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Poker & Trading (leveraging on poker success)
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Poker & Trading (leveraging on poker success)

  #11 (permalink)
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I used to follow professional poker quite extensively many years ago (although not recently).

One of the other major differences between poker and trading is the issue of bluffing. You can bluff your opponent and that could possibly win you a few hands more than just playing straight all the time. However, in trading you can't bluff the market since your bluff has no effect on the market. As a matter of fact, you have control over the market since it's so vast so you're just along for the ride (.0000001%) unless you're a big big player. In contrast, in a poker table of 10 - 15 players a huge magnitude higher percentage wise.

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  #12 (permalink)
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trading and bluffing


TrendTraderBH View Post
One of the other major differences between poker and trading is the issue of bluffing. You can bluff your opponent and that could possibly win you a few hands more than just playing straight all the time. However, in trading you can't bluff the market since your bluff has no effect on the market. As a matter of fact, you have control over the market since it's so vast so you're just along for the ride (.0000001%) unless you're a big big player. In contrast, in a poker table of 10 - 15 players a huge magnitude higher percentage wise.

au contraire - there is very much bluffing in trading. Please see the attached paper for an academic discussion.

Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
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Poker & Trading (leveraging on poker success)-diegosalzman.pdf  
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  #13 (permalink)
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The topic of poker and trading is a great one! There was another guy on here talking about poker and trading - https://futures.io/elite-trading-journals/10860-my-journey-poker-pro-trader.html. Its elite I think so you may or may not get to see.

One book I highly recommend is Jared Tendler's book "the mental game of poker". Its about TILT control, learning, and improving at activities that are like trading.... Really good. He has a new one as well, can't remember the title.

Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
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  #14 (permalink)
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I will piggyback on this thread, for the following poll, and for a continued poker vs trading discussion.

Do you regularly play Poker?

Total votes: 653
 


Please vote and discuss.

Mike

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  #15 (permalink)
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Yes for fun.

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  #16 (permalink)
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just returned from a short vacation to Vegas...

Poker is fascinating to watch for me but my gambling games are Blackjack and now added Craps... both for fun and small stakes. Frankly I enjoy the conversation at these tables... no gamesmanship at BJ and Craps.

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  #17 (permalink)
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I play poker with friends for money. Not as often as I used to though. Straight 5 card is my favorite. Pretty much break even over the course of many years. I also play video poker about 4 to 6 times a year at the casinos. At one time they were the best odds in the casino. Once you memorize the probability of the hands its hard not to walk away with at least a break even. I have a positive expectancy when playing the quarter variety video poker.

Robert

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You make your own opportunities in life.
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  #18 (permalink)
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This is the only game i'll participate betting money on at casinos or elsewhere because there's actually somewhat of an edge. I used to play blackjack but have given it up because it's too static.

I love playing poker with friends and usually win because I only bet on sure hands and know how to progressively bet without showing my hand. I also will bluff occasionally to throw them off. I find it very similar to trading in regards to discipline.

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  #19 (permalink)
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I used to play poker for income mostly during college and then several years after that. Also did some live play as well in the US and Asia, but 90% of my playing was online. I think that there are definitely parallels between the game and trading. Although it needs to be taken in context. There are definite skills that are cross application although not everything can be brought over.

My top 5 skills that poker taught me were:

1) Understanding +EV. Key to trading and key to poker.

2) Being able to identify that I am on tilt and realizing i am not in an optimal state of mind. I still use HALT to this day (Hungry Angry Lonely Tired) in order to take my self away from the table or the screens.

3) Bad beats and probability. Bad beats will happen even when you have the edge. But it is just that, an edge. As long as you had that at showdown you're doing fine, winning or losing the hand is irrelevant. You needed to have the statistical edge or you just got lucky.

4)Game selection. Either picking the kind of game you want to study, stud, hold em omaha. as well as the tables you want to play at. Where are there opponents I can likely beat? This would be markets to focus on learning to trade and the systems to trade them.

5) Risk of Ruin and Money Management. This is a key. I know my Risk of ruin, I also know how big of a table I can play and how many big blinds I have. I select the table I can sit at because I know it fits my budget and I can stick around through the variance in order to exploit my advantage and identify weaker opponents. I had a set schedule of when I can move up or down limits based on my P/L. Most people play at too large of a size in trading and at the poker table, blowing out. So I have always kept that in mind.

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  #20 (permalink)
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Here's an article some time back also discussing the similarities between poker and trading.

Guest Post: Poker And Trading | Zero Hedge

Some of my own personal thoughts:

Some similarities ...

Reducing Variance - In both games/fields, a strong element of randomness exists.. Minimizing this inescapable variance without sacrificing too much return is the goal for both games. Multi tabling, limit bets is similar to trading in the form of diversification, proper position sizing and appropriate use of leverage.

Psychology - As mentioned by others, neither automated and discretionary traders can escape the psychological pain of losses. These losses either come as a huge single loss (bad beat) or drawdowns (prolonged losing streak). Losses always do affect a player more than gains. When hitting an emotional threshold, the negative effect of losses affect behaviour and changes betting patterns. Players & traders become ultra aggressive (poker tilt mentatility to 'win it all back') or overly passive such as missing good hands or trades . Pain threshold is a critical factor to success in many fields and no amount of theoretical reading can prepare one for it.

Some differences ...

Expectancy - Probabilities in poker are a little 'easier' to define. The odds of winning depend on what cards you have, and how many players you are playing against at each turn of the card. Additionally, the strongest winning hand is well defined when you have 'the nuts'. In the case of markets, being an open system of continuous flow of capital, the probability distribution is never fixed and you can never be certain of a 'winning hand'. A bad exit can destroy a good entry.

Costs - Just wanted to point out not to forget slippage in the costs. Unless one has a fat structural edge, commission costs actually dwarf the slippage you get in markets. E.g the ratio of comm cost to slippage in the case of ES is $2 to $12.5 everytime you hit the bids. Shorter term traders have lower variance, but slippage eats into a lot of this return so maintaining this expectancy is hard.

Essentially, there are always many parallels one can always draw from other fields. However, the mindset which helped me was that if unprepared, I would definitely get creamed by the incumbents who were superior in strategies, psychology, technology and capitalization. Make no other assumptions.

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