Zen and the Art of Poker

[brownsfan019]

	Quote:	brownsfan019
	Damn, this is an awesome thread about poker! (and trading) DB - can you post links to more of this? Websites, books, etc. as I am in my learning stage of poker and have been gobbling up anything I can get my hands on.

After reading the first post (duh), I believe this is the book being referenced. Correct?

Just want to make sure before I purchase it.

[Frank]

This such a true statement I have to include it in this thread:

"Beginning poker players [traders] sometimes ask, “What do you do in this particular situation?” There is really no correct answer to that question because it is the wrong question… The right question is: “What do you consider in this particular situation before determining what to do?”

– David Sklansky, ‘The Theory of Poker’

[brownsfan019]

	Quote:	Frank
	This such a true statement I have to include it in this thread: "Beginning poker players [traders] sometimes ask, “What do you do in this particular situation?” There is really no correct answer to that question because it is the wrong question… The right question is: “What do you consider in this particular situation before determining what to do?” – David Sklansky, ‘The Theory of Poker’

That is a great book!

Here's the link to Amazon for anyone interested.

I think that's what may have attracted me to poker was the striking similarities between trading and playing poker. This is a great thread b/c it shows how similar the two activities are.

[DbPhoenix]

RULE#5: Sometimes others get to play and you don't... But the most important thing is this: you must be comfortable with this - welcome it. Make peace with this idea. Cross your arms and sit back.

It is silly to try to catch every swing or worry about missing a move. There are thousands of markets out there and we are missing a play ALL THE TIME. The objective is to execute the business plan with precision over a long run. Precision = Speed. Marginal, wild, random trading will only bring chaos into the statistical equation.

There are also internal reasons not to play. The poker adage H.A.L.T (Hungry, Angry, Lonely, Tired) basically says that if you can't play with a smile, don't play at all.

And scared money rarely wins. (William)

[DbPhoenix]

RULE#6: To win at poker you must embrace the idea of breaking even... A distaste for breaking even can lead us into the valley of pressing and overplaying and other wrongful activity.

We have to have a positive mindset for the long run. A one-sided expectation for a short performance interval is just going to chew us up. Breaking even or a loss is just one of the natural outcomes in a statistical run. This is the way our trading plan is supposed to work given the nature of the game... The plan is not broken. The reason we have a plan in place is to help us focus on executing sound decisions under fire. Do not make it difficult by trying to outsmart your own plan. Pressing at the last hour to meet some number in our head is just out of place.

When you have a glass of muddy water, you can't make it clear by stirring it. You can't make the mind clear by forcing it one way or the other. Don't force your expectations on your trading; let the Law of Large Numbers do its work in peace. (William)

[brownsfan019]

	Quote:	DbPhoenix
	RULE#6: To win at poker you must embrace the idea of breaking even... A distaste for breaking even can lead us into the valley of pressing and overplaying and other wrongful activity. We have to have a positive mindset for the long run. A one-sided expectation for a short performance interval is just going to chew us up. Breaking even or a loss is just one of the natural outcomes in a statistical run. This is the way our trading plan is supposed to work given the nature of the game... The plan is not broken. The reason we have a plan in place is to help us focus on executing sound decisions under fire. Do not make it difficult by trying to outsmart your own plan. Pressing at the last hour to meet some number in our head is just out of place. When you have a glass of muddy water, you can't make it clear by stirring it. You can't make the mind clear by forcing it one way or the other. Don't force your expectations on your trading; let the Law of Large Numbers do its work in peace. (William)

I like this one a lot. It's so easy to jump ship after a bad day only to watch your plan work the next day and the next day, etc.

The market has a very wicked humor about her that will test your fortitude and patience with your plan one day and then show you how you *could* have made a ton the following.

[DbPhoenix]

This is in keeping with what Bo Yoder calls the "win-lose" cycle. I paraphrase his take in one of the stages in the "Stages of a Trader" pdf posted to my Blog:

After a while (sometimes a good long while), you notice a particular phenomenon which pops up regularly and seems to "work" pretty well. You focus on this pattern. You begin to find more and more instances of it and all of them work! It’s all true! It Works! Your confidence in the pattern grows and you decide to take it the very next time it appears. You take it, and almost immediately your stop is hit, and you're underwater for the total amount of your stoploss.

So you back off and study this pattern further. You go back to the books, back to your notes. And the very next time it appears, it works. And again. And yet again. So you decide to try again. And you take the full hit on your stoploss.

Practically everyone goes through this, but few understand that this is all part of the win-lose cycle. They do not yet understand that loss is an inevitable part of any system/strategy/method/whathaveyou, that is, there is no such thing as a 100% win approach. When they gauge the success of a particular pattern or setup, they get caught up in the win cycle. They don't wait for the "lose" cycle to see how long it lasts or what the win/lose pattern is. Instead, they keep touching the pot and getting burned, never understanding that it's not the pot (pattern/setup) that's the problem, but a failure on their part to understand that it's the heat from the stove (the market) that they're paying no attention to whatsoever. So instead of trying to understand the nature of thermal transfer (the market), they avoid the pot (the pattern), moving on to another pattern/setup without bothering to find out whether or not the stove is on.

[zeon]

	Quote:	DbPhoenix
	Practically everyone goes through this, but few understand that this is all part of the win-lose cycle. They do not yet understand that loss is an inevitable part of any system/strategy/method/whathaveyou, that is, there is no such thing as a 100% win approach.

Isn't this a bit contradictory to what you posted earlier in another thread? You said that if a trade goes wrong, it's the trader who didn't listen to the market. So if a trader focuses on a pattern and he sees it but 3 out 10 times the pattern ends up in a losing trade, is he having trouble understanding the market or is he accepting the fact that "there is no such thing as a 100% win approach"?

[DbPhoenix]

If a trader has 14 losing trades in a row and hasn't the least idea why, I suggest he's looking at something other than the win-lose cycle.

[zeon]

	Quote:	DbPhoenix
	If a trader has 14 losing trades in a row and hasn't the least idea why, I suggest he's looking at something other than the win-lose cycle.

That wasn't really my question and your reply sounds more like a personal attack than anything else... Ofcourse I know that 14 losing trades in a row isn't "normal", which I why I stopped trading.