Trading vs Playing poker, will it help with my trading?

Quote from magix3d:

What aspects of poker will help an aspiring trader? I'm a fairly horrible poker player and I was thinking that getting better at poker would help my patience. Thoughts?
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Three key factors:

1. Learning to recognise and handle 'tilt' (a state of emotional decision-making caused by anger/distress at large losses or bad luck).

This is absolutely critical for a trader. If you ever tilt, and do not always stop playing/trading soon after the tilt begins, you WILL go bust. Simple as that. Poker is excellent training for this, because tilting in poker will also make you go bust pretty quickly if you don't nip it in the bud.

2. Learning to become indifferent to money.

As a poker player, you must be able to go all-in without caring whether you win or lose on the hand. If you can't do this, you will get slaughtered by players who can disassociate their emotions, as they will simply bluff you off your hands by betting above your comfort level whenever they sense weakness.

As a trader, you must be able to make trading decisions based purely on the market setup and market action - there should be no input at all based on how much you are up or down on the position, or your overall portfolio. Your trade decision-making process should be identical whether you are betting $0.1% or 10% of your account equity, whether you are in a 30% drawdown or if you are up 100% on the month. If you cannot do this, you will always make sub-optimal trades whenever the stakes are higher than your comfort zone.

3. Learning about losing streaks and variance, through experience.

No matter how much statistical theory you know, how many Monte Carlo runs you do, you won't fully appreciate the reality of losing streaks until you experience them first-hand. Poker helps train you to handle these and the emotions that initially come with them. You need to be able to trade just as well at the end of a 25 trade losing streak as you do after a nice winning run - poker helps with this as losing streaks are even more common than they are with trading. The same is true with variance, no-limit poker is even more variable than (most) trading, so it's good training for this aspect.

Poker can also help a bit with patience and discipline, as you need to be able to pass on a lot of hands, only playing when you get strong hole cards.

The one thing poker is completely useless for is any kind of market knowledge. In fact, it's harmful for this, as it takes time you could use to be researching market history and behaviour. Poker also is a closed system and has far less black/grey swans than markets do.
 
Quote from CleverNickname:


What I think makes poker quite difficult relative to trading (and take this with a grain of salt, because I'm a total newbie to trading) is the difficulty of moving up. A person who can profitably trade $10,000 can probably profitably trade $100,000 with more or less the same system. A person who can make a profit in $100 poker games almost certainly cannot make a profit in $1000 poker games using the same strategies;
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You can look at it the other way. In poker, you can make a nice living playing in easy to beat games full of tourists, noobs, whales etc. In the markets, ALL players are playing against a tough table filled with experienced pros. What's more, every table in the markets gets tougher every year or two due to increased competition, greater research and market efficiency, more capital chasing edges etc.
 
Quote from DeeDeeTwo:


Over the years my hedge fund variance...
Is about 3% of what is typically experinced by elite online NLHE players...
(Yes, I did the math)...
And virtually every trading firm in existence has < 10% of NLHE variance.
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Maximum downside variance is -100%, so you are implying your worst peak-to-valley loss in your trading is -3%. I call bullshit.

Virtually every trading firm in history will experience a >10% drawdown during its lifetime i.e. the exact opposite of your 2nd claim. Even low-drawdown market neutral strategies eventually run into periods like 1998, 2001, 2008 and so on, and generally blow up or at least drop a lot more than 10%. If top quant firms like DE Shaw, Citadel, and Renaissance have lost more than 10% at times (sometimes a LOT more), then for sure your friends bucket shop won't be doing better. All arbitrages eventually get competed away, and then a >10% drawdown is practically a certainty.

With sloppy thinking like this, I doubt very much that you are a successful trader - besides, successful traders don't have the time or rationale to play poker regularly, since markets make a lot more money for less risk, and are more intellectually stimulating for games-player types.
 
Quote from eudaemon:

There is a not-so-secret strategy in No Limit poker, that mechanically employed by a newbie, has positive expectation even against an all pro roster table. It is called "small stack strategy".

The market is, by definition, a "calling station", as it'll take any bets you make against it with almost no limit to the size. That makes your bankroll by definition, a "small stack".

If you understand poker well, and "small stack strategy" in particular, it is reasonably "easy" to develop similar winning market strategies. Many uncorrelated "bets" or systems are possible under the same umbrella.:eek:

There you go, I just gave you a method to systematically create winning systems... I feel generous today!.:D
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Small stack poker "works"...
Because you have excess "folding equity" versus multiple big stacks in a ring game...
"Folding equity" and ring games do not exist in the financial markets...
You are not dealing with a closed system like a poker game.

Also, Pros will quickly identify SS strategy and adjust.

I actually think poker players are at a disadvantage as traders...
You would have to DEPROGRAM certain types of behavior...
Give me a blank slate over someone with hardcoded -EV habits any day.
 
wtf is "small" stack, I'm not poker expert (or groundhog for that matter, for those who know the joke) but I think its called short stack, and no, market is not a calling station, and you won't beat a table full of pros no matter how "big" or "small" your "stack" is

some concepts from poker that helped my trading are folding, understanding variance, bankroll management
 
Quote from DeeDeeTwo:



I actually think poker players are at a disadvantage as traders...
You would have to DEPROGRAM certain types of behavior...
Give me a blank slate over someone with hardcoded -EV habits any day.
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I dont agree with this for all players. I have a friend who I chat with on skype from time to time and knew him first as a poker player. I have sweated him in games as high as 5000NL ($25/$50 BLINDS)
So he is definitly a high stakes player and he has done quite well grinding up from a small deposit.

In talking to him I found out he was a trader (before I ever thought about trading) and he probably spends much more time doing that now that playing poker. From what he says he does quite well trading. (mostly long term from what I know)

I think picture that people paint in their minds when picturing someone playing online poker is that they are sitting at one table and either waiting for good hands to get all their chips in the middle with or fleece some noob coming to the table.

The most successful players I know are the ones that play multiple tables and condition themselves to make to best play possible to make them the most $ in the long run. Extremely disciplined. They review their hands and stats at the end of each session or week and are constantly trying to improve their game. They are definitly not gambling in a sense. They are taking the most logical move given the situation and if they are making -ev moves they will certainly be reviewing it and trying to fix it. They go to the length to find out the best amount of tables to play to make the most $ (including bonuses)

I think the overall work ethic and dedication to what they do in poker is the main thing that will make them successful in trading.

I think the actual part of playing cards is meaningless.
(I can't think of anything yet from the way I played the actual hands to looking at charts and coming up with any connection)

I do agree with you if you are talking about the kind of player who just plays but never does anything to try to get better other that just play cards. They generally just want to gamble from my experience. This kind of person unless they are a genius or savant is doomed at poker anyway and probably at trading as well.

I didnt mean this reply to come off as an arguement if it sounded like that.
 
Poker definitely helps with patience. The thing with poker is that it is a zero sum game. At the end of the night one man takes the pot. He has the patience to make the right move at the right time. In a field of seasoned veterans, the right move at the wrong time is a losing bet 99% of the time (ie. not profitable long term).

A while back the futures trading newsletter put out by my broker had an article about having the patience to keeping stops. If you're good at poker you'll be playing by a system, same as futures trading. Knowing when to fold your hand in poker is like knowing when to close your position in futures trading. As soon as you break your system, you're truly gambling.
 
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