What Squid Game Can Teach Us About Day Trading

Okay, I have a question for you.

Let me preface this by reminding you of the kinds of risks you probably take just to make it in the markets.

Maybe you’ve already lost hundreds of dollars through day trading, or even thousands of dollars. Or maybe even hundreds of thousands of dollars. My guess is that you’re trading for a purpose since no one intentionally seeks to lose money for no good reason. 

Whoever said money can’t buy happiness has probably never had to pay 6 figures in student loans, raise kids as a single parent, or try to make ends meet below the poverty line.

A lot of us got interested in trading because we’re looking for a way out of financial struggles.

We’re willing to put up with drawdowns because we believe we’ll be able to make it over the long run.

But let me ask you this – Would you wagger your life to pay off all of your debts?

While you may automatically say no, the characters of the 2021 South Korean drama Squid Game beg to differ. In this blood bath of a psychological thriller, Squid Game follows the story of contestants who are so desperate to pay off significant debt that they are willing to sign up to play children’s games in order to win their freedom. The catch, though, is that if they break any rules of each game, they are automatically killed on the spot.

This is by far one of the most jaw-dropping and binge-worthy shows I’ve watched all year, and if you haven’t seen it yet, I recommend checking it out on Netflix. Also, if you haven’t seen this show yet, I recommend that you pause this video now, and go see the entire first season because there are some mega spoilers in this post.

Repeat, this is a spoiler alert, please stop now if you want to enjoy the suspense of watching this show without knowing what’s going to happen next.

The element of curiosity and surprise is what makes this show so enticing.

5 Lessons from Squid Game That Apply to Day Trading

Okay, now that you’ve been thoroughly forewarned, let’s go over some of the most important lessons from Squid Game, a game with the odds against them, that can help us become smart and savvy traders as we attempt to survive a game where the odds are against us.

I’m going to draw connections from five different aspects and moments from this show and will explain how they relate to day trading situations, while also pointing out practical applications for your own trading.

Let’s get started.

1) General Tactics and Strategies

So I want to begin with a very general observation of the kinds of tactics and strategies that competitive players use to survive from game to game.

This was apparent in the first game of red-light greenlight but confirmed with the second Dalgona sugar cookie game.

As long as you’re following the rules, you can get creative by using other players or tricks and uncommon strategies to beat the game. A mix of creative strategy and luck often kept a player alive. Brute force alone left one doom to the fate of a black box. Other traits, such as being cunning, creative, connecting with one another, and always, always staying alert of opportunities helped the main characters make it to the final rounds.

Squid Game Day TradingDay trading can be similar.

Just showing up and putting on a trade without a plan and thinking you’ll be okay if you just watch it and hold through is going to drain your account fast. If you want to survive as a day trader, you need to have a plan, that is, a strategy and a system for reflecting on your trades, such as the one I teach in the Disciplined FX Scalping Strategy Course, and you’ll need to think on your feet in case that plan fails.

Thus, you need to be diligent about your risk management. This means that you should focus on a strategy that uses a specific set-up or combination of indicators to highlight high probability trades. You don’t need to catch every move, you just need to focus on performing that strategy right.

You can’t take twenty trades a day in order to brute force your way to profit. You have to prepare a creative plan and be willing to choose risk management over impulse, predefining how much you’ll risk per trade, as well as where you’ll set up your stop loss and take profit targets.

2) Be Mindful of Who Influences You

It’s also beneficial to have a community you can connect with while you trade, so long as those traders aren’t bullies and actually know how to learn from mistakes with humility.

Speaking of good connections, the second trading lesson comes from witnessing the wackadoo audacity of Han Minyeo.

This intense gal is coy and abrasive, she hooks up with the big gang bully Jang Deok-Su, who thinks he can use her as a pawn but ultimately ends up losing his life when she gets her revenge during the glass bridge game.

From this experience, we can reflect on the importance of not getting mixed up with untrustworthy brokers, toxic forums, scammy social media traders, or too-good-to-be-true offers from unreputable prop firms and signal providers.

Be choicey about who and what influences you.

It’s important to have high standards for the resources you seek to learn to trade from.

You should be able to trust that a person or a firm genuinely wants to help you, especially if you’re looking to do business with them.

Furthermore, be mindful of the people you choose to tell about your trading experiences. There are some friends and family that may not be supportive of your choice to learn to trade and will feed you demotivating discouragement that can trip up your trading psychology during a drawdown.

Ideally, after you explain the learning curve that comes with developing trading skills, you’ll have people in your inner circle who trust you and support you in your decision, but this isn’t always realistic.

Again, it’s better to share your experiences with a few chosen people who are positive and supportive rather than shout it across your personal social media platforms and hope someone will care.

3) Wait for Confirmation

Next, our third example is from the glass bridge challenge.

This is more of a technical analysis axiom than general trading advice, but the point is that you don’t want to be the first person on the glass bridge.

The more people who test the steps, the more likely you’ll make it across because the path will be shown to you. This can be a metaphor for following a trend or a breakout area.

You don’t want to be the first one in there – you should wait for confirmation before entering a trade.

Whether it comes from breaking and retesting a support zone in a trend or waiting for a confluence of multiple indicators with price action, you’ll likely want to have a few tools that can test the pattern and tell you if it’s clear to go.

Responsible traders are patient and will wait for the perfect setup before entering a trade.

4) Don’t Forget Who Runs The Show

Fourth, we couldn’t run this video without talking about some of the bigger picture structures that control the games in the first place.

You should know, that if you are involved with any financial market, be it stocks, forex, crypto, real estate, you can assume that somewhere some very rich men are betting on your failure.

So it comes as no surprise in Squid Game that the entire system of games runs on the desire of rich sociopaths who are so disconnected from society in their own self-grandeur and disregard for the care of living people, that they find amusement and joy out of betting on who will live and who will die through playing a series of children’s games.

Squid Game InvestorsAs retail day traders, we should never forget that we are merely Remora fish swinging alongside great big sharks who control where we are heading.

There are big banks and investment firms that have large stakes in every single market and it’s basically up to them to decide which direction the market is going. As retail day traders who trade in a whole year a very small fraction of what those institutions trade in a single hour, we do not want to go against their choice of direction.

It’s often advised that new and novice traders stick with a trend as these are high probability moments where all the big players are in agreement.

We also need to be mindful of black boxes, the algorithmic trading that these big players use to make automatic trades based on the other positions in a market, and therefore stay away from ranging and low volume markets. 

Okay, now for our last comparison. I’m giving you one final warning that this is the ultimate of ultimate spoiler alerts for this show.

If you haven’t seen the series, stop right now, because I’m going to give away the ending to the first season of squid game.

This is your last chance to stop now!

Okay, you’ve been warned!

5) Know Your Goals

So I think this one is a bit more meta than the others and involves genuinely reflecting on why you want to make money in the first place.

At the end of this first season of Squid Game, the big reveal is that the jovial, light-hearted, likeable old man in the game is actually the number one sociopath who put the whole kitten-kaboodle pay-per-murder-view show together in the first place.

Squid game old man(I mean, we should have seen this coming, he did a pretty good job position sizing his way through the marble game, that sly ol’ fox. )

He explains that after making so much money, he lost joy in life and couldn’t find excitement in the risk and reward of common experiences. It took having his life on the line to actually feel something again.

And I think this is a great reminder to us as traders to have an end-game in mind.

You need to routinely ask yourself why are you trading and what amount of money do you need in life to meet basic needs, to finally get out of debt, to have a comfortable lifestyle, to be able to invest in the future of humankind, to leave a legacy, and to live out your dreams.

By actually sitting down and calculating the cost of your dream life, you may discover that you don’t need millions of dollars to be happy. A lot of people can live what they believe to be a millionaires lifestyle with under $300k a year.

Achieving your financial goals to get to a place of security and comfort requires even less.

I recommend setting targets for account size and profit targets that reflect your budget and goals while risking conservative amounts per trade.

But that’s not even the point. My purpose in bringing up this comparison is to draw attention to the moral failing of pursuing money just to have more money.

There’s a saying that money makes you more of who you already are.

If you’ve resented people your whole life, you’re going to feel more comfortable openly resenting people and being disrespectful to others. Those who stick around for you will likely only do so because you now have money.

However, if you are a considerate and nurturing person, you can use your wealth to solve your own problems and help people solve their problems too. You can also use your money to influence change so that systemic issues can be properly addressed.

My point is that money should serve a purpose in your life and the life of others, and not be pursued just for the sake of hitting a higher and higher networth status.

Making this distinction can help you make better risk management choices since the end goal isn’t to constantly be making more and more money but rather hit a healthy and reasonable target.

Using targets like this can help you create a trading system that fits your needs.

We’ve now reached the end of this quirky little review of what are really risk-taking skills that were employed in the plot of squid game but are also highly relevant to our experience as day traders. Life involves making decisions based on probability and risk every single day. This is true all the more so for day trading.

Never forget that the lessons you learn from movies, stories, and your own life can teach you about behavior and markets. You can always develop yourself as a trader by maintaining a mindset of endless learning.

I wish you nothing but the best of strength and luck in your own trading. I’ll see you in the markets. Take care!