Turning a professional poker player into a trader

[snowbank]

I've been a professional poker player for the last 2 years. I've been very successful, but earning power is limited to some degree in poker. I've debated getting into trading because I know poker and trading have many of the same skill sets, and if I was as successful at trading as I've been at poker I'm pretty confident I'd have the ability to make 7 figures/ year, since your earning power is uncapped with trading. However, I know nothing about trading, other than people who hear I'm a pro poker player telling me that I should get into trading because I can make more, etc... I use more than enough bankroll management; play on multiple screens, 8 games at once online, many times on auto-pilot because I've seen the same betting patterns a million times before and know how to counter it, maximizing gains and minimizing losses. From what I described here(my job) and what traders describe, it seems almost identical.

If I could learn to do this with trading, would I make the ridiculous amount of money people tell me I will make? How difficult is it to learn? Are people here making serious money?($500k+/year) What % returns are people making yearly?(I know totally noob question but I know nothing about it and I think it's important to know what type of numbers people are putting up to know if it's worth taking time away from poker to learn it.)

 

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[1320Trader]

I think trading is like everything else....if you put a lot into it you can get a lot out. I have heard of many people that can average 1% a day. So if you have 50k in capital... thats 200k on 4:1 margin...1%...$2,000 a day....250 trading days....$500k a year. Of course the 95:5 (95% lose and 5% win) still applies here, but its the same way in poker and pretty much anything else in life.

Here is a good list of day trader blogs to check out.
http://www.movethemarkets.com/blog/blogs-i-read/

 

[MJ DeMarco]

Having spent a lot of time doing both, I can say there are many similarities between the two activities. However, I think in poker, there isn't a lot of things you can do to improve your odds -- even the best poker players in the world can't cash in every tournament because it is gambling.

With great practice and research of your competition (other players for poker / mass trading mentality for stocks) you can improve your odds of wins.

Personally, given a choice, I'd rather day-trade than play poker. I find I can handle my losses in trading (you lose to "the market" which is faceless) vs in poker, you have bad beats and some wise-a$$ like Mike Matusow smirking at your and making comments about how "I knew you had that".

I think poker is more gambling vs skill, while the market is more skill vs gambling.

Poker:
60% Gambling
40% Skill (Calculating Odds/Reading Opponents)

Stocks
40% Gambling
60% Skill (Reading charts, financial statements, market sentiments, etc.)

 

[snowbank]

I think trading is like everything else....if you put a lot into it you can get a lot out. I have heard of many people that can average 1% a day. So if you have 50k in capital... thats 200k on 4:1 margin...1%...$2,000 a day....250 trading days....$500k a year. Of course the 95:5 (95% lose and 5% win) still applies here, but its the same way in poker and pretty much anything else in life.

Here is a good list of day trader blogs to check out.
http://www.movethemarkets.com/blog/blogs-i-read/

Thanks for the response KO. Where did you find that decent traders made 1%/day. I didn't see many % numbers from the few guys who did stocks on the RD forums, but I didn't think the ones I did see were anywhere near there. Do you have a link/article on that type of stuff specifically you could hook me up with?

 

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[snowbank]

Having spent a lot of time doing both, I can say there are many similarities between the two activities. However, I think in poker, there isn't a lot of things you can do to improve your odds -- even the best poker players in the world can't cash in every tournament because it is gambling.

With great practice and research of your competition (other players for poker / mass trading mentality for stocks) you can improve your odds of wins.

Personally, given a choice, I'd rather day-trade than play poker. I find I can handle my losses in trading (you lose to "the market" which is faceless) vs in poker, you have bad beats and some wise-a$$ like Mike Matusow smirking at your and making comments about how "I knew you had that".

I think poker is more gambling vs skill, while the market is more skill vs gambling.

Poker:
60% Gambling
40% Skill (Calculating Odds/Reading Opponents)

Stocks
40% Gambling
60% Skill (Reading charts, financial statements, market sentiments, etc.)

MJ,

Thanks for the response. Ya, the bad beats and all that stuff doesn't get to me anymore. I play 99%+ of the time online, so don't have to deal with being around a lot of degenerate gamblers, can just play from home whenever. I play about 750-800 hands/hour online compared to about 30/hour live, so variance takes a lot less to overcome(timewise) since I hit "long-runs" quickly based on the amount of hands I play. It's not that I don't like my job, I love it. I think that potentially I could like trading about as much as I do poker, and if a lot more potential profit is there to be made, with a relatively easy transition based on my experience with a lot of the same skill sets I'd be real interested in learning a lot about it to see if once I got the hang of it I had the same desire to 'play' the market as I do with poker.

What are your thoughts on attainable % earns MJ?(i know really broad)

 

[snowbank]

Daytrader hmm. Well, you'll have to come up with a successful system... In poker, learning how to play correctly is uh well it's not easy but at least there are particular guidelines . If you're daytrading in the market... Where to start? How would you know your system has positive expectancy? You can backtest but you cannot be 100% confident. On the other hand, you can be 100% confident of your long term success as a poker player.
Now something more longer term and maybe there are certain guidelines which can lead to consistent profitability.

TGB,

Well said. Ya, that's the type of stuff I honestly have no clue about.(systems with trading) I should probably pick up a good book on stocks and then come back and ask some questions since I'm such a noob with it.

 

[1320Trader]

there are a decent amount of traders at www.elitetrader.com just remember a lot of the people there are not successful so you have to weed through to find the good posts. If you can only make .5% a day then you need 100k in capital or you'll just have to settle for making 250k (50k capital) until you build up your account:smxD:. Also search Harvey Walsh on youtube....he has some good videos imo.

Here's a couple:

[ame="http://www.youtube.com/watch?v=u4hA6gGcsjQ"]YouTube - Live Online Stock Trading - Day Trading Live August 8 2007[/ame]
[ame="http://www.youtube.com/watch?v=wSiYX5k49OY"]YouTube - Day Trading in Volatile Markets - Make Money Day Trading[/ame]

 

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[snowbank]

futures??

In the last 24 hours or so I've done a ton of reading, asking questions to people on other sites, etc.... Someone I spoke with last night told me I should do futures because it's the most similar to poker. Do people agree/disagree with that?(a different person I talked to later told me to stay away from futures)

That's one of the hardest things I'm finding when I'm researching, is I don't know where to begin, because I don't know what aspect of trading I should be looking at doing. It's like a poker noobie looking through a bunch of stud, omaha, hold em articles without knowing anything about any of them so not knowing which area to pursue. I'd be a lot more productive if I figured out which area I should be pursuing, so that I could focus all my energy researching trading on that one particular area. Anyone have some suggestions as to what I should be focusing on, and why?

 

[JesseO]

I don't know much about stocks, but I know that TheGreatBear could give you an idea of how his futures adventure went...maybe he'll catch this thread and let you know about it.

 

[1320Trader]

Futures

Advantages:
· There are a wide variety of futures contracts available to trade through
various exchanges around the world, so we can find a contract in a
time zone to suit us.
· Quite high gearing allows for good profit potential.
· Brokerage fees and exchange data fees are generally low.
· Futures can be fast moving allowing us to make our daily profit in a
short space of time.
· There is a good selection of brokers and software available.
· There are no restrictions on the number of times we can trade.

Disadvantages:
· Realistically, because of considerations of liquidity, the variety of
contracts available to trade is less than may first appear.
· Some types of contract must also be discounted because they are
seasonal, such as grains or animal products.
· Because different contracts have their own “personalityâ€, it becomes
necessary to specialize in just one or two, and get to know them well –
in other words learn how they move.
· The contracts we would be interested in trading, are largely
unpredictable in terms of when during the trading session they will offer
good trades. So it is necessary to watch them for the duration of the
session, with no guarantee that a high quality trade will present itself.
· Although quick, moves are relatively small and so to get the best from
them requires highly skilled entries and exits. In short, futures contracts
can be difficult to trade.
· The smallest tradable quantity is a single contract, which due to
gearing is high value, so it becomes difficult to limit our risk.

 

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[1320Trader]

Shares

Advantages
· Huge availability – there are stock markets all around the world.
· The larger stock markets have all the liquidity we could want.
· There is a good selection of brokers and software available.
· Broker and exchange data fees are generally low.
· Most markets are now fully electronic with automatic order matching
and so are completely transparent.
· There are thousands of individual shares available to trade, so we can
look for shares that are giving trading opportunities rather than waiting
for trading opportunities to come along.
· There is lots of scalability in terms of how much risk we take because
we can trade very small quantities.
· Fast moves can give quick profits.
· Sizeable moves are more forgiving of poor entries and exits, so are
easier to trade profitably.
· In some markets, moves occur at predictable times of the day, so we
can tune our trading window to get the best out of the market in a small
space of time.
· Individual stocks within the same market usually exhibit the same
characteristics in terms of the way they move, so unlike futures it is not
necessary to become familiar with each one.

Disadvantages
· Lower gearing than other instruments means we need more capital to
make equivalent profits.
· Some markets (US) place restrictions on how often we can trade

 

[RAiMA]

Disadvantages
· Lower gearing than other instruments means we need more capital to
make equivalent profits.

There is a high leverage vehicle for shares called cfd's (Contracts for difference), which allows you to leverage 10:1. It's kinda like options without the expirey dates. I'd suggest only using the vehicle if you've got good analysis and spotted a definite trend in the market. Without it good analysis, it's one of the quickest ways to loose money/family/jewelry/kidneys tremendously fast.

The general strat for cfd's is keeping it simple and being in the game for the long haul. Just keep it covered in case the market turns around. It's not a "hang onto the edge of your seat" day trader strat.

Hope this helps

 

[Sparky]

I've read the book by K. van Tharp and Brian June, Financial Freedom Through Electronic Day Trading (can find it on Amazon), and found it hard. Its a lot of technical stuff about day trading screens, but more so about the position sizing/expectancy and also a lot about the psychology of trading (but to be honest, I got stuck on the technical stuff, and didnt get to the good psych stuff). If I ever wanted to go day-trading I'd take this book as a start. Also, the book, New Market Wizards (by Jack D. Schwager), I heard were very good (its on my pile of books to read).

For general technical sites/blogs, I follow Piranha's website: http://www.chrisperruna.com/

But take this all as spectator advice :smxF:

 

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[RAiMA]

I thought CFDs were illegal for Americans?

I'm not sure to be honest as I'm from Australia.

If the research is good and you can make money consistently in a lower leveraged vehicle, best to double check if cfd's are legal in the US as the vehicle can accelerate the growth.

If they're not legally available to the average mum and dad, you may need to find other creative means that will give you access to the vehicle legally.

One last thing I'd like to note is, it's important for an investor to get good research and analysis done. That's where the money is made, not the vehicle itself. Once the research and analysis is good, just select the best vehicle.

 

[snowbank]

I don't know much about stocks, but I know that TheGreatBear could give you an idea of how his futures adventure went...maybe he'll catch this thread and let you know about it.

GreatBear,

what can you tell me about your experience with futures?