Thursday, August 11, 2016

12 Lessons Pokémon GO Taught Me About Trading

Pokémon GO has hit the world by storm. It makes many people, young and old, go into a frenzy. So there are lessons we can learn from this game which has seized the attention of the world and get people wildly addicted to it. As an avid trader and trainer (Pokémon Trainer I mean), here are the 12 lessons Pokémon GO taught me about trading.

1. Have a Plan
When you play Pokémon GO, you have a plan. A plan to decide what type of Pokémon (fire, water, grass, electric, etc) you want to catch and where to catch them, which Pokémon you want to evolve or power up, and which gym to challenge and which Pokémon to assign to defend the gym.

In trading, you also need to have a plan. You need to know what are your trading objectives, what are your strategies, and where to take profit or cut loss before you even place your order. Plan your trade, and trade your plan. If you fail to plan, you plan to fail.

2. Don’t Chase It
In Pokémon GO, it is literally impossible to chase a Pokémon once it breaks free and flees. In trading, you should practice the same. Never chase the price. If you miss the first wave of move, let it be. Otherwise, profit taking and short squeeze move will turn your P&L to red.

Believe that there are plenty of opportunities (Pokémon) elsewhere. Get ready to catch the next one.

3. Take a Break 
Have you ever felt tired after playing Pokémon GO for a couple of hours? Like you keep catching the same birds, the same rats and the same bats, and you feel bored of it. Take a break.

In trading, it works the same. Don’t overtrade. Consecutive wins will make you feel over-confident; consecutive losses will make you grumpy too. It is always in these emotional moments that traders lose big. So when you find yourself in an emotional state, stop trading. Take a rest. You live another day to fight the battle.

4. Keep a Journal
Like playing Pokémon GO, you have a journal. A journal to keep track of what Pokémon you caught at what time, what Pokémon you hatched, and what items you received from PokéStop.

In trading, you need to have a journal too. A journal to keep track of the details of your trades, the reasons you opened those positions, and most importantly your results and the lessons you learned from them. You see, all of us has blind spots. Keeping a journal is of paramount importance to help uncover our blind spots and mistakes. It helps you to know which strategy causes you the most drawdown, and which strategy yields you the most profit. Having a journal is instrumental to the next point that I want to discuss.

5. Self-Evaluate
Do you always evaluate the strengths and weaknesses of your Pokémon lineup? Like what type of Pokémon you have the most? What type of Pokémon you lack the most that you need to catch and power up more? And then you plan the Pokémon lineup strategically in battles that will deal the most damage to the opponent’s Pokémon and win?

In trading, you also need to constantly do self-evaluation. You must be aware of your strengths, weaknesses, and your trading statistics. For instance, under what market condition you usually win or lose, your winning probability of each strategy, your risk-to-reward ratio, your average win and average drawdown, your average return per month, etc. It is only when you understand yourself and your performance, then you learn, improve, and make progress.

6. Be Adequately Capitalized 
Do you remember the moment when you saw a nearby Pokémon in silhouette, and you got really excited! You probably turned on incense, hoping to lure it to you. And when it finally showed up… No Poké Balls! I repeat, No Poké Balls! What a pain in the ass!

The same goes in trading. You need to be adequately capitalized. You hate it when the opportunities come, but you have no additional capital. Besides that, the amount of capital you invest is also important. Having too little capital makes trading a bit boring to you; while having too much capital is likely to make you emotional when you trade. Imagine you put your entire savings that you cannot afford to lose into one single stock. Chances are you will be emotional in your trade and make mistakes. The best is set aside an amount that you can afford to lose, but sizeable enough to motivate you.

7. Use Better Tools
Imagine a wild Dragonite (CP1000 ) appears. You feed him with a Razz Berry and cast your Poké Ball at him. Unfortunately, the Dragonite breaks free and flees after your first attempt. Never give you a second chance. What if you have used a Great Ball instead?

In trading, having good tools and workstation are one of the critical success factors. Good tools, such as screener, trading platform, and technical indicators, can help improve your success rate and get you into a trade faster and more accurately. Good tools, coupled with an acute sense of trading, make you consistently profitable and invincible.

8. Live a Healthy Lifestyle 
In line with Pokémon GO’s mission to make people exercise and head outdoor, a good trader should maintain a healthy lifestyle too. Do exercise, go jogging, sleep early. When your body is fit, your mind is sharp. Trust me, many traders that I know who consistently beat the market, sleep and wake up early.

9. Always Challenge Yourself
Do you fancy going to gym and challenge the gym leader? That moment of joy and ecstasy when you have successfully beaten the gym leader or leveled up the gym you defended is incredible!

As a trader, you need to challenge and level up yourself every single day! Read more books, gain more knowledge, experiment with different strategies, bend or tweak your rules to improve your trades and results. Remember, the market is dynamic and is changing every single day. You need to keep yourself abreast and equipped with relevant skills to beat the market.

10. Teamwork makes a dream work
Do you always see a gym that is changing colour every half an hour? That is a weak gym. On the contrary, I have seen a level 9 gym with the first Pokémon already leveled at a thousand CP. How to beat that? This can only be done if you have a strong and aligned team, coordinated well enough to defend it together.

In trading, teamwork is important. Imagine you have a team, giving you buy and sell signals, warnings, and the market latest updates every single day… Will you feel more confident and supported to achieve success in trading? I, too, join and head several trading communities. I see my results improve significantly compared to when I trade alone. So get yourself a mentor or join a trading community (Instinct, Mystic, Valor). If you want to go fast, you go alone. If you want to go far, you go with a team.

11. Be Humble 
Yes, be humble! Having a few consecutive wins shouldn’t make you feel like you are on top of the world. Strange enough, the market will always punish arrogant people. Before you know it, you will lose big in the next few trades and return all the profits to the market. It is like becoming a gym leader for 10 min, only to be beaten by someone stronger. The glory doesn’t last. You see, when you become arrogant, you stop learning. This is deadly.

Likewise, you shouldn’t underestimate small wins too. Catching 20 Pidgeys will evolve one to be a Pidgeot too. Remember, there is a thin line between confidence and arrogance. It is called humility. Confidence smiles; arrogance smirks.

12. Don’t Give Up 
Trading is like playing Pokémon GO. There are times you lose a Pokémon (lose your trade). There are times you run out of Poké balls (miss your trade / run out of resources). But don't give up. There are always PokéStops (Support / Mentor) to replenish yourself.

P.S. If you like my ideas, share it with your friends to inspire them. Then you are free to continue catching your Pokémon.

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