What can traders learn from poker?
Probably you have heard that there are many kinds of poker. But do you know what is the key difference between them? Do you know that this factor is also one of the key elements of any trading strategy?
So what is it?
A variance!
A variance describes how stable are your results. If you win in any game 5 dollars then your variance is 0 . If half time you win 10 dollars and other times you lose 10 dollars then your variance is higher. The higher is your variance the more unstable are your results.
So which variance is better for good, professional poker players? High or low?
Professionals play better poker than other players. So if a variance is low then their profits almost constantly grow. They don’t have to worry that inexperienced, stupid players win their money. They play correct and they win. So they should like it. Right?
NO!!!!!!!!!!!!!!!!!!!!!!
It is comfortable when you play correct and you win. But professional don’t want comfort. They want to win inexperienced player’s money. But they can do it only if inexperienced players want to play with them.
If the variance is low then inexperienced players almost constantly lose their time. So they have no motivation to stay.
On the other hand if the variance is low then inexperienced players may make stupid moves and win money in the short run. Of course they will lose it in the long run. But they will remember that they won before. They will think that they are great poker players but they had a bad luck . So they will bring more money and play more poker. Professional players will be waiting for them.
What can you learn from it. Don’t be focused on short term results like inexperienced poker players. You lost your last 3 trades? OK, but it is not enough to say that your strategy doesn’t work.
Check last 100 trades. Think and act long term like professional poker players.
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Probably you have heard that there are many kinds of poker. But do you know what is the key difference between them? Do you know that this factor is also one of the key elements of any trading strategy?
So what is it?
A variance!
A variance describes how stable are your results. If you win in any game 5 dollars then your variance is 0 . If half time you win 10 dollars and other times you lose 10 dollars then your variance is higher. The higher is your variance the more unstable are your results.
So which variance is better for good, professional poker players? High or low?
Professionals play better poker than other players. So if a variance is low then their profits almost constantly grow. They don’t have to worry that inexperienced, stupid players win their money. They play correct and they win. So they should like it. Right?
NO!!!!!!!!!!!!!!!!!!!!!!
It is comfortable when you play correct and you win. But professional don’t want comfort. They want to win inexperienced player’s money. But they can do it only if inexperienced players want to play with them.
If the variance is low then inexperienced players almost constantly lose their time. So they have no motivation to stay.
On the other hand if the variance is low then inexperienced players may make stupid moves and win money in the short run. Of course they will lose it in the long run. But they will remember that they won before. They will think that they are great poker players but they had a bad luck . So they will bring more money and play more poker. Professional players will be waiting for them.
What can you learn from it. Don’t be focused on short term results like inexperienced poker players. You lost your last 3 trades? OK, but it is not enough to say that your strategy doesn’t work.
Check last 100 trades. Think and act long term like professional poker players.
You can control your emotions