 Welcome back to the Trade Hacker Mindset. In this episode, I want to talk to you about how the board game Backgammon is actually fairly similar to trading options. Trading the markets can be difficult to master and seemingly just out of reach. Professional traders have a secret. Trading requires total mental and emotional control. It requires the Trade Hacker Mindset. OK, so let's jump into this topic of how Backgammon is similar to options trading. Now, if you played Backgammon very much, you understand that it actually is a game of probabilities. Every time it's your turn, there are moves that you can make that have a higher probability for success than other moves. Now, as options traders, you understand that the game of trading options is probabilistic, meaning we have a very specific math model that we can use to put the probabilities in our favor. But there are also, in the short term, there are periods of time where luck is involved. You can get a little bit lucky, and it can actually benefit you from a performance standpoint. And there are periods of time where you can get unlucky and just happen to get caught in specific situations in the short term that are a little bit unlucky. But we know that over time, the probabilities play out. And it's the same thing in Backgammon. When you're playing Backgammon, you're rolling the dice. You cannot control what the dice do. We talk about this all the time with trading options. We cannot control the market. The only thing that we can control is our entry and the way that we manage risk and the way that we manage trades. In Backgammon, you cannot control the dice. You can only control the moves that you make. You can't control the moves that your opponent makes. You can only control the moves that you make to give you the highest chance for success to win the game. Now, in Backgammon, you can just play single games, but the most common way of playing Backgammon is considered match play, where you're actually playing the best of five, or the best of seven, or the best of 21 games, so it's kind of a match play. And one thing that you can do in match play is when you feel like you have the probabilities on your side that you're going to win the game, you can actually double the value of that game when the odds are in your favor. Now, you can double the odds anytime you want, but you typically only want to double the odds when the probabilities are in your favor of winning that particular game, which is very similar to options trading from a perspective of we want to increase our position size. We want to add capital to a trade when we feel like the odds are more in our favor. A couple examples of that would be, you know, let's say you're a trend trader, okay? We have a trend trading system where we have very specific criteria that dictates if we are in an uptrend or if we are in a downtrend. If we are in an uptrend, then we are going to allocate more capital towards long positions, okay? If we are in a very obvious downtrend, we are going to allocate more of our capital towards short positions, okay? So that would be an example of, you know, pushing the odds in your favor, allocating more risk when the odds are in your favor. The other way you could do it, if you are a premium seller, you know, some of the strategies that we trade at navigation trading are premium selling. So when do we want to allocate more capital to a premium selling strategy? Well, we want to do that when implied volatility is high. If implied volatility is low, we want to allocate less capital because the odds are less in our favor. Another similarity is conceding a game. Now, when you're playing backgammon, sometimes you get the odds so stacked against you from actually having the potential of winning the game that sometimes it just makes sense to concede. For example, if the odds are stacked way against you and your opponent offers to double the value of that game if you're in a match play and the odds are really against you, sometimes it's better just to cut your losses and concede the game and move on to the next one. Just like in trading, sometimes you get in a position and you now have the ability to see that that trade did not work out, that trade did not do what you had hoped it would do. So sometimes it's best just to cut your losses and move on to the next trade. So playing backgammon is actually a pretty good trading simulation when it comes to the similar emotions that you will face in trading. Sometimes we get fearful while trading, sometimes we get too greedy while trading. Those are the two big emotions that we come across in our trading activities. And similar emotions can take place when you're playing backgammon. You could get too aggressive or there are situations where when each, if you play backgammon you'll understand this, where each checker that you have, if there's only one checker on a space, then that checker can be captured and kind of sent to jail is what I call it. And so you always wanna have two checkers on a space because if you have two or more checkers on a space, then you cannot get captured. That space is essentially blocked. And so, but there are certain periods of time, whether it's just the random roll of the dice that you get or you're looking between two different moves. One is more conservative and one is more aggressive. Sometimes it makes sense to be more aggressive depending on everything else that's going on in the game. Just like in trading, sometimes it pays to be more aggressive when certain odds are in your favor and sometimes it pays to be more conservative. The same rules apply to backgammon. So every time it's your turn, you are making these decisions. You are making these emotional decisions based on being aggressive or being conservative just like you do every day in your trading. Now, I first learned how to play backgammon when I was a pretty young kid. I would play it with my grandma. And my grandmother, if you can imagine, was a pretty conservative person. She was a teacher her entire life. She never really took much risk in investing or anything like that. And so she was by nature a pretty conservative person. And so when she would play, every move that she would make would be very conservative. Okay, now as a young child, I've learned now as an adult to temper some of my aggressive style. But as a child, I was very aggressive. And so I was always constantly taking some of the more risky moves when I was playing. And obviously sometimes it would work out, but usually more often than not, she would beat me with her conservative style of play. But just like in trading, there are obvious times when it makes sense to push a little more of your chips in. It makes sense to be a little bit more aggressive because the risk versus reward is high. So when you're trading, you're constantly measuring, what's my risk versus the reward I'm taking? If you're in a position and you've been in a position, you've got to constantly monitor, okay, does it make sense to stay in this trade? Are the probabilities on my favor? Is the amount of potential profit that I can still make relative to the risk that I'm taking, is that still in line with the probabilities to make sense to stay in the trade? Or does it make sense to go conservative and either get out of the trade or reduce size or take some of the position off? All of these things are very similar when we're trading as it is when you're playing backgammon. Now I would say one of the biggest similarities between trading options and playing backgammon is your ability to be able to accept losses. Okay, now this is a big one, especially for newer traders, because as humans, from a human nature standpoint, our ego does not like us to lose, right? And so it's very difficult for us to accept losses and it's similar in backgammon. We don't want to lose the game, right? Because that would mean that's a negative connotation on our ego. And so sometimes you might try to make the decision to do things that you know are not the right move, trying to avoid loss and in turn it just makes it worse because then your opponent tries to double up the value of the game or you end up losing when you would have had a chance to win had you been just able to accept that loss for what it was. In trading, we find ourselves trying to take too much risk or if we have a losing trade, we try to revenge trade or try to get back to even or try to double that so that we make a profit when we're in the hole and sometimes it ends up digging us a bigger hole and it works the same way in backgammon. So you have to be able to accept losses. You have to understand that taking losses is part of the game, but if you make the moves that are in your favor, if you make the moves that give you the highest probability of success over time that give you the highest probability of success over many occurrences in trading or over many games in backgammon, then you will come out ahead. You know, the backgammon app that I have on my phone that if I'm bored or if I'm waiting for one of my kids at school or sports or if I just have a few minutes that I don't really have anything else to do, sometimes I'll pop open the backgammon game on my phone and play a game or two of backgammon. And over time, you start with the app that I use anyway, you start with a very specific number of points. And so each game you play is worth a number of points. And of course, like I mentioned, you can double the value if odds are in your favor and different things. And so my points have consistently gone up. So I have 50% more points than I had before. And there's a whole system where this app ranks you as a backgammon player compared to other players. And my ranking and my points have consistently gone up because I've taken the approach that I exactly like I do with trading. If I lose one game, who cares? You know, it's not a big deal. You're going to lose games. There's no possible way that you can win every game. Just like in trading, there's no possible way that you're going to win 100% of your trades. You have to understand that it's a game of probabilities and that if you place trades where the probabilities are in your favor, over time you will come out ahead. If you make moves in backgammon that where you know it's a high probability play, you know that you may lose that game, but over time you are going to win more than you lose. So I don't play a lot of video games. My kids do. But to me, playing video games is kind of a waste of time. I have so much that I want to do. I have so much value that I want to provide. And so many things I want to do in life that playing video games or playing games is kind of a waste of time. But I would encourage you if you do have downtime, if you do have time that you are doing things on your phone or scrolling through social media, doing mindless things, I would encourage you as a way to even, I would even say home your trading skills, start playing backgammon and start to understand what I'm saying about the similarities between trading options and playing backgammon because it will actually help you hone your emotions. It'll actually help you hone your fear and greed because the similarities that I've talked about can play out in backgammon and play out in options trading. And the more that you can practice that, the more that you can practice controlling your emotions, being aware of your emotions, it's going to help you become a better trader. So I hope this was helpful, kind of an off topic, but I thought it would be helpful for those of you who either play backgammon or want to learn how to do it, it actually has all these similarities. So hope that was helpful. If you want to be part of the navigation trading community, just go to community.navigationtrading.com. We've got hundreds of traders interacting on a daily basis, not only about the mindset stuff, but helping each other become better traders. To my knowledge, there's never been a conversation about backgammon in the community, but hey, you never know. We might have one now. So look forward to seeing you on the inside. Take care.