Chess and Trading

As an avid fan of the game of the KINGS, I have never paid attention before between the amazing similarities between chess and trading, until I read a BRUCE PANDOLFINI book called “Every move must have it’s purpose”

This is an amazing game that is not fully devoted to trading but to the concepts of business and chess and how they look alike.

Understanding the concepts is basic in chess or trading. Concepts are more important than theory.

Let me do a quick lecture about those concepts.


The first concepts he points is “Play the board not the opponent”. This is an amazing concept and clearly fits any trader and their psychology. The board is the chart and the opponent in this case is our own emotions. A player must focus on the board and his game only. Same the trader.


The second concepts is “ Don’t ignore a good hunch” This can clearly applies to the traders especially like me, who trades intuitive. Many times You do not have an entry setup that fits your rule but it doesn’t violate either but You know there is a big move coming, I can not explain it butyou feel the move and you take it and voila clink$$.You may not understand it because we try to rationalize but our right side of the brain is telling us “this is correct”. Go for it.


Third concept “Play with a plan”.We need to have an edge, a methodology and stay with it. In chess if you do not have a strategy you are going to be massacred. Same in the markets. Move your pieces in a nonsensical way and you are out of the game in less than 12 moves.

“You don’t need a plan if you can afford to fail”

Bruce Pandolfini


Fourth concept “Look at your opponents move” Every time you play chess and you are ready to make a move, You should ask “With what purpose” when the opponent makes a move You must ask yourself

“With what purpose?”.

The markets show you what is going on on the charts. They talk to you, do not close your ears.

Learn the market personality, don’t arbitrary switch markets and think it is the same my edge applies to any market. Be months first watching the personality if you have to, then enter the market.

“See what they see,sit where they sit” Clearly applies to the competition, in the markets the opponents are the other traders.

Fifth concept is “Don’t waste material”.

There is a nice story told by Bruce, about how Lasker won a guy several games in a row without his queen. We can count on it too, for the player with the more powerful arsenal customarily rules.It is like they want more pieces and greater ones every time.

In chess we tend to waste pawns because we have a lot and are not big assasins like a Queen or a Rook

but if pay close attention a Pawn on it’s own with the assistance of the King can give mate, while a Bishop or a Knight can not. Also you can not transform a Knight into a Queen. So next time you play chess do not waste your Pawns.

Remember You can not save the pieces you already lost.This concept fits incredible well to our trading world.


Don’t over extend” You know what happens when we get greedy and we do not know get out of the trade. What it seemed to be a fantastic attack ends up in a check mate, but for your opponent.


Learn from Your Mistakes”

Here there is fabulous story of maybe one of the best players in the history of CHESS.

Jose Raul Capablanca , eight years without losing a game, a decade with only one loss.

Capablanca played a perfect chess,but even the best players fail.

Competing in an international Cuban tournament in 1930 Capablanca made a mistake, allowing his opponent to take a rook for knight. Ussually when a player loses this kind of material it is fatal, but he was able to draw the game.

Capablanca was a proud man,unable to bear the tought that anyone might think he made a mistake, he went a few rounds later into the same position, and this time he deliberately blunders again just to prove his superiority and his ego. He draw again.

The best traders face the same situation of Capablanca, if you do not accept your mistake trying to be right all the time, The only certain thing, where you will be right is when you realized that you blew your account !

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