Poker And The Stock Market

I had another poker site and I forgot to renew the domain name and pokerroom.com bought it so I lost all the writing I did about when I first got started playing poker.  

But my very first introduction to poker was from someone who was very active in the stock market. They told me that I could play poker on line and it would help my trading. I thought this was crazy the first time I heard it but then I started checking around and I ran across several people who thought the same thing so I decided to look into it.

Now after I have been playing poker for over a year I can say without a doubt that it has really made a big difference in the way I trade stocks and futures.  Probably the most important thing I have learned is that when your play poker or trading there are times when you make money from doing the wrong thing and there are times you do the right thing and you will lose money.

This may be obvious to some but to me it took poker to drive this point home.  The nice thing about poker (texas hold’em) is that there are only 169 starting hands. This makes it much more defined than the stock market, you can really examine exactly what each hand does.  After playing a lot of hands and looking at my results it started becoming obvious to me that each individual play is not that important and really does not matter if you win or lose, what you are looking for is something that is consistently winning over time.

When I started out trading I was always trying for a home run, I wanted to knock one out of the park and just make as much money as I could, I never really thought about the odds or anything else I just looked at each trade individually and checked to see if it made money one not then I went on to the next trade.

What poker did was it made me realize that certain plays are related and you can predict what the outcome will be over time and that is what really makes you money.

For example, at a 10 player table if you get pocket 2s your odds of winning that hand are about 12% so if your paying $1 for each play and you play that hand 100 times you have just paid $100 now out of the 100 you will probably win 12 times if you make an average of $4 then you have invested $100 and made a return of about $48 not a very good deal.

So playing limit I usually don’t play pocket 2s (your mileage may vary).  When I started I would get pocket 2s and win $12 then I would say I put in $1 and made $12 I want to do that again. Then I would lose the next 30 times in a row trying to get another one of those $12 pots.  

It dawned on me that I was doing the same thing in the stock market, I was taking trades that were not profitable in the long run just because I happen to try it once and made some money at it.

I could never see that in the market because there were always too many variables, no 2 trades ever looked alike to me.  Each one was new and different so I really didn’t think about the odds or how it was related to other trades.

Poker has really changed all that I look at each hand as a series, I don’t care if each hand makes money but I want the series to be profitable in the long run.  

Trading my trading now is exactly the same, in the long run it need to be profitable and now it is thanks to poker.