Poker for Traders

Somehow, I over looked this terrific article by Doug Kass, comparing poker with trading.

Here’s a few bullet points:

• Understand when to play aggressively. It’s the winning way. Don’t be a tight or loose player/trader; be a solid one and recognize when it is time to press your bets/positions. To attain superior returns in poker and investing over the long run, grind it out (in stocks until you are up 30%-40%, and then if you have convictions, go for a 100% year). If you can avoid losing and put together a few 100% years, you can achieve outstanding long-term investment performance.

Tells: Look for them, and you will find them. Poker players and stock markets have tells — giveaway moves that are very revealing. Learn to recognize them. History is your textbook. (For example, improving corporate financials usually presage a rally; conversely, deteriorating financials usually augur poor market performance.)

• Art and science … it takes both. Both activities are more art than science — that’s why they are so difficult to master. Knowing what to do is about 10% of the game. Knowing how to do it is the other 90%.

Money management. The same sound principles of money control apply to the business of tournament/professional poker and to successful investing. The way to build long-term returns or poker winnings is through preservation of capital and home runs.

This was originally published on the very expensive Street Insight; It since ahs been moved to the free site — so go see the entire piece.

Poker Is Flush With Insight for Traders
Doug Kass
Street Insight, 1/25/2005 7:20 AM EST

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  1. duncan robertson commented on Jul 17

    Knowing what to do is about 10% of the game. Knowing how to do it is the other 90%.

    = Very very true

    understanding markets

    one must have a plan with fixed rules
    & patience, & DISCIPLINE, to be able to implement ones plan

    almost everybody knows next to nothing about the mysteries of money
    so what to do?
    Learn, what not to do
    then work on, what you need to do

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