I've been playing poker on a regular basis (both online and live) since 2005 and trading daily since 2015. The similarities are amazing and both help the other.
One of the biggest and most important is Risk management.. In trading, how much do I want to risk on this trade and what is my potential profit.. How often, based on my experience, will I win this trade with a given risk management strategy (i.e. break even formula - profit / (profit + stop). In poker, how much do I want to risk on this hand, what kind of pot odds am I getting to call someone's bet, based on my perception of their hand strength range versus mine and what can I accomplish with a bet in this situation and how often will I win in that bet.
Patience and Discipline:
In both trading and poker you MUST wait for YOUR spot.. Typically in poker a solid reg will be playing 18-22% of the hands dealt in a 9 handed game over a session (typically 2-4 hrs). That means they are folding their dealt hands before the flop, 78-82% of the time.. They are waiting for position, a top shelf hand or a player they know they can outplay. Folks that play A LOT of hands typically do not fare well over the long run. They may have a couple of good sessions due to variance, but inevitably they go bust as they think this is a winning strategy. If I sit down at a table and cannot find the fish (bad players) well, guess who the fish is... IT'S ME! I will leave that game and look for another game that I can find my edge.
Traders who attempt to trade every move of the market in their session (typically 2-4 hrs) fall in the same trap as the poker player that plays too many hands.. They have a winning trading session, think this is how they are going to crush the market and within a short period of time, are busted. Typically traders that are looking for their "spot" will take 1-3 trades in a session. Sometimes no trades are taken as the price action is not conducive to finding their spot they know they have an edge in the probability.
More than 50% of my poker winnings in a cash game come from players on TILT.. They have just had a bad beat (gotten their money in good, they were a favorite, but the cards that came out after the money went in, caused them to lose their hand... They made the right play, but lost... The reload and now are playing mad... What we call playing on Tilt. These are the easiest players to play against, as they have a very hard time making solid decisions due to the emotions of losing a hand that cost them money, even tho they made the right decision.
In trading, you will find your spot, make a good decision and still stop out (lose) the trade.. How do you react? Do you up your contracts and try to get the money back quickly? Do you immediately get into another trade? Or do you wait? Be patient for another spot that you can make a good decision.. This is the biggest difference between winning and losing traders.. They winners regroup, do not let the stop out effect their next decision.
Both successful poker players and traders are NOT RESULTS ORIENTED. They are more concerned with the decision they made, not the result.. They know and understand that over time, if good decisions are made, the results will speak for themselves.
Play Poker or Trade whenever you want!!
One aspect that I absolutely love about Poker and Trading is that I can play poker or trade on MY TIME.. With the advent of online poker and card rooms running around the clock I can find a game when I WANT to play.. Im not relegated to a 9-5 schedule.. Trading is the same. With the futures market, we can trade 23 hrs a day Sun night - Friday afternoon.. Again, on MY SCHEDULE. If I am not in the mood to play or trade, I dont.. I've found when my attitude is not positive and Im not in my zone, my poker and trading goes a similar route. I feel like I am forcing every hand and trade I take. When I play in my zone, I can let the poker game and trading come to me and it comes fairly easily when I dont have to force it.. Play when YOU want to play!
Critical Decision Making!
When money is on the line, can we make critical and thought based decision based on our experience and knowing the risk mgmt percentages of winning the trade or hand over the long haul?How many folks do you know that are Sim Millionaires in trading, but when they trade live money, they cannot make the same decisions and why is that?
BR Mgmt falls in line with Risk Management. Knowing your bankroll in both is crucial to maintaining ;a solid strategy of not being over leveraged in a trade or a poker session. Typically never trading more than 1-3% of your trading account on one trade is crucial. In poker, you shouldn't be bringing more than 10% of your bankroll (or less) to any game... Tournament poker even less than 10% as the variance (swings) can be brutal. Are your playing stakes too high for your bankroll, or trading too many contracts for your trading account to handle. These are sure fire ways to go broke!
Losses are a part of Trading and Poker!
Downswings (poker) and Drawdowns (trading)are a part of each and how you handle the losses will determine your long term profitability. This is what separates consistent and profitable poker players and traders .. In my experience in both, how I can steadily grow my poker and trading accounts is this.. My goal is small win, small win, small loss, small win, small loss, BIG win, small win, small loss, BIG win.. Obviously in any order, but notice that BIG loss is not a part of my equation if at all possible.
If I start a poker or trading session with a bigger than normal loss, I will not move up in stakes in poker or trade more contracts, actually I may do the opposite. I may drop down in stakes or trade less contracts and chip away at my loss.. My goal is to get back to even.. I am NOT going to try to get back my loss in one trade or hand... Grind your loss to a break even. I consider that a WIN and typically will end my session and come back to fight another day with a great attitude!
In summation, I believe trading and poker is gambling UNLESS you have an edge by using position, situational awareness and risk management.. The only way to find your edge is experience. Joining a trading group, poker training site and getting a coach or mentor will be the most productive way for you to find YOUR EDGE and shorten the learning curve.
Keep grinding at the tables and charts and look to collaborate and share with other poker players and traders!
Trade Well at FNL!!