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Old 04-22-2010, 06:42 PM
piphunter piphunter is offline
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Default Poker or Trading?

Ever since I saw the poker tournaments on TV few months ago, I decided to learn the game. It turns out I really enjoy it. Poker is so much like trading and I think it's the best training for trading.

This is what I have learned so far in poker (this is coming from a guy who didn't know what a full house was)

Most winnings will come from playing very few select starting hands. When I first started out, I found myself playing every hand, thinking that the blinds won't hurt much. But as I play, I realize that playing tight means you will fold more often but more importantly not lose money by playing every bet. I didn't realize how much money i lost just getting into small bets. THese add up, so it's best to jsut play premium hands (for now).

Poker is about probabilities and skill. Luck is a small influence. A strong starting hand can lose its edge as you see the flop. This is why you keep seeing the same faces at final tables, even though everybody knows the rules and what the good starting hands are. It's skill even though you're dealt with random hands!

I'm still learning the psychology aspect of poker, such as knowing when to bluff and how to read other people's cards.

So how does this translates to my trading?

After looking at charts the last 3.5 years, I know that good trades work out quickly. These trades are like my good hands that I should be aggressive with. But you never know how the hand will unfold after you enter (flop). So you have to play the trade right but willing to close out-even if the trade is a pocket A's quality. I see people go all in with good startig hands but you know they're beat when looking at the community cards.

I also have VERY tight risk management. I get stopped out a lot; Similar to the many hands that I fold while playing poker. But when my trades go my way my winners are 5x the losers. But i guess people want to be right more often rather than win in the end. It's the same thing in both worlds.

It's frustrating in the beginning to let go of these trades so quickly especially when those trades work out in the end. It's kind of like folding a hand but after the river card, you found that you would have had a full house. Poker taught me to keep playing my strategy because if i hold on to those bad hands, i will lose in the long run even though I may win with them from time to time.

I'm not sure how psychology plays in trading like it does in poker since it's a lot harder to gauge other trader's positions especially for forex market. But so far just trading the way I play poker is paying off.
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Old 04-22-2010, 06:46 PM
macrotrader macrotrader is offline
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Good post. I don't agree though. I've heard people make this comparison a lot.

I'm not a big poker player at all. I think it's gambling. Trading if done correctly is not gambling.

When you play poker your hand is stacked against everyone else's hand. So instead of going one on one against the market and having limited probability you are going 1 on 10 or how many other hands you are competing against.

The probabilities are stacked against you. With correct risk management you can win in trading. I don't know of too many poker players that make long term careers
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Old 04-22-2010, 07:17 PM
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matthew matthew is offline
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I equate trading to being a bookie. Same exact thing if trading is done correctly.

When you're a bookie you have to have a big enough bank of money to take on losing bets. You can't take on a bet that is big enough to wipe out your bank.

Same thing with trading. If you put the odds in your favor you will never lose long term.

There has never been a casino to go out of business. I'll equate it to black jack.

I recently went to a casino for fun with a friend. They had a black jack table ( a $2 black jack table).

I had $20 on me. Each hand I had to put in 50 cents to play. At one point I was up about $12 after about 20 time went on I was done $5 to $15 that's when I got out after losing $5.

What you have to do with trading is the exact same thing that the casino does to it's poor victims that go in their....because that's what they truly are (victims).

Alright let's get back to our example of Black Jack. The casino makes you put 50 cents each time you want to play. How can you do this with trading? Well if you trade commodities you can buy 3 month bills and collect the interest while you trade against it....or if you have a forex account most times they will give 2.5% interest on the money that is in your account. This acts as the anny that is coming to you every round.

Trading is probability just as gambling is. Now in Black Jack the dealer can see all of my cards but I can't see his. So he obviously has an advantage.

How do I stack the advantage to my favor in trading. The only advantage that dealer had is knowing what my other card is....whereas I don't know his. All he does is follow a simple rule of probability.
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Old 05-09-2010, 09:54 PM
bluesdave bluesdave is offline
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I thought the same thing for quite a while.....things like folding when you know your beat.....your job as a player is not to protect your money in the pot, but the money you have left in front of you.........BUT if you play like poker, you will LOSE in the end.........The better analogy is play the market like CHESS anticipate your next move based off how your opponents move.....most great players play in regular patterns of movement...they even name the series of moves and the better player know how to defeat the same with Forex or any High volume market....your opponents are predictable at precise times they telegraph what they are going to's your job as a trader to see the moves that create the next move and jump all over it...the markets move in repeating patterns know what they look like, and when you identify it......if you don't see and recognize poker and .02 good luck
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Old 05-09-2010, 09:55 PM
wilburbear wilburbear is offline
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Yes there are many similarities between poker and trading.

Check this book....

I read about it on Victor Niederhoffer's website long time ago, not a method or maths book but the principles are very applicable to trading. Its sort of like "Trading in the Zone" type of book. Highly recommend it.

This is the article from dailyspeculations...every trader can learn from...
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Old 05-12-2010, 12:56 PM
trader1 trader1 is offline
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Poker is gambling trading is also gambling but if done correctly can be seen more like investing
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Old 08-05-2011, 12:13 PM
forexer forexer is offline
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Trading as to be done correctly in order for it to not be seen as gambling. Minimize risk, only take 1-2% of risk on each trade.

The odds are 50 / 50 and if you have a good strategy you can get slightly better odds
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