The BIG Debate:  Improve Trading Performance - Learn to Play Poker!
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Winning tips for serious traders and poker players

Knowing that you have an edge over competitors is vital to becoming a consistently winning trader or consistently winning poker player. It follows, that traders and poker players must have useful tips they can share.

We would generally suspect that a winning trading strategy and a winning poker strategy are completely different, especially as the instruments and wagering environment have nothing in common. Nonetheless, we would be mistaken because winners from both environments have the same objective; to make profits at the expense of all participants. What may surprise us, however, is that when we look beyond the rules that govern each environment, a winning poker strategy and a winning trading strategy share many key characteristics.
 
  Poker is about betting. Betting determines who wins and who loses. You must know when to bet and when not to bet - The same holds true for trading. Market Timing plays an important role in trade efficiency and for improving your bottom-line.
 
  The difference between a great poker player and good poker player is the ability to make an educated guess as to the value of their opponents’ cards - In much the same way great traders "read" the market correctly by looking beyond the "noise".
 
  Winning poker players can fold a hand when they know they’re beaten. They don’t chase pots. When players chase a pot they hope to get lucky by drawing a winning card - This is also true for good trading strategy. Winning traders use stop-loss orders to protect capital. Chasing a trade that has gone against you will more often end in greater losses than had you used a stop-loss order.
 
  Do not let your emotions stop you from folding a hand. It is important to be disciplined and fold when necessary; even if you have money in the pot. You must understand that money in the pot is no longer your money - This sentiment is echoed for trading. You must know when to close-out a trade, especially if it has gone against you. Do not let your emotions take control of a trade. Systematic, rules based trading platforms such as TradeStation can help traders to maintain discipline by removing emotion from the trade. Remember that after you enter a trade the money at risk is no longer yours. It belongs to the market until you win, when it reverts to you.
 
  Winners are patient. This is KEY. You may have been dealt hand after hand of unplayable cards and eventually lose patience and play the first good looking (although not necessarily strong) hand that comes along. Do not play weak cards in the hope of getting lucky. Be patient and keep folding until good cards come your way. Alternatively, move to another table - In trading, patience is also key. If you have taken the time to acquire an edge and back-tested your strategy sufficiently to know the probable outcome of each trade, there is no reason to pre-empt your own strategy because you are impatient to exercise it. In the long run you will lose vital trading capital and seriously limit your chances of long-term profitability.
 
  Knowing how to manage setbacks will help you to become a better poker player. If you play a hand badly or you are victim of a "bad beat", you must know how to "let it go". "Holding on" to negative outcomes will affect the rest of your game and almost certainly affect your ability to win. To beat adversity you need large supplies of mental fortitude - This sentiment is identical for trading.
 
A "Poker Ace" has much in common with winning traders. They are knowledgeable and know when to play and when to hold back. They know how much to bet and when to bet. They can accurately read other participants and they know when to hold and when to fold. They do not chase a pot and fold their hand if necessary. The Poker Ace has a game plan, and they make good decisions. They are patient players who handle adversity with calm. The Poker Ace continually improves their knowledge of the game.

Can learning to play poker improve trading performance?

Ultimately, we leave the reader to decide whether learning to play poker can improve trading performance. However, our study into the winners and losers of online trading delivers a compelling case for learning poker and mastering poker strategy. Nonetheless, until we discover the truth for ourselves it is unlikely that we will be able to answer that question with certainty.

There is a wealth of information concerning poker strategy and trading strategy that we have not discussed in this article. We shall cover those topics in future publications. For the time being we remind the reader that learning to play poker could improve trading performance providing that we find an edge over competitors, are skilled and equipped with winning resources, posses large supplies of mental fortitude, and are committed to continually improving our knowledge and understanding of the business of trading.

TradersWorld is a specialist supplier of TradeStation - considered by many to be the finest online strategy development and trading platform in the world. We recommend that you try it free for 2 - months and discover your own trading edge.

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References:
Lawrence Harris: The Winners and Losers of the Zero-sum Game (1993)
Amanda Young: Gambling or Gaming Entertainment or Exploitation? (2006)
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