Good Trading and poker are meant to be BORING
Good poker is actually very boring. If you are in a tournament with about 1000 other people, it will probably take you 4-5 hours to get to the end of the tournament at Internet sites (and perhaps a day or two in live
tournaments with a dealer). During that time, if you are good, you probably do not play more than 30% of the hands you see. Professionals actually say that people who play more than 30% are very aggressive and could be setting themselves up for disaster by playing less than mediocre hands. You could go hours without playing a hand. Perhaps you'll start to play a few hands, but then you'll have to fold because someone raises a hand you have that is not particularly strong.
But when the action does come it can be very dramatic and exciting. It's a real down when your AA loses to QQ because the last card turned up is a Q. It it's really great when you get that Q. People thrive on the ups and
downs of playing.
Good trading is equally boring. In fact, if you do it right and just follow your system, there is none of the excitement of the few extreme moments in poker. Well, perhaps you might get excited when a stock goes up
(or down) 5-10 points in a day.
I've been researching personality types and trading and there are many types of traders who cannot tolerate the boredom of good trading. They must have some excitement. And if they don't find it in the markets, then they'll
make it for themselves. The results are usually disastrous. And if you put all of your chips at stake whenever someone raises, no matter what kind of hand you'll have, you'll also get a quite bit of excitement (probably extreme
disappointment) but it will probably end early with you being eliminated from the tournament.
The same goes for trading - how often do you throw position sizing fundamentals out the window and risk more than you should?
Comments
Great point, VT. There have been many parallels drawn between professional gambling and trading, and this piece illustrates the point. Successful people in both fields have discipline, a system with an edge, and as a part of that, great risk and money management skills. Another example would be a professional blackjack player. When the count is high, and thus the expectancy is negative, one should 'bet' the minimum. Conversely, when the count is high and your edge is in play, one should push it and regain those miniscule losses by increasing size to exploit it. Yet most of the time is spent back and forth, back and forth, waiting for that window of opportunity to open up.
Posted by: Wilson | July 21, 2006 05:30 AM