Poker and the Beginning Trader

Quote from whitster:

3) avoiding "going on tilt". poker players, like traders can suffer from the fact that even when the stats say "i should have won", they will still suffer from bad beats, etc. and NOT letting that get in the way of continuing to employ a sound methodology. traders need to avoid suffering a similar fate - doubling down on a bad trade when the market has clearly said 'you were wrong", etc.
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Well said.

I don't know about you guys, but it's far easier for me to maintain my cool at the poker or blackjack tables than it is in trading, probably because I know each card is random at the casino.

In trading however, the markets are often inherently set up to hurt the most people, almost as if a stacked deck; "they" are out to get you, and every last dollar you have, if you let them. So in this case it is even more crucial for one to maintain composure and stick to what you know and do best. So why, if I know this to be true, do I let losing trades get to me at times when I can shrug off losing poker hands without any problem? Must be the ego -- the irony of which is not lost on me.
 
illiquid

You point out the primary difference between trading and poker, imo. I have absolute, total and complete faith in the law of averages. I have found but a few things in life to trust and the law of averages is one of them. The deck of cards is fixed and therefore the odds are fixed and you can have confidence that they will be your friend over the long run if you use them correctly. There is no such assurance in trading. In trading the deck is continually changing so you cannot become complacent.
 
easyrider, that's a great point

in the market, you have the law of "ever changing cycles".

in cards, you don't

many of my setups are backtested as statistically valid. it does not mean they always will be. however, the chance that pocket AA's will be a winning hand, if drawn to the river, against 2 other randomly chosen hands - will never change (how people bet them will of course)

but i trade, with the odds, just like i play poker.
 
easyrider,

I think the sinister aspect of successful trading is overconfidence: if you start to believe you are playing with a deck that is completely stacked in your favor (aka an infallible edge), the losses become harder to shrug off, and in the extreme case, you start to think you're "supposed" to win, each and every time. So it becomes not so much suffering from complacency as actively doing contortions in effort to "make" what you believe true "come to pass". Discretionary traders would be far more prone to this than mechanical/systematic traders, imo.
 
OK, i will concede to the fact that all types of gambling, or should i say successful gamblers, need to adhere to core principles. In certain terms the markets are a gamble, but, in the same context, if an individual of the correct mindset and capabilty applies themselves.......they can over come the odds.
 
Where trading is concerned, it does not matter who you are or where you are from, get to grips with it.....and it can give you a sense of freedom. That, my friends, is worth it's weight in gold.
 
"OK, i will concede to the fact that all types of gambling, or should i say successful gamblers, need to adhere to core principles. In certain terms the markets are a gamble, but, in the same context, if an individual of the correct mindset and capabilty applies themselves.......they can over come the odds."


correct... some thoughts

1) both TRADING (i am not talking investing here) and poker are similar, in that you are playing setups with relativel probabilities of coming to positive outcome. in both cases, you make your bets based on that.

technically speaking, trading (equities) is not zero sum (futures are) (and of course this discounts commissions ) however, in the short term nature of daytrading you are essentially trading your money with other traders, so it can seem so. in the case of poker, it is zero sum (discounting the rake), but the advantage in poker is that you can continually find a few tables with fish and just BLEED them, and then (in no limit) when you have built up a stake of 2 to 3 times the buyin limit, you have awesome advantage. you don't have this in trading, but you do have the advantage of sitting out until you see opportunity. in poker, you don't have this advantage. you gotta play the big blind/little blind when they come around. that's your toll
 
In my experience the hardest part of poker is money management and emotional control. Anyone can learn the skills. That is why I think being good at one makes you good at the other.
 
i think moreso in NL than in LHE, that the mathematical skillz alone will not be enuf to be profitable against all but the weakner opponents

in LHE you can play a pretty profitable game w/o worrying too much about psychology, as it's more about small edges in math, and you can do ok
 
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