Winning Poker Players Can Make Great Traders

[Dan Mezick]

...if they are part of a team with strict accountability controls.

Many 'hotshot' traders in brokerage firms (with strict accountability measures in place) exit the firm, and go it alone only find out-- the hard way-- how valuable that structured accountability was. With no one to keep them in check, they often cross the line into excessive risk and trades originated outside of the trading rules they gave created for themselves. Then the big drawdown comes...

A famous trend trader named Richard Dennis proved that trend-trading could be taught. Candidates selected came from all walks of life. NOTABLY, two of the successful candidates were (duh) "professional card players".

Here is one of the sample questions used to screen candidates:

TRUE or FALSE: If one has $10000 to risk, one ought to risk $2500 on every trade.

Emotional control, strict risk control measures relative to bankroll and the ability to follow the stated rules with consistency ranked very high on the list of personal attributes leading to overall success.

That's the execution part. The strategy formulation and planning part was handled in advance for "the turtles" by some very very smart people such as Richard Dennis.

Note that the trading game is scored in dollars, not IQ score, SAT score, or total number of advanced degrees. Just like poker.



[ QUOTE ]
They included an actor, a security guard, two professional card players, a low-paid bookkeeper, two quite unlucky traders, a financial consultant, a boy fresh out of school, a financial consultant, a woman who used to be an exchange clerk and even a fantasy game designer.

[/ QUOTE ]

The Turtles Explained

[ QUOTE ]
Can the skills of a successful trader be learned? Or are they innate, some sort of sixth sense a lucky few are born with? Richard Dennis, the legendary Chicago trader, who turned a grubstake of $400 into $200 million in 18 years, has no doubt. Following an experiment with a group of would-be traders recruited from around the country, he's convinced trading can be learned. Over the past 1 1/2 years, a group of 14 traders he taught earned an average annual compound rate of return of 80%. In contrast, about 70% of all non-professional traders lose money on a yearly basis. Trading was even more teachable than I imagined, he says. In a strange sort of way, it was almost humbling. Mr. Dennis says he debated the learning vs. innate ability question with some of his associates for years. While they argued that his skills are ineffable, mystical, subjective or intuitive, he says his own answer was far simpler. The 40-year-old Mr. Dennis attributes his success to several trading methods he developed, and, perhaps more important, the discipline to follow those methods. To prove his point, Mr. Dennis decided to run a real life experiment. In late 1983 and again in 1984, he placed ads in the Wall Street Journal, Barron's and the New York Times seeking people who wanted to be trained as traders. The job required that they move to Chicago, where they would receive a small salary and a percentage of any profits while Mr. Dennis taught them his methods.

[/ QUOTE ] The Turtle Selection Process

Think about it.

See also:

The 2+2 Hedge Fund

[Paluka]

Many trading firms use poker as part of their training process. And it should be obvious that people can be taught to trade.

[laserboy]

[ QUOTE ]
Winning Poker Players Can Make Great Traders

[/ QUOTE ]

I used to think this was the case until I started reading this board... LOL!

[lehighguy]

Anyone good at Chess, Poker, and Tetris can be a winning trader. They have the analytical and pattern recognition skills. The problem is personality. I think my friend Kevin is a genuis and could be a great trader, but he's immature and emotional. A more well known example is Dutch Boyd. His genuis math skills make him a decent player, but his [censored] up personality keep him from being a great player.

[1800GAMBLER]

What's everyone's thoughts on the book, Trend Following: How Great Traders Make Millions in Up or Down Markets?

[zerosum]

[ QUOTE ]
The problem is personality.

[/ QUOTE ]

Exactly.

[adios]

Or can people who don't play poker well make great traders? I guess I'll have to be the forum curmudgeon, at least for awhile. Methinks that the answer to both questions is probably yes.

Does a great trader always posess the ability to be a winning poker player? If so up to what limits? I would think that a great trader doens't necessarily translate into being a winning poker player. Thus I would think a person's ability at poker has little to do with one's success at trading.

[Dan Mezick]

I think generally the personal discipline, and personal psychology, and emotional-dynamic aspects of both poker and trading are very similiar.

World-historical traders such as Mark Minervini (interviewed in the book Stock Market Wizards) and others strongly suggest poker play as important training for traders.

I therefore conclude that a successful poker player, who by definition must develop keen discipline, emotional control, judgement etc, is likely very much predisposed to a successful trading career, as compared to any randomly selected non-poker candidate.

A major trading concern reportedly uses Sklansky's books and poker playing in their trader training. You can examine information on that here:

2+2er "Redsox" Spills the Beans

[goodedesign]

[Beezos]

Any traders out there in NYC area looking to recruit new blood to their firm feel free to private message me. I am a avid poker player in my mid twenties looking to move from financial services into trading. I prefer to get into institutional trading but am also interested in day trading. Talk to you soon...