from a bad loss.
In a break-even trade, although we do not make a profit, there is no loss incurred. At little cost, there are takeaways and invaluable insights we could have learned. Equipped with growing experience, you always are able to open a new position.
#3 Knowing When To Take A Loss
Everybody wants to win, and no one wants to lose. However, knowing when to take a loss is also an essential part of setting yourself up for trading experience. Imagine a team losing with a score of 3-0, rather than committing more on the offensive and leaving the defence exposed, the losing team can attempt to limit the damage by shoring up their defence. This would prevent the game from being a blowout with the potential for scores to hit 7-0.
In trading, knowing when to strengthen defences and manage risk would play a tremendous role in protecting one’s capital. When a trader does not know when to take a loss, over-trading and over-leveraging could result in a quick loss of capital.
#4 Small Wins Can Add Up
With a strong defence, scoring just one goal could be enough to clinch the win. Likewise, small wins can accumulate over time to make you a profitable trader with a higher win rate instead of constantly aiming for big, unrealistic gains which often come with high risks of huge losses.
Remember that consistency is what transforms average to excellence. Hence, there is a difference between good trading and one good trade.
#5 You Don’t Always Play The Same Opponent
The number of CFD instruments in the financial markets is comparable to the many football teams around. The odds of winning can be improved through gameplay preparation, learning about their opponent, executing different tactics, formations etc.
For the financial markets, traders can apply the same idea when looking at specific instruments, be it forex, commodities, stocks, indices or other products, enlisting different research methods and strategies to gain an edge over the markets.
#6 The Team Matters
When a goal is scored or when a game is won, it is not just credited to one man’s work, but rather the collective efforts from your teammates, the coaches, and other external factors such as the opposing teams’ gameplay and much more.
In the same vein, when a trade hits your take profit level, it is not solely down to the trader’s efforts, but also the market conditions, spreads, and trade execution speed just to name a few.
Vantage’s client-centric attitude has allowed us to provide traders with our best conditions possible for trading with spreads starting from as low as 0, leverage of up to 30:1, and $0 deposit fees. Vantage is committed to being supportive in your trading journey, sign up with a demo account here to begin your practice. Alternatively, if you’re ready to take a shot, you can also open a live account here.
Whether an individual wants to be a professional football player, or a sound financial trader, effort and hard work need to be in the equation. To develop a strong mindset that can analyse the opponent and produce a strategy to win are a few key transferable skills between both fields.
