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Poker and Trading Strategies – Similarities and Differences
update : Nov 4th , 2013 – Tonight is #FinalNine #WSOP and will probably stay up late watching like I have in past years. Really love to watch and play poker since there are so many different levels that as a trader I appreciate. I wish I had more time to spend playing poker but has changed a lot since I first started playing and not as easy as it use to be online. Trading on the other hand, continues to bring in consistent profits for me over many years and its like winning a tournament each month without the long hours. Below you will see many of the Similarities and Differences between Trading and Poker and since I have a unique perspective was able to come up with a very detailed list that I hope you enjoy reading.
UPDATE : April 16, 2011 WITH THE RECENT FBI SHUT DOWN /SEIZURE OF ONLINE POKER SITES what will online poker players do? – Many young talented poker players looking for something other then live poker will look to trading since provides them many similarities and much more upside potential. thought to repost this article to show the many similarities and differences with Trading Stocks & Playing poker. I hope you find it helpful . Another article i just did on Stacking the deck in your favor using “money management can be read here – Money Management – Position Sizing & Risk-Reward Anaylis in Trading Poker players & card counters will find this article very easy to understand since they already have a great understanding of percentages, odds, risk/reward etc.
So if you are an x- online poker player & asking yourelf ” I can’t play online poker , Now what do I do ? you should consider Trading Stocks. Check out our site, blog , free webinars & chatroom for some help to get started. Also if you have a group of poker players that want to learn to trade and want to have an online webinar structured so that its from a poker players perspective then shoot us an email at email@example.com and we should be able to help. Enjoy the articles on Trading Stocks and Poker Similarities / Differences , and money management in Trading.
I thought to share a list of similarities and differences of Poker and Trading. My best win online in 24 hours was over $32,000 placing 3rd in an online poker tournament for $21,136 & over $10,000 multi-tabling $10/20 $20/40 hold’em , and have done well playing live holdem (Limit & NoLimit) . I’ve made far more trading over the years and find the time it takes to play online tournaments and live poker a bit too long. I prefer trading to poker but I enjoy both.
You can see some more of my tournaments at the bottom of this article.
Similarities of Poker & Trading
- Money Management
- Confidence and knowing you have control will aid in success
- Successful Traders and Poker Players Log & Analyze Past Hands/Trades & Probabilities
- Use Bankroll as a Tool
- Use programs, websites and mentors to constantly improve
- Successful Poker Players and the best traders have a certain level of gamble in them
- Many are a Sole Proprietorship – you’re own boss but some successful traders set up corporations
- You need a Trading Plan & a Poker Plan where you must set goals and revisit or change those plans to see that you stay on track
- Quick to adjust to different stock market conditions – and to different poker players and stakes (both live poker & online poker)
- Best to specialize on one main style but learn the others ( Trading – daytrading, swingtrading, futures, Forex – currencies, options — for Poker ( live or online)- holdem, stud, omaha , eight or better, razz, limit , no limit , pot limit)
- Skill is most important but there is always an Element of Luck
- Don’t go all in with your whole bankroll (live to fight another day)
- Trade or Play according to your Bankroll size
- Great Traders and Great Poker players think ahead of each move similar to chess players
- Continuously making correct decisions that will help to maximize your profits and minimize your losses
- Know when to stop playing poker and when to stop trading for the day ( Stop Losses or Maximum Losses per session help)
- Both poker and trading yield high levels of return on equity or buy-in amounts
- Unlike a job, you can leave at the end of the day with less money then you started
- Can’t win every trade or every poker hand but you can still be profitable
- Both can create great primary or second (2nd) incomes & have created millionaires of those that seriously learn trading and poker techniques and strategies
- Emotions play a big factor (don’t over trade and don’t go on tilt) If you do then re-evaluate & try to control those emotions
- Outside Influences such as quarrels, family problems, pressures or playing underfunded will affect your success
- Both successful traders/poker players try to maximize win to loss ratios
- When you are unsure or go on a losing streak play or trade smaller amounts till you get back in the Trading or Poker zone.
- In Poker the house is the casino (taking a small amount of rake or session fee from all players). In trading the brokerage companies and exchanges/ECN’s (are the house) who take small amount of commissions from all traders.
- Don’t chase your losses but concentrate on the next best decision
- Bad beats and losing streaks will happen but learn from them and move on ( check article I’ve done on Handling Trading Losses)
- Trading allows you to use leverage with margin while skillful poker players have been known to get staked (lent money by others for a % of profits and/or tournament wins)
- Successful poker players and traders know how to maximize wins & minimize losses
- If your bankroll is your rent money then you will have a difficult time at success
- Age, sex, race or nationality are not boundaries to success
- You can read all the poker and trading books but you’re real experience is when you actually play or trade
- With both you can trade on simulators or play money accounts. They won’t be exactly like real live trading or poker playing but a great way to start without losing any actual money.
- Online Poker Players & Advanced Traders use multiple monitors for their computers
- You can’t bluff in trading ( in poker you can win with the worst hand by outplaying your opponents )
- Can’t consult during live poker tournament or game in progress but you can while trading by asking other traders for advice on a particular trade
- In Poker can’t hedge like you can in trading (with options) – unless you are like Phil Hellmuth Jr and ask for insurance on hands
- Great poker players are well known / Great traders could be u’re next door neighbor
- Less time required in trading (especially for swing trades) so don’t always have to be at computer watching positions.
- Highest levels of poker is limited to few individuals while trading on the other hand some traders and hedge funds managers can make millions or billions of dollars and not be household names
Some Famous Poker Players that are also traders or hedge fund managers are : Bill Chen, Jason Strasser, Erik Seidel, Jay Siplstein, Eric Brooks, Matt Glanz, Rep Porter, Andy Beal, Carl Icahn, David Einhorn, James Simons, Steve Cohen, Jeff Yass – some interesting stories below
One of the most interesting is Andy Beal (Beal Bank) – Beal is a long time poker player who participated in one of the most epic games of poker with some of the greatest professionals in recent times. The game was immortalised in the book The Professor, the Banker, and the Suicide King: Inside the Richest Poker Game of All Time. Andy Beal vs the Corporation where he played professional poker players which included Doyle Brunson, Chip Reese, Todd Brunson, Ted Forrest, Jennifer Harman, Howard Lederer, Phil Ivey, Gus Hansen, Barry Greenstein, Chau Giang, and others for stakes as high as $100,000/$200,000 Limit Hold’em heads up, with more than $20 million on the table. On February 5, 2006, Beal was down $3.3 million (USD). He then returned to the Wynn a week later, and won approximately $13.6 million from the Corporation during daily poker sessions from February 12–15. The games resumed February 21–23, with Phil Ivey representing the Corporation against Beal at limits of $30,000/60,000 and $50,000/100,000. During these three days, Beal lost $16.6 million to Phil Ivey. Beal is recognized as the poker player who won more money in a poker game in a single day than any other known poker player. On Thursday, May 13, 2004, at the Las Vegas Bellagio, Beal won $11.7 million from Chip Reese, Hamid Dastmalchi, Gus Hansen, and Jennifer Harman
Carl Icahn from Icahn Partners – apparently generated his first investing stake by winning $4,000 playing poker while in the US Army after graduating from Princeton.
David Einhorn (Greenlight Capital) – demonstrated the link between poker and investing in reverse. After setting up Greenlight and achieving extraordinary investment returns over a 10 year period, Einhorn decided to learn poker. Within a few years he had mastered the game and finished 18th in the World Series of Poker
James Simons of Renaissance Technologies – retired from Renaissance (which he founded in 1977) and has one of the top hedge fund returns track records, resulting in Simons making some huge performance fee paychecks. Simons was an avid poker player at MIT, and according to Rachel Ziemba in the book Scenarios for Risk Management and Global Investment Strategies (The Wiley Finance Series) Simons started Renaissance with a focus on gambling related concepts which were retained in the trading models that underpinned Renaissance’s returns
Steve Cohen of SAC Capital – Along with James Simons, Ken Griffin, and John Paulson, Cohen is one of the top hedge fund managers of the past 20 years. Cohen played poker frequently in high school, often playing through the night. According to his brother, Cohen excelled at poker and would have lots of cash stored at his desk. Cohen eventually quit his part time job to focus on poker and says that it taught him how to take risks. Cohen continued to play poker successfully at Wharton while earning his economics degree and developing a fascination with the stock market.
Jeff Yass founded Susquehanna with some of his poker playing friends and has turned it into one of the largest options trading firms in the world.
I haven’t played many online tournaments in years since too busy with trading and have made more over the years from Trading then from Poker. I still enjoy going to play live games on weekends and during time off.
My bucket list still has on it to play 10 events +the main event one year at WSOP which I can only do by taking a summer off from trading . The entry fees are not a problem but the time to play that many events is something I can’t seem to justify now but one year I will and plan to make a deep run on at least one or two events.
Below are a few of my older most memorable tournament screen shots that old time online players will remember, was during the time that Party Poker was the biggest site before PokerStars. I’ve also had decent success in live poker cash games since I take it as seriously as my trading. Definitely used many of the similarities in overlapping trading and poker. If you enjoyed the article feel free to contact us with comments, send it to your friends, retweet it or print it out.
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