5 similarities between Mahjong and Trading

My eldest aunt taught me how to play Mahjong at the age of 6 when she took care of me. I grew up in a family of 'gamblers'. On weekends, my cousins, aunts and uncles would be playing together. Love the game and I started teaching my kids how to play. Even easier to do so during this Circuit Breaker period in Singapore.

" Sorry friends, I have been missing recent game nights because of Mahjong ;) "

In these past month or so as we played, I notice so many similarities between the game to Trading. We are actually using the same mindset, psychology and so many rules applies.

Similarity #1: You can't win all the time

In trading, there is no way that every single trade of yours will turn out to be a winner. If you are looking for that 'holy grail' you are wasting your time. Traders just have to get use to taking in the losers together with the winners. Losing is part and parcel of the game.

When playing Mahjong, my 'newbie' kids will get good hands and win games. Anyone can get crappy hands and lose the game. What can we do? Just rack up the tiles and just move on to the next game (trade). Keep cool.....

Similarity #2: Setting your stop loss

In trading, understanding your risk tolerance is important. Risk only what you are comfortable with, and trust me on this, your trading will be way less stressful. For every trade, set a stop loss limit. So you will know the maximum amount of money you can lose on the trade.

So in Mahjong, we usually set a rule of a maximum 5 'tai' (doubles) for each game. This limits the maximum amount of money you can lose per game. So you won't end up the night with a big hole in the pocket.

Similarity #3: Let your profits run

When you get your analysis right in trading and it moves with conviction in your direction, hold on to your winning positions a much as you can. Add on to the trade position when you have the chance to maximise your profits. Occasional trade of the month could easily give you a 5-10% growth in equity.

Comparing it in the game of Mahjong, we all try to maximise our winning by planning to increase the 'tai' through 'pong', 'kong', 'chi', the winds and the dragons.

Similarity #4: Constantly predicting the market

When trading the Harmonic Patterns, we are constantly looking for turning points to take trades. Constantly looking for repeated patterns, reading charts to enter the trades to increase the probability of winning.

In Mahjong, we are constantly observing see the other players' discarded tiles, predicting what they need and avoiding giving them the winning tile. Increasing your own chances of winning.

Similarity #5: It is a probability game

Following a fixed set of rules that has a positive expectancy before you engage the trades increases the probability of consistent profits. Similar to Mahjong, calculating the probability of the remaining tiles would be key to winning the game. Going with the higher probability gives us the better positive outcome.