How Poker Players Can Be Some Of The Best Stock Traders

Although it may not seem so obvious at first, there are many telling parallels between poker and stocks. Both require in-depth knowledge of the game (yes, we call trading a game) and its rules and strategies, as well as the ability to make decisions based not only on what you hold, but also what happens. around you. And that’s why poker players would make excellent traders.

Demythologize

But before we dig deeper, let’s dispel a myth about poker and trading. Those unfamiliar with both often assume that both are games of chance with players and traders betting big to score big and all that nonsense. Well, that couldn’t be further from the truth. The losing poker player and stock trader is so inexperienced that he didn’t spread his bets or know when it was time to quit.

Successful poker players are those who play the game intelligently. They pay attention to their opponents, take advantage of the information they have, and base many of their bets on probability. Sound familiar? But if you’re not convinced, take a look at these guys.

  • David Einhorn is the founder of Greenlight Capital and has won over $5 million in World Series of Poker events.
  • Andy Frankenberger is a former BNP Paribas and JP Morgan trader who has earned a total of over $2.5 million playing poker.
  • Bill Chen has won over $1.6 million playing poker and now works at Susquehanna International Group as head of their statistical arbitrage department.

And these are just a few of the many players and traders who have traded tokens for stocks or vice versa.

What makes them so good at both games?

Although most of us already know how to play poker, there is a big difference between the casual player and the guys who spend their time playing poker. Professional poker players, like traders, are men and women like no other and those from both backgrounds share a significant number of characteristics.

Namely, the two share a mathematical mind that can make calculations on the fly without a second thought. And in the two games where hesitation can end in failure, it’s a huge advantage. They are also competitive by nature and strive to be the best at everything they do. Ask any poker player how they feel about finishing second and they’ll tell you how wrong they were. Traders are similar in that they seek to achieve the best possible results and will not rest until they have achieved their goals.

Poker players are also rational thinkers and base most of their decisions on probability. They do their best to keep their emotions on hold when they’re at the table and, as you can imagine, that’s a hugely positive trait for anyone involved in stock trading. They are also acutely aware of their surroundings and study behavior patterns of their opponents; something traders do with the market.

But one of the most important reasons a successful poker player will make a successful trader is that he never chases losses. This is one of the most common pitfalls in poker and trading, and it’s how many players and green traders lose their money.

Now, we’re not suggesting that an average person at the local poker club can run a hedge fund. But players who have reached the top of their game certainly have the skills to do something big on the court. Could they become millionaires? Maybe they could. But in all honesty, poker is a way of life, and we just don’t see many of the top poker pros leaving the circuit to trade stocks; although they could do worse than follow in the footsteps of the guys above.

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