Here are some things I have learned from playing Poker that are very applicable for trading:
- Play tight and aggressive. If you don’t have a good hand, don’t buy in. If you have a good hand, play aggressive. Playing is best if you have an edge.
- Think about probabilities. There is no point in getting into a game when there is a high probability that somebody has a better hand than you.
- Think about the long run. Only fools risk their all money in one hand. Even if the hand is good, you have more to lose than to win.
- Remember that if you blow out, you are out. Take smaller risks.
- There is always a fool playing. Find him. If you can’t, you are the fool.
Good parallels. One comment regarding playing tight, if you do that on a consistent basis then people will get the hang of it and will fold on you every time you raise. Second point about this is that the higher the stakes, for example 1 on 1 games the more loose one should play. At least that’s the theory :-) - roughly based on David Sklansky’s material.
Nice blog, I enjoy your posts.
Thanks Eyal. And yes, I know what you mean. I think though the most important thing in Poker and Trading is keeping your emotions in check. I know I’m in trouble if I get the straight in Poker or my Options are now in-the-money and I’m happy like a 3 year old. That’s something I’m constantly working on.
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