Actually, I'm very surprised by the results of the poll..... I expected that most traders would play poker at least on a recreational level.
In find the skills and mentality in poker and trading are almost identical.
I agree completely with everything the original poster mentioned, in particular just want to add on my own views in terms of making money.
Even if you have the best starting hand, e.g. AAs or KKs, there's no way of knowing how money you are going to win. Might be just the antes (your raise makes everyone fold), of might be some crazy 3 way All-in and you bust 2 players. Exactly the same concept in trading. Just because you have your idea trade setup, why do you think you can ever achieve your specified target? It's the same thing, you're trying to do the impossible, that's predict the future. It's like saying you have a fixed profit target for playing AAs, when if you tell a poker player that, he'll think that's ludicrous. But yet, we are trying to do achieve this fixed risk/reward BS every single day in trading, risk 3 tics to make 10 ticks. .... haha.. it's a joke.
Second part of trading that almost identical to Poker is this illusion of a constant $/day mentality. Like, if I can make 200$ a day on 1 contract, I can make $4000 a month, and 1 year i make this, and on the next year I start doing 2 contracts and blah blah blah that's all BS also. Even if I deal you KKs every hand, there is no way you can know for sure you'll make X amount of money that day. You might run into a set every time you go all in with your KKs. Sure it's possible to grind out a fairly consistent profit over time, but every poker Pro has that 1 year where he just totally crushes it (e.g. winning the WSOP Main Event). Ever wonder why you don't see the same Poker pros year and and year out? Because they crush it for 1 year and then just chill for the next few years. You need to also have to same mentality in trading, there'll be just 1 or 2 years where you will crush the market and then for the rest of the time u'll just be treading water.... just making it by, not losing a lot but not winning huge either. Poker pros play poker so that they can achieve a lifestyle where they are in the "F-You" position. Don't like your boss? "F-You", don't like a certain person? "F-You". I don't think anyone is really "passionate" about Poker, they are more passionate about achieving the lifestyle. After trading for this while, I no longer feel "passionate" about trading as well. All I see it as just a means to the ultimate goal. That is make enough money so I can say "F-You" to anyone I want to. Don't confuse interest with passion. I still have interest, and you must have interest, but there's no passion. As soon as I achieve what I set out in my mind, I'm pretty much done with trading.
Let's face it, you're trying to make a living by trying to predict the future, same with poker.
In some aspects, I would argue that poker is a bit more level that trading. Because you get to read the faces of your opponents (assuming you are playing live), and maybe you can pick up some tells. In trading, you have very little to go on. You can't read what the big players are trying to do, all you have are your indicators and mathematical models which is really a one sided event, for the most part, pretty worthless IMO. Can an RSI or Fibonacci line really tell you what the big players are going to do next? Come on..... Even a candlestick tail can only tell you there was some buying or selling at the moment in time, it cannot tell you what is going to happen next.
So actually, my best advice for anyone who wants to improve their trading, is stop trying to find new indicators and learn to play Poker!
This is all my own 2 cents worth.
Last edited by KelvinKing; March 15th, 2015 at 01:24 AM.
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I study no limit holdem just as hard as trading if not harder.
I think the analogy is really overblown. It really has more to do with so few other games being played for money than an isomorphism between trading and poker strategy. "Trading is like backgammon for money" or "Trading is like chess for money" would make just as much sense if not more.
The most obvious difference to me is 52 cards in a deck. Poker can be made into a tractable problem and in many spots solved right now because of limited states of the game.
We have some stylized facts about markets but the idea of solving markets doesn't really make sense.
"Solving the real estate market" sounds like something from an infomercial.
Well I think poker has a lot in common with trading.
Poker had its golden time when if you applied some very basic stats rules you would have done easily a lot of money
Trading had its golden time when there were so many inefficiencies that if you could exploit them you would have done easily a lot of money.
Now poker is much more difficult, I know some pro poker players that now turned to sell the poker instead playing and the ones who play it professionally, can earn some money only on very large numbers. I've read that some play with a negative P/L but earn a living with house rebates on hands. Off course I'm not talking about the big ones like Phil Ivey...
i think the reason for the analogy being better than chess is because poker you bet multiple times, same as trading,
but in chess unless you bet on every move, trading and chess for money is less relative. plus in poker and trading you can
take smaller losses. chess for money is all in. also chess is fully transparent, you see everything your opponent is doing.
where as poker the unsolvable problem is your opponent. you know how the market works, but not the people trading it.
you know the probabilities of the cards, but not your opponents. just my opinion though.
The following user says Thank You to nightshade for this post:
I don't really agree with that either though. When was this golden time trading? If anything, people have always thought you could make money 10 years ago but not today no matter what year it is and across speculative activities.
I guess I don't think the analogy has much meaning really. If you are good at chess it means nothing as far as how good you are at poker outside of general intelligence. I don't see how that is any different if you compare poker and trading. Poker players would understand probability and bankroll management better than the average person off the street but those are separate things to me. A poker bot and algorithmic trading system have basically nothing in common.
Well I really didn't mean that poker and trading are the same thing, yes understanding probability a some basic concept of money management may help but that alone will not make a poker player a succesful trader. Infact I started writing my post and at the end I just found that in both fields was easier making money some time ago.
At poker you just had to play conservative to exploit a statistical advantage over your opponents. Now the game is evolved and it is much more aggressive and everyone know the rules so if you look for a statistical edge you have to play much more hands to earn much more less, this is at least what reported me many pro poker player.
As regards trading many markets had some really big inefficiencies, I entered quite late in the business but until 3/4 years ago some markets still had some very good opportunities.