Poker and Market Trading: Very Similiar Skills Required

[Dan Mezick]

I've written an essay on the poker/trading link. Experts in trading say the critical skill is a fully developed INTERNAL psychological foundation.

This is likely 100% true for poker players also.

Comments?

The Inner Game
www.primatepoker.com/online_poker_article001.asp (http://www.primatepoker.com/online_poker_article001.asp)

[Paluka]

The skills/abilities that make a successful poker player are similar to the ones needed to be a professional trader/market maker. I'm not sure these are the same skills that you need for the kinds of investing that most people do in the personal accounts.

[OrangeCat]

Nice article. Certainly, patience and discipline are essential for trading and poker. They are also similar in that failure is more often the result of self sabotage than anything else. I’m not sure what you mean by inner psychology but to me it means understanding why it is that we beat ourselves. I mean, most of my losses, trading and poker, are due to my making a play that I knew better than to do rather than some external event like my opponent catching a lucky card or a surprise earnings report.

Trading and poker differ in some important ways too. Poker is more of a person to person thing but with trading (as an individual looking at a screen) the opponent is like a freight train - either you jump on or get the hell out of the way. IMO, anything other than solid reasoning will lead to ruin when trading but some poker players seem to do well going on gut instinct. I don’t agree that trading and poker are zero sum games. They are minus sum. Poker has a rake and trading has slippage and commissions.

Much of what I’m saying here could be found in the book “Trading for a Living” by Elder. Highly recommended.

- Orange

[GeorgeF]

Why does you article apply to trading only. It seems that the same article could have been writen about success in any business.

[ QUOTE ]
On his poker web site, Steve Badger has correctly identified the "inner game" as biggest, widest, most important gap in poker knowledge and understanding today.

[/ QUOTE ]

On the 2-4 holdem tables I play on the most import gap in poker knowedge seems to be that if there are three or more cards on the table that can form a flush, straight ,or full house, the guy that keeps raising and reraising might have a flush, straight ,or full house.

A full house can also be formed by just a pair showing, when I master this I will move to 3-6?

[andrasnm]

It is a good essay but as a professional trader and one time professional poker player (wanna be /images/graemlins/smile.gif I must point out some flaws in your paper. Phsychology is important in trading but money management is more important. I say this because trading can be mechanized and turned over to a "manager" if you lack the psychology. Poker and trading is similar in the odds management and money management aspect even more.
If you coin flip your entries and manage your exit better you will make money as long as you keep your losers and winners to a 1:3 ratio or better. i.e. let your winners go use stops and cut your losses. This technique works with coin toss entries as well as a mponkley throwing darts at the WSJ. Yes there have been research and proven this theory. Similar to poker if you go with your best draws against pots that are humomgeous and play only few hands this money management will save your hide. Poker unfortunately has too much of a luck factor for me and I have the worst luck in the world.

[Paluka]

[ QUOTE ]
It is a good essay but as a professional trader and one time professional poker player (wanna be /images/graemlins/smile.gif I must point out some flaws in your paper. Phsychology is important in trading but money management is more important. I say this because trading can be mechanized and turned over to a "manager" if you lack the psychology. Poker and trading is similar in the odds management and money management aspect even more.
If you coin flip your entries and manage your exit better you will make money as long as you keep your losers and winners to a 1:3 ratio or better. i.e. let your winners go use stops and cut your losses. This technique works with coin toss entries as well as a mponkley throwing darts at the WSJ. Yes there have been research and proven this theory. Similar to poker if you go with your best draws against pots that are humomgeous and play only few hands this money management will save your hide. Poker unfortunately has too much of a luck factor for me and I have the worst luck in the world.

[/ QUOTE ]

I'm a professional trader and have no idea what your are talking about here. You are saying that if you just buy random stocks and stay long ones that move in your favor immediately and sell a stock as soon as it moves against you this is a long-term winning strategy?

[Dan Mezick]

Very interesting and absolutely correct(correction) point on "minus sum", thanks for pointing that out. I shall edit the essay to reflect this very important detail.

[Dan Mezick]

I appreciate your post and I want to comment on it.

I used to think that trading mechanics was key. But people smarter than me clued me in. Often the focus on mechanics is a perfectly "reasonable" way to avoid answering the deeper questions about what drives your behavior.

Here's an example. A very intelligent person reads every poker book and consciously understands all the content. He focuses on money management, yet he still makes bad plays of all kinds, including play #1, game selection.

Because of this he has negative edge so matter how much money management he practices, the best he can hope for is a slow rate of bankroll burn.

What is the solution?