Poker Trading Strategy

Hi,

Many discussion around forex trading as a business or a part of gambling ( totally gambling).

For both business or gambling views, there are risk and probabilities factors.

So, if trading ilustrated as a poker game. How do you do to play? What is your strategy? When you decide to fold for example? How you play when you think you have a very good card.

Anyway, happy easter all.
** may not a wise time to discuss poker or gambling...ha ha.

Your opinion are welcome.

Hi there... I like someone discussing probability as this is no doubt a game of probabilities. For instance, a good poker player will always calculate probability of the worst case scenario before taking a decision. Similarly, it is good for a trader to back test his model to see historically the probability of the strategy to perform in the future.

For e.g. a scalper might assume taking smaller profits is a good thing, but when calculating probability it may turn out to be a flawed strategy.
Say his strategy allows him to win 80% on smaller money wins vs 20% of major losses; even though on paper it appears to be a good strategy, in reality its not.

One sure thing in trading, we cant bluffing the market...lol.

Statistic say only around 30 % the hands action can success ( high probabilities win). Sound similar with the 30 % the market goes in the trend.

You talking about back test, hmmm...its another good topic. I will " raise" about that...lol

back testing allows to take wise decisions before paper trading. this way a trader can either figure out a gap in the strategy or simply bin it if not statistically possible

In poker a solid early game strategy on a 10 man table is to play tight early on and only contribute to the pot when you're almost certain to have a winning hand. In forex, my personal philosophy is to only pick the best positions in the market to sell from and to make sure my position size is reasonable compared to what I'm willing to risk for that one trade or hand. In both cases, most of the time you are flat (forex - no position, poker - fold), and it requires a lot of patience.

Of course, poker is a dynamic game which changes as players are eliminated and chips accumulate in the hands of a few bigger stacks. In forex, I think you can be profitable with a static strategy as long as it's based on some fundamental reality (early information, knowing where the big stack bullies are buying or selling, knowing where the fish have their stop losses).

My opinion, there are some similarities between trading (Speculation) and poker for sure.

A bad hand should always be folded --> Equivalent to cut your losses short.

If you have a bad hand and try to bluff --> You are most probably averaging your position to recoup losses. Unless the market gives you a small move in your favor, you will end up with a big loss, throwing good money after bad.

A good hand which has more than 60% probability to win the pot should be played wisely --> Equivalent to most small to medium winners in trading.

An excellent hand which has more than 80% probability to win the pot should be played very aggressively and leveraged to the max --> This is equivalent to when you are on the right side of the market in a strong trend in your favor. You should be pyramiding your position aggressively and getting the max possible from the pot. Eventually these are the real money makers in both, Poker & Trading.

Yes, agree with you. Back testing for yours or your favor strat to take wise decision.

Every system has its own weakness and strengh. The most important IMHO are where to cut( fold) when the weakness come ( that might difficult to accept our weakness).

Maybe focus on the strenght is the answer.

poker is cards game depends on your luck in getting the best cards to win, yes it needs calculations but still a luck game

forex is a well controlled system drived by the big and huge funds , it does not depend on luck if you are one of the big players, but if you are just small trader ( less than 5 million fund ) then ...gone with the wind...

Some differences between poker and trading:

 As already pointed out, you can't bluff the market(!)

 An "all in" MM strategy in trading would be suicidal.

 Odds in filling poker hands can be calculated mathematically. There's no equivalent in trading: sure, you can get some idea from prior testing, but ultimately there is no guarantee that the past will repeat itself in the same way, and markets are forever (even if subtly) changing due to economic shifts and evolving technology.

IMHO trading is more analogous to pro blackjack than it is to poker.

You discribe well on lucky game for poker. Skill to calculate the probability and how to control emotional aspect when the andrenaline is hot may be the addon

Mind reading of opponents that also read your mind. Seem like an art of lucky game mixed with emotional factors about money/chips and skill of math/probabilty.

About forex, i would be lucky today onward if you willing to discribe more about " gone with the wind". At least give me " a little light candle" hope as small trader ...lol.

Or, tell me. How is a feel as big players for educational purposes. I guess just like all in and win ...

I will pointed out your opinion that interesting for me..
First, your personal philosophy to only pick the best position. That is interesting as most or all traders want to best position as well.

Seconly, static strategy on forex as long as based some fundamental reality ( that might not always static i think).

Mostly, apreciate your kind opinion. Thanks

A very true reality, the house is always win.
The house are both players and regulator with "veto right" to change the rules or even to no rule land.

Skip to an live case on forex... now USdCAD technically long. For how long? Or how high?

Time will tell how the house play.

Looks like it's due primarily to CAD weakness, which (perhaps not surprisingly) coincides with a fall in oil prices. For how long will it last? I've been away from the markets for a few weeks, will need to get tuned back in to the happenings when I find some time. And anyway, if the institutional analysts (who have much better info at their fingertips) are frequently wrong with their forecasts, what chance does an abject novice like me have, LOL? Indeed, only time will tell.

Poker Trading Strat
I would like to share a raw material ( still the idea or concept) of poker strat for trading.
In hope to simplicity the explanation because of my lack in native english. I will using ilustration or picture.

Intro;
As we know, market have its own rule ( even no rule is still it rule).
So, if i want to join the game should i make my own rule?
If you agree with YES, then go to below explanation.

Change the Poker game rule for trading;
First, determine the AA class of card and only focus on that card. So in forex trading if above (x line) its an AA class to buy and v.versa.
Then, if next card ( next candle or based time factor in trading) meet with our card then " hold or raise".
If the next card or the next after the card doesnt meet with the AA card then " fold" or cut loss/ stop. You always have own rule where and when to fold...its your game.
A little bit different with poker game, where / when to exit in trading?...hmmm its just like how much you will raise for poker. You have your own level.

The last, practice;
I will attach picture, if you interest then please make a rule based my short explanation. How you will play poker in trading.

Note: all is yours, for yours and by yours.

Rgds
Lsnow

Do you mean you get thrown out if you start winning? (joking)

Haha, nice!

Actually, what I meant was something like:

 Edge: to win, you need a demonstrable edge over the house (blackjack) or market (trading). In BJ, this comes from card counting and correct gameplay. In trading, it comes from analysis and exploiting market biases and behavior. In both activities, basing your decisions solely on P/L can not provide an edge. Your edge must be big enough to overcome the house edge (BJ), or transaction costs (trading), to provide a winning advantage.

 Bet size: in BJ, you increase your bet to as much as you believe you can get away with, without getting caught by casino personnel, when the count is highly positive; and the minimum allowable bet, otherwise. In trading, you place a bet (i.e. trade) good setups, and a zero bet (stay out of the market) otherwise.

 Money management: you risk only a small part of your bankroll on each hand (blackjack), or trade (trading). This allows your bankroll/account to survive series of losses, keeping you in the game for long enough to give your edge the opportunity to ultimately prevail.

 Execution: in both BJ and trading, lapses in disciplined execution (i.e. failure to implement your system/strategy consistently) will cost you in the long term. (However, in the short term, lapses may fortuitously lead to winning hands/trades, which can get the player/trader into bad habits).


Some ways in which BJ and trading differ:

 Probabilities: In BJ, odds can be precisely calculated (although you'd probably need a computer). Whereas in trading, every situation is unique (one of Mark Douglas' better quotes); probabilities are fuzzy at best, and past market behavior does not necessarily guarantee future results.

 Countermeasures: In BJ, you can get thrown out (as you pointed out). I suppose it's possible for a bucket shop br0ker to ban a highly successful trader, but this is not the usual practice. In BJ, dealers can shuffle early to reset the count; I suppose that's somewhat analogous to a br0ker squeezing a trader (scalper) by applying slippage, widening spreads, delaying quotes, etc.

 Scalability: In BJ, there are house limits on certain tables; in trading, there are maximum permitted position sizes (e.g. 100 lots with many MT4 br0kers), but compared to casino table stakes, $1,000/pip positions potentially allow for some pretty big P/L swings!

 Pace: In BJ, you get dozens of hands per hour. Trading tends to play out more slowly, hence more patience is required. In BJ, a hand is either a win or a loss; in trading, each position can go through periods of profit, and loss, before the trader finally closes the position and the P/L is settled; hence trading arguably requires more nerve.

And no doubt many other comparisons that have slipped my ageing mind..........