14 Mar How Being A Good Poker Player Could Make You A Good Trader
While at first the notion that being good at poker could help you become a good trader may seem hard to believe, the reality is that there are numerous components of poker which lend themselves towards developing your skills as a trader. Some of the individuals who have tried their hand at both have enjoyed considerable success – examples include: Andy Frankenberger who was a trader at BNP Paribas and JP Morgan before winning over 5 million across World Series of Poker events; while Bill Chen made the leap from being a professional poker player who won 1.6m to now leading the Statistical Arbitrage Department at Susquehanna International Group.
In considering the characteristics that are transferrable between the two careers, it’s important to clarify that the applications they are applied towards vary considerably. However, in saying this, evident traits include:
Personality – both are renowned for possessing a competitive nature, while also committed, determined and focused on what they do so that they may become the best in their field. Furthermore, patience and calmness are what distinguish them from their less successful peers who often act hastily without extensive research, or analysis of their trades and success levels.
Understanding – being able to quickly calculate probabilities and potential earnings is paramount to trading and playing poker. Furthermore, both rely extensively on risk assessments that govern their decision making (often, systematically organized). On this point, poker players and traders rely heavily on statistics from the past as well as those they predict in the future to arrive at their decision.
Awareness – another common trait is the ability to consistently scan an environment for cues and signals that might assist. For poker players, this means trying to read their opponents or understand what cards have already been drawn or laid down. In trading, this might mean analyzing the depth of a particular equity, looking at chart patterns, following economic data, and assessing the activity of other market participants. Money management is another crucial component, with both participants highly skilled in managing their finances and exiting positions to cut their losses, or strengthening their position once they spot a winning trade.
One thing that the trader does benefit from however, is the extended period of time afforded to them to recover from a mistake – resultantly, this shows up in the fact that 36.7% of traders in the market are successful, while the corresponding number for poker players is far less at 10-12%.