August 20, 2018

Why do professional poker players make good traders?

..The most successful poker players and investors know what it feels like to take a serious risk, and they don’t let it rattle them too much. Maybe they’ve even “pushed the rent money into the middle of the table,” Brown says.

“People who haven’t had that experience find it very difficult to separate the decision from the result,” he said. In other words, both gamblers and traders must be able to judge their decision-making process impartially and understand why it worked or didn’t. If they can’t do that, they’ll just start imitating the trades and bets that have made them money in the past. That’s a quick way to “blow up” in both investing and poker. And if you did that? “You’re just doubling up until you lose,” he said. “But it’s a very human strategy.”

In both fields, it helps to have what Brown calls a “zero memory”attitude, meaning that you quickly forget your defeats and don’t let them throw you for a loop. “You can’t let recent events affect your thinking,” Brown said. That goes for both a bad hand and a bad trade. “People tend to make very different decisions after gains and after losses, and that’s just fatal to trading,” Brown said. “People tend to get more stubborn after taking big losses and stubbornness is a real problem.”

Read more at https://www.marketwatch.com/story/what-poker-sharks-have-in-common-with-wall-street-traders-2018-01-18

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