Trading Places

As I have gone through my poker life, certain things have become apparent to me that were not immediately obvious in days gone by. One of those is how certain other games and fields share uncanny similarities with poker. I am not talking about the actual tactics here but more of conceptual issues. One area that has long since held an intense fascination for me has been the stock market. I have always risen to the new challenge of trying to beat something that few others could and was the main reason why I became active in not only poker but blackjack as well before that.

I have done an awful lot of research down the years on the stock market and I have noticed that many principles and concepts can be used to great effect in poker and we will be taking a close look at three of the best known golden rules of trading in this article and seeing how each one can just as easily be applied to poker. These three golden rules of successful trading are,

1.  Cut your losses
2.  Letting your profits run
3.  Trade selectively

Of course there is far more to the stock market than simply following these three pieces of wisdom but let us take a look at how each one applies to poker.

Cutting Your Losses

Is it feasible to quit a poker game just because you are losing money? Many mathematician types would argue that it is all one big long game and that it really does not matter when you quit. If all we look at are the mathematics then this piece of well trodden advice is true. But unfortunately, poker is played by human beings and they have emotions that can play havoc with your game.

If losing money in a poker game really and truly does not affect you then there is absolutely no reason to quit the game at all…or is there? It could certainly be possible that the reason for you losing money could just be because you are playing in a game that is too tough for you and the other players have your number. Maybe they are reading your bluffs very accurately or you have a predictable table image.

But one thing is certain, most players do not play as good when they are losing as when they are winning and this certainly applies to me. So if you are losing money then by sheer definition, some of your opponents must be winning that money. This then means that not only could you not be playing at your best because of losses but your opponents are not suffering from the same emotions because their particular session is going well. Thus the gap between your level of play and that of your opposition could have got a whole lot wider since you first sat down. It is true that your losses could be entirely statistically normal and you still have an overlay in the game but if you are not sure then why take the chance and especially if losing money affects you. If you are going to have the inevitable losing run and you are prone to tilt through incurring losses then it makes sense to fragment those losses so it ends up hurting you less and when you hurt less you tilt less. 

Let us say for instance that the poker gods have decreed that you are about to endure a very big 200 big bet downswing at $10-$20 limit hold’em which equates to $4000. Let us also say that you are multi-tabling online so that kind of swing will happen over a much smaller time frame. Each and every one of us has a personal pain threshold be it physical pain or mental pain. Let us also say that in this instance our personal pain threshold when related to poker losses is in the region of $2000 meaning that once you have lost this amount of money that it actually starts to hurt you.

Why not stop at say $2000 and give yourself some time to get over that loss and get it totally out of your system. If you simply plough on through this barrier then not only do you risk playing badly and tilting but as we have already stated, the gap between you and your opponents widens or narrows, whichever the case may be. But if chopping that same $4000 negative swing into two manageable $2000 stints that are separated by enough time for you to absorb the first one then this could just end up saving you an amount of money that was much greater than the $4000 should you have ended up tilting even more money away.

So while cutting your losses in the trading world is done for a totally different reason, it is still worth remembering that cutting your losses is a tactic that can be applied to poker as well. Because if you are prone to playing badly and tilting when you are losing then fragmenting those losses can actually lead to you cutting your losses.

Letting the Profits Run

We have already touched on this above but it still staggers me just how many people quit a poker game just because they get in front. The reasons why people do this are psychological in nature. Deeply embedded within people is the desire to experience something positive in life and poker winnings are indeed that….positive.

So when Joe gets a couple of hundred ahead in his usual $3-$6 game of No Limit then he quits because he likes the idea of recording a win in his diary because it makes him feel good. Yet two players in this game were throwing an absolute party and tilting badly but yet he left the best game that he has been in all year and all because he wanted to clock a win.

Joe was winning money so he was feeling good, his opponents were losing money and were possibly feeling bad, he also has a skill advantage over his opponents so why in gods name is he leaving the game? Well we already know the reason why but that does not stop us from asking the question again all the same. People crave positive experiences in life and shun or try to ignore negative ones. This is a major reason why many players play on when they are losing in an effort to try and get the money back. They don’t want to end the session losing which is a crazy thing to try and do in poker as the game will simply not allow you to win every single session.

Of course the type of person that I am referring to here is the one who quits the game purely and simply in order to clock a win. I am not referring to anyone who leaves a great game for valid reasons like being tired or late for an appointment or some other commitment. But in my experience, too many players do just the exact opposite of what they should be doing. Instead of cutting their losses and letting their profits run they end up running their losses all the way to tilt and cutting short their wins….a recipe for disaster.

Trade Selectively

The very best traders do not trade every single day and certainly do not trade all of the time. This is very similar to poker where one of the worst mistakes that any player can make is getting into action too frequently. But selectivity in poker can mean lots of things. It can mean being selective about what hands you play from what positions. It can mean being selective on what game you play in and at what limits. It could mean being selective at what times of the day or night that you play at and it could also mean being selective on what site you play on or which card room.

Many people fail not just in trading but also in poker through little or poor selectivity. Like the old well known saying goes, “you can be the tenth best poker player in the world but of you sit in a game with the other nine who are better than you then you will be a loser”. The meaning behind this famous quote is to select very carefully the games that you sit in and the opponents that you go up against. In my opinion, the secrets to successful poker are really not secrets at all but something that nearly every player is aware of.

Someone famous once said that “simplicity was the true genius” and this certainly applies to poker. But please do not get me wrong here because in no way am I inferring that poker is a simple game to master but many people do attempt to make the game far more complex than it really is at times. But perhaps the greatest advice and tips that you could give to would be poker players can be found written in numerous books, magazines and websites. Statements that are so widely used that people tend to overlook their importance.

Doing Something About It

It is one thing to read up on poker but it is something else to transfer that information into the poker environment. This is why many successful poker players certainly do not mind writing poker books because they know all too well that the advice that they give will probably be either overlooked or ignored in the heat of battle by the overwhelming number of players. Reading poker books will increase your poker knowledge and that goes without saying but only playing poker will give you skill.

But I have felt for sometime now that one of the best avenues to improve your overall game is by way of coaching videos. This process of learning is not only better than learning from books, in many instances the advice that is being imparted is coming from some of the best internet players in the world. These are people who have proven track records of success in the online environment and are actually the people who are operating at the level that you are trying to get to. For me personally, I have found the quality of advice and the videos on Poker Elite (www.pokerelite.com) to be absolutely first class and even though I have been an online pro for six years, I still improved my game as a result of that site.

So the bottom line is that the most important concepts in poker are plain for everyone to see and are no great secret. But if every player simply did the basics very well then there would be a hell of a lot more poker players earning money and being successful not just in the short term but into the long term as well.

Carl “The Dean” Sampson is a full time poker player, coach and author and can be contacted at www.pokersharkpool.com