One of my all-around favorite quotes on trading is actually about poker.
It comes from cash game pro Tommy Angelo, who says, “The best way to get better at poker is to get better at everything and let poker rise with the tide.”
An intimidating thought for some. To REALLY up your game (be it poker, trading, or something else entirely) you have to improve as a competitor. As a human. As a thinking, acting, decision-making machine.
For others, though, this thought is not intimidating but inspiring. “Raising the game,” i.e. getting better at everything, is part of the attraction in the first place.
To that end, trading is all about making decisions.
And making good decisions is not just an art, but a skill set — an area of focus where you can learn and practice and improve. (more…)
Archives of “poker” tag
rssPoker/Trading Similarities
- Actual winning/losing of a trade is unimportant.
- Each well executed trade, win or lose, is a victory.
- Each poorly executed trade is a defeat (even if you make money).
- Each move or action lacking discipline can eventually cost much more money than the original trade in the form of monetary/emotional loss.
Good Trading and Good Poker
- Reduce your expectation for what you have to make on every trade;
- Reduce your expectation for how many trades you need to take every day/week;
- Concentrate your efforts on waiting for the best trades, and avoid the second-rate tempting ones;
- Risk less per trade and survive longer.
Poker/Trading Similarities
Actual winning/losing of a trade is unimportant. - Each well executed trade, win or lose, is a victory.
- Each poorly executed trade is a defeat (even if you make money).
- Each move or action lacking discipline can eventually cost much more money than the original trade in the form of monetary/emotional loss.
Actual winning/losing of a trade is unimportant. Difference between trading and gambling?
Gambling is, usually, an event with:
- Limited duration
- Finite upside
- Finite downside
- Binary outcome
When you gamble you either win or lose. That event usually takes only a small amount of time.
For example, you can bet on a horserace 10 minutes before it starts and 5 minutes later you have a result. For anyone who plays poker, you know it may take a little bit more time as the stakes are raised. So poker is a little bit closer to trading.
In gambling your risk on any event is usually what you outlay. And your potential return is what the house is offering at the time you agree to the bet.
I love to play blackjack (and for some reason, while I don’t play often, I have been profitable almost every time I’ve played in the last 3 years) like one of my trading mentors who was an original Turtle Trader.
A bet on a Blackjack table can take a minute or two until it’s over. Whereas in trading, a trade has the following characteristics: (more…)
Federal Judge: Poker Is A Game Of Skill, Not Luck
Trading Should Be Effortless
- Money comes in bunches.
That one says it all. You can’t force trades. You can’t simply work harder in order to be ‘in sync’. Sometimes you are, sometimes you are not. You simply have to accept that as being part of the trading business. What you can do, is to closely monitor if your performance is in sync with the market’s performance. If the markets make new highs and your overall portfolio is going down something is wrong. You need to address that issue. Fast. The best way is to step aside and drastically reduce exposure and risk. That’s what I did.
- Trading should be effortless.
A true piece of wisdom. In my experience when I trade well it is like shooting fish in a barrel. Almost everything works. I don’t need to be overly patient with positions. The money comes in very fast. That’s exactly how trading should be. The exact opposite was the case during the first 2 months of this year. So I did what I had to do. I recognized the situation for what it was and admitted my efforts were not leading my portfolio anywhere. It was like folding when you are dealt a bad hand in poker. So I folded. Now I am waiting for the next hand. If it is a bad one I fold again. If a series of trades start to really go my way I push it hard and increase exposure and trade aggressively.
- When in doubt stay out.
This one is key. That’s how I interpret the adage: It doesn’t mean you don’t trust your instincts or your methodology. As a trader you should adapt to new situations. You constantly analyze the markets and your performance. Then you adjust your trading. Then you compare your expectations with the actual outcome. Then you adjust your trading. Then you repeat the process. At times things simply do not work. That’s when doubt creeps in. You know something is not ‘feeling right’. Your job is to protect your capital. Your job is not ‘to be right’. Put another way: You should be able to exit or reduce exposure without the need for explanations. The markets usually give you those explanations at some later point in time.
The Battle is With Yourself
“Years of experience eventually teach you that your main battle, always, is with yourself — your propensity for errors, for rationalizing marginal hands into good hands, lack of concentration, misreading other players, emotional eruptions, impatience, and so on. Your opponents are merely dim outlines that come and go. Few of them ever reach the exalted heights of damage that you can inflict on yourself.”
– Larry Phillips, Zen and the Art of Poker
Many great traders have expressed some version of the opinion, “Your greatest opponent is yourself.” Do you agree?
If so, what are the implications?
On the positive side, if “we have met the enemy and he is us,” as Pogo once said, what does that say about growth opportunity?
If you had perfect discipline, perfect motivation, and perfect emotional control, how good (or great) a trader could you be?
Dont Take Too Much Risk
One of the most devastating mistakes any trader can make is risking too much of their capital on a single trade. One thing is certain in trading and that is if you lose all your capital you are out of the game. Why risk so much you could be prevented from continuing? There is a saying in poker than going all-in (risking all your chips) works every time but once. This is true of trading.
If you risk all your account on every trade it only takes one loser to wipe you out (and no trading method is 100% accurate), so you will be out of the game at some point it is only a question of time.
In general, we only risk 1-3% of the available capital allocated to a system on any individual trade. This is calculated using the size and, the difference between our entry price and our maximum stop price, and the amount of capital allocated to the system. With the win probability and ratio of size of winning trades to losing trades we are almost certain never to lose all of our trading capital. In fact, the chance of us hitting our maximum drawdown for the year is tiny. (more…)
20 Poker Quotes -Traders Must Read
Poker is one of the very few casino games that’s like trading. Unlike other games where the casino keeps the odds in their favor, in poker there are many ways to get an edge over other players at the poker table. The way you play the odds can give you an edge, folding on bad hands quickly and playing the best hands only give you an advantage. Managing risk per hand can keep you in the game while others blow out. Sticking with the odds instead of letting emotions take over is another big advantage over other players. I have a buddy that plays well in poker tournaments and it is odd how we can talk about the same elements of strategy that matches both endeavors. Both poker and most financial markets are zero sum games where money flows from those who do not know how the game works to those who do.
- “Living in the past is a Jethro Tull album, not a smart poker strategy.” -Richard Roeper
- “The beautiful thing about poker is that everybody thinks they can play.” -Chris MoneyMaker
- “If there weren’t luck involved, I would win every time.” — Phil Hellmuth
- “If you can’t spot the sucker in the first half hour at the table, then you are the sucker.” — Matt Damon in Rounders
- “The cardinal sin in poker, worse than playing did cards, worse even than figuring your odds correctly, is becoming emotionally involved.” -Katy Lederer
- “You cannot survive without that intangible quality we call heart. The mark of a top player is not how much he wins when he is winning but how he handles his losses. If you win for thirty days in a row, that makes no difference if on the thirty-first you have a bad night, go crazy, and throw it all away.” -Bobby Baldwin
- “When we play, we must realize, before anything else, that we are out to make money.” -David Sklansky
- “Poker may be a branch of psychological warfare, an art form or indeed a way of life – but it is also merely a game, in which money is simply the means of keeping score.” -Anthony Holden
- “The real things to know is that folks will stand to lose more than they will to win. That’s the most important percentage there is. I mean, if they lose, they’re willing to lose everything. If they win, they’re usually satisfied to win enough to pay for dinner and a show. The best gamblers know that.” -Pug Pearson
- “Poker reveals to the frank observer something else of import—it will teach him about his own nature. Many bad players do not improve because the cannot bear self-knowledge.” -David Mamet