Following a month-long study into the winners and losers of online trading, TradersWorld is drawn to conclude that learning to play poker could improve trading performance. Our research covered a significant body of work including a close analysis of "zero-sum games". The fruit of that endeavour produced an additional and altogether surprising result. The rationale for trading financial markets closely mirrors the rationale for playing poker! Naturally, we felt it was pertinent to share these findings with you.

This article focuses on the zero-sum games of trading and poker, and shows that participants in these apparently unrelated activities have more in common than, at first, we might think. Because both are zero-sum games it is wholly plausible that financial market traders could improve their performance by learning to play poker. However, before we proceed to qualify that statement, let us set the scene by introducing the winners and losers of online trading. They are "Serious Traders" and the "Also-rans".

"Serious Traders" are winning traders. Winning traders are skilled. They choose better portfolios, they are better at timing their trades, and they find the best rates for their trades than losing traders. They are better analysts, they pay more attention, they act faster, and they organise information more effectively than the losers. Winning traders trade with the expectation of making profits and represent approximately 10% of all traders. However, only 2% - 3% of winning traders make fabulous profits.

"Also-rans" are losing traders. They include those who expect to profit from trading but on average do not. These traders do not recognise the difference between their expectations and their results. They may be irrational, they may not posses adequate mental fortitude, they may rely on untrustworthy data or they may trade for entertainment or gambling. Losing traders generally use winning styles of trading but are unable to profit from them. Incredibly, they represent 90% of all traders.

In a zero-sum game there will always be a dollar won for every dollar lost. Winners will profit at the expense of losers. In every financial market there are losing traders who consistently hand their money over to traders who consistently win. Why is it that such a small proportion of traders take most of the money from the remaining participants? Could it be that a majority of traders are simply gamblers?

Traders will tell you that gambling represents something completely different. To determine the answer we must first take a closer look at the definition of gambling...

NEXT: A correlation between traders and gamblers.

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