Poker and the Beginning Trader

Hi,
Not sure if this has been posted here yet, I apologise if it has, but you all should know that www.wsex.com has made their poker room rake-free.
This site is part of the World Sports Exchange, one of the largest and most trusted sportsbooks on the net. Rakefree poker is a huge value and a plus for our community in so many ways that we really should support this effort if only to let the big guys know that we do have a choice.
I apologise for the semi-spam, but this really is important.

Ed
 
Very good post my friend. Personally, I have been a very successful poker player. I have been playing hold-em (cash limit tables only) online for the last 2.5 years. I started my first account on partypoker.com with $100. I lost it all my first 2 hours. However, I had a decent understanding for the game and decided to take a short break.

I came back two weeks later with another $100 and have been consistently profitable playing conservatively on $2/$4 tables ever since.

I sit down with something in the neighborhood of $200-400 and i look to double my money to be done playing for the day. Much like trading I look for my goal, and once I've made it, I am done for the day.

Last year 100% of my income was generated via playing online poker. As of the beginning of the year I have begun trading the S&P 500 E-mini. I have noticed more similarites than I could list between hold-em and trading.

For some reason however, I have been unable to turn a profit trading yet but have not given up. The relationship between trading and poker I believe is quite simple. In both instances you are looking to generate an edge over the opposition. In poker, it's the other players sitting at your table, in trading, it's the other traders buying/selling on the market you are trading.

I can be profitable on the S&P but it's like I'm playing No Limit Hold-em. I'll be dealt my aces, raise the blinds and everyone folds. Next time I'm dealt aces I raise the blinds and get re-raised all in. Of course with AA in the hole I am going to call. My opponent shows me pocket kings (I am more than a 4:1 favorite) until he flops his king.

This is very similar to trading in the sense that you pick up you're favorite signal, but perhaps it's early in the day and you don't feel like using too many contracts so you go light...You make a small profit and wait for you're next edge. Next signal you get (2nd favorite KK) and you decide to be a little more aggressive. Unfortunately, this time, the market decides to go against you.

I guess what I'm saying is, I've worked myself more or less into the boom/bust cycle of trading. Small profits here and there but when I lose I tend to lose 3-5x what I would make off an average trade. The fact that I pick 80% winners is meaningless at this point.

Any advice for a new trader who has been able to be successful at poker but not yet in the trading world? Thanks.

Blake
 
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Any advice for a new trader who has been able to be successful at poker but not yet in the trading world? Thanks.

Blake [/B][/QUOTE]

Stick to poker.:)
 
stop losses.

they are called STOP LOSSES

trading is very similar to poker in many ways, but trading has this thing called stop losses

your next entry is only a commission away
 
Yes i use stops. My trading system is very much contrarian and I am always looking for market reversal. I tend to stretch a little add some more, stretch a little more, add a little more until I can't take it. It seems like whenever I'm trading 1/2 CT I never get scared out adjust my limits/stops or anything of that nature. But once I'm sitting in with 10 CT or so...I start to get worried...I think I just need to learn to trust my system a little more but any further suggestions would be most appreciated.

Blake
 
Quote from BAETrader:


Any advice for a new trader who has been able to be successful at poker but not yet in the trading world? Thanks.

Blake
More...

Start thinking about how poker and trading are different. Since you're trading the ES, you'll have to start amassing statistics and understanding the following:

1. How do close-to-close and close-to-open sequences affect your daily bias?

2. How often are highs and lows broken?

3. How often are highs and lows tested?

4. How do daily range sequences predict morning and/or afternoon breakouts?

5. How often are ranges greater / lesser than average?

6. How often do trend days occur? Reversal days?

7. Are certain patterns significant? Gann pullbacks, dojis, NR/WS days, hooks, double bottoms/tops, etc.

Oh yeah, throw in gaps, mean reversion, volatility -- it's just a giant jigsaw puzzle with a confluence of edges.
 
Quote from PoundTheRock:

Start thinking about how poker and trading are different.
More...

Poker is different in that having the best hand doesnt really mean you will win that hand even though when all cards are shown you still have the best hand..... :D
 
Quote from ElCubano:

Poker is different in that having the best hand doesnt really mean you will win that hand even though when all cards are shown you still have the best hand..... :D
More...

Well said EC!
 
Quote from BAETrader:

I guess what I'm saying is, I've worked myself more or less into the boom/bust cycle of trading. Small profits here and there but when I lose I tend to lose 3-5x what I would make off an average trade. The fact that I pick 80% winners is meaningless at this point.

Any advice for a new trader who has been able to be successful at poker but not yet in the trading world? Thanks.

Blake
More...
Hi BAE

I guess the one question I would have is - can you isolate and define the reason why those big losing trades go so far against you? This is a long discussion but you will find people here, including me, who would be happy to have it with you. It would involve taking a look at your signals and your entries and exits. Your risk management rules should be getting you out of those trades before they go so far against you. The only thing I can think of is that you have very wide stops for your winners, so that you often see your winners going deep into the red before turning around and becoming winners. You may then be taking the money off the table too soon. This would involve two mistakes - too wide a stop on the downside and taking profits too early. Do you leg into or out of your positions? Am I right that your winners often go against you quite far before going your way?

One more thing - you mentioned 'deciding to be a little more aggressive'. I get a feeling that the decision you are talking about may be responsible for some of your losses. You are getting away from a systematic approach when you make such decisions. I am not saying by any means that there cannot be a discretionary component to successful trading or that there aren't times when you should press an advantage, I just mean that you had better have a very good reason for these kinds of 'decisions'. If that second signal is also your second best one, then you shouldn't be pressing harder than you did when you got your best signal.

If you tell us a bit more about your method, you can get some great feedback here about your trading. There will be some flaming, but there will also be some invaluable advice from real traders. You can start a journal - since you have the guts to admit that your trading isn't perfect yet, you should have no problem starting a journal and posting a few of your trades for analysis. I really believe that if you are a winning poker player, you have the mindset necessary for good trading.

PS - I just saw your second post and it definitely looks like there are some decisions going on that are not strictly 'by the book'. if you are sometimes trading 1/2 CT and trading 10 CTs at other times, that's a wide range. I am wondering how those positions relate to your total equity.

You mentioned that you 'add a little more until I can't take it' and 'once I'm sitting in with 10 CT or so...I start to get worried'. These are two things that should never happen, IMO.
 
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