Saturday, April 18, 2009

Poker and Trading

Although on the surface poker is nothing like trading, I find they are two very similar "games" and the experiences and patterns from one can be transferred to the other. Here are some examples:
  • Both are games of people; "zero-sum" games that the result is based on people's perceptions and actions.
  • Majority of the "players" are bad ones. 80 to 90 percent "players" have no idea what they are doing. That's how one can win, consistently.
  • Most "players" tend not to spend real time to seriously work on their games. They tend to mistaken things they overhear as real knowledge without internalizing most of them. This is good because it is enables someone the chance to win, provided that someone takes a different approach.
  • Sometimes the best thing to do is do nothing. In poker sometimes you have to fold 20 to 50 times, in trading you have to let many trades go. Not an easy thing to do in both cases.
  • "Being good" is not judged by how you play a certain hand or a trade; it is judged by how you fair in 100 hands or trades.
  • Bad players bemoan the "bad lucks" they have, good ones work on their discipline and system.
  • The only way to "win" is by playing without clinging, without attachment, without thinking about the past or the future. In other words, play the game with the presence of your mind, totally in the moment.
  • You system must be so internalized and rehearsed that you can act without thinking. You must simply react, not think. When you think, you are already dead.
  • To win you must minimize your losses, and maximize your gains. You lose more times than you win, but your winners make up for your losses.
  • Even when you "play" correctly, you can lose. That's OKAY. Be happy that you "played " correctly.
  • Different methodologies can be (and need be) applied to different "stages" of the game. Have the mental flexibility to adapt when necessary.
  • You can never predict the outcome; try to do so is fatal. You are just trying to get an "edge" so that it is more probably that the result, after a number of hands or trades, will be in your favor.
  • There is no game. It is a reflection of your mind and character.

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