Poker & Trading: How a Gambling Game Can Train You to Trade

Becoming a trader (or a professional poker player) means solving a two-sided problem: constantly getting better at assessing your own risk-taking, and learning to develop, refine and deploy ways of trading — making them as effective as you possibly can.

For most people, a trader’s success lies less in some unlikely moment in the spotlight (a shot at manufactured fame) than in the result of steady progress — a continuous, evolving process in which every learner starts out with innate abilities and tries to outperform their peers. This chapter will explore the skills that successful traders share and the common mistakes that stop newcomers from developing their potential. Not all traders approach the work the same way, and not every trading career is alike. Understanding these subtle distinctions sheds light on why the subject deserves deeper study, both in terms of how you progress and how long the learning takes. All roads may lead to Rome, but not all of them lead to the ideal job. In that case, every trader can start by asking themselves another question …

Am I a Poker Player?

Poker is the only casino game that, by definition, doesn’t let you know in advance the mathematically fixed odds of the player winning — whereas those numbers are usually used against you. A common example: slot machines. While chance plays its part at the moment the cards are dealt, a poker player’s odds of coming out ahead over the long run depend mainly on their skill relative to that of their opponents. Poker is a game of strategy, tactics, probability and math. It is also a useful, if simplified, simulation of trading.

Playing No-Limit Texas Hold ‘Em for a meaningful sum of money involves the same kind of decision calculus and personal involvement as managing a trading position. It is by far the most accessible way to learn how to take risks, short of sitting down at a trading desk.

Poker: A Good Way to Train?!

Good poker players are always in a state of intense analysis, because success depends both on an advanced grasp of the game’s underlying probabilities and on a feel for the nuances of human nature. Professionals spend a great deal of time studying their opponents and characterizing their playing style along two attributes: how much risk they take with their money and their general tendency toward passivity or aggression. Depending on their appetite for risk, opposing players are described as “tight” or “loose”. Plotted on crossed axes, opponents are then sorted into a four-cell grid: