Poker and Trading Mistakes

Submitted By Michael Michaud

By Van K. Tharp, Ph.D. - Van Tharp Institute

Click Here For Dr Van Tharp's 2009 Trading Workshops Schedule

I’m currently reading Why You Lose at Poker by Russell Fox and Scott Harker. I’ve pretty much promised myself that I won’t play poker for real money again until I’ve read at least three poker books and come up with some major paradigm shifts. As I read this book, I’ve been struck by the amazing similarities between poker losses and trading losses. They are similar sorts of mistakes. As a result, I thought I’d write a series of articles covering various chapters in Why You Lose at Poker and relate them to trading mistakes that I’ve seen.

Part I: Playing Too Many Hands or Not Waiting for the Opportunities that Are Likely to Make Money

When I first started playing Texas Hold ‘em Poker, I had a friend run a computer simulation to determine the chance of winning for all 169 starting hands if you and every other player stayed in through all five up cards. We did ten million simulations with 2 players, 4 players, 6 players, 8 players, and 10 players. I’d seen someone list the probability of winning with each hand, but I didn’t believe that. It turns out I was right not to believe them after we looked at the results of our simulation.

Here were a few of our conclusions:

The top starting hand was AA. It gave you an 87% chance of winning when there were only two players, but only a 33% chance of winning with ten players. This is why poker experts recommend betting big when you have a high pair to get as many people out as you can.

When you got down to the 20th best starting hand, which is A9 of the same suit, you have a 62.6% chance of winning heads up (i.e., against one other person). But you only have a 15.74% chance of winning against ten players.

At the 50th best hand (44), you only have a 57.4% chance of winning heads up and a 12.74% chance of winning with ten players staying. Notice that with the 50th best hand the odds are 5.7% in your favor with two players and 2.74% in your favor with ten. Those are not outstanding odds, but they are equivalent to some of the best odds that you might get with a good entry signal in trading.

By the time you get to the 94th best hand, you have a 10.07% chance of winning with ten players (i.e., the odds are 0.07% in your favor) and only a 49.25% chance of winning heads up (i.e., the odds are 0.75% against you). However, the 94th best hand is different for ten players (i.e., A4 off-suit) versus two (i.e., T8 off-suit). Heads up A4 off-suit is the 49th best hand, so having an ace plus junk in your hand is useless with ten players and slightly advantageous with two players.

Clearly knowing the winning odds of the cards in your hand can help you play better. The same is true with the signals you from your trading systems. But have you taken the time to learn the odds?

Do you know the probability of winning with the trades you take? Do they differ depending on the market conditions? There are various types of markets, so the probability of winning with certain signals probably changes dramatically in different market types. Have you done the necessary research (as I did with poker hands) to determine the chances of winning with certain signals?

If you haven’t done this sort of research, then you are probably making a mistake. For example, what if you find a Graham’s number stock selling at 0.6 times its liquidation value? Is that a good deal? Or what if you find a stock that meets all of William O’Neil’s CANSLIM criteria? Is that a good deal? What are your chances of making money with those stocks?

In addition, as a poker game progresses, context becomes important. Let’s say you have KK, the second best starting hand. You bet 5 times the big blind and only one person calls. You now have odds you like, only two people playing, and you have the second best hand. The person who called you might have another high pair or perhaps a hand like AQ suited. Now comes the first three cards or the flop and those are AQJ. Now how does your KK look? Not so good. If you opponent has one A, you are in trouble. You are in even worse trouble if they called you with QQ or JJ. You bet half the pot and they re-raise you. Staying in the game under such circumstances is probably not wise and it’s another example of playing too many hands. But again, it is context dependent… perhaps you opponent is someone who calls most hands to see the flop and someone who bluffs a lot. If so, that might make your hand appear stronger.

Trading is also a context dependent activity. You enter into a position and the next day favorable news comes out but the stock reacts poorly. You enter another position that goes up while 90% of the market goes down. What do you do with the positions now? These are context dependent decisions. Have you done enough homework to understand how to respond? If not, then like the unprepared poker player, you are making a big mistake.

Chances are most trades are just like starting poker hands: good ones give you just a slight edge. What’s important is your win/loss ratio. It’s fine to make money 40% of the time if your winners make 2R and your losers only give up 1R. Playing too many hands of poker could be the simple equivalent of making too many trades when the risk/reward ratio is not favorable enough for you to make consistent profits over time. We’ll discuss that much more extensively in Poker and Trading Mistakes

About Dr. Van Tharp: Trading coach, and author, Dr. Van K. Tharp is widely recognized for his best-selling books and his outstanding Peak Performance Home Study program - a highly regarded classic that is suitable for all levels of traders and investors. You can learn more about Dr. Van Tharp the Van Tharp Institute.

Did you like this article?

Login or register to post comments
Email this page
Reset vote
0 points

Welcome to

Submitted by yhwebcn on Mon, 02/22/2010 - 10:48pm.

Welcome to www.swisswatcheszone.com, we have the massive high grade replica watches, our special study sells such brand replica watches. Will attract your vision obviously with the reasonable price's Swiss Replica Watches. You can even buy with here wholesale price high qualified Longines Watches. It is a wise choice for you to choose these rolex submariner. Pleased and satisfied customers are what we desire, and we firmly believe that our first-class service can satisfy all their Replica Watch needs. Chanel J12 Watches GRAHAM Watches IWC Watches Rolex daytona watches Replica Roger Dubuis watches Montblanc Watches Franck Muller Watches Replica Breitling watches Replica Panerai watches Replica Tag Heuer Watches.

خليجي شات

Submitted by qwer on Tue, 02/09/2010 - 10:20am.

خليجي شات خليجي دردشة خليجي شات صوتي دردشة شات شات كتابي شات سعودي دردشة كتابية توبيكات منتدى العاب سعودي كام شات رجاوي دردشة صوتية شات سعودي شات تعب قلبي شات الشله شات كتابي شات صوتي شات كويتي قلوب شات كتابي شات تعب قلبي شات السعوديه شات سعودي شات قلوب شات القلوب شات قلب شات شات قلبي سكس

Replica Handbags ALEXANDRE

Submitted by coco123 on Tue, 02/09/2010 - 3:47am.

Replica Handbags ALEXANDRE MCQUEEN Handbags Louis Vuitton Handbags Gucci Handbags Chanel Handbags Fendi Handbags Coach Handbags Manolo Blahnik Boots Cheap UGG Boots Shoes China Handbags UGG Nightfall Replica Tiffany Jewelry Cheap Chanel Flap Cheap Chanel Hobo Handbag Cheap Chanel Quilted Cheap Chanel Handbags Cheap Chanel Tote Handbags

Here are cheap north face

Submitted by kei111 on Mon, 02/08/2010 - 7:22am.

Here are cheap north face outlets, these northface jacket clothes are designed with a waterproof, breathable, fully seam sealed exterior shell and a removable, insulated interior, cheap northface from our cheap northface jacket online sale.-zouzhilong007

NBA Basketball

Submitted by kei111 on Mon, 02/08/2010 - 7:14am.

NBA Basketball Shoes

Nbasupplier.com are authentic NBA Basketball Shoes supplier, who have a long history in NBA basketball shoes trade. Their customers are from all over the world. The best quality and best service promise to you. You can find the newest and the classic style in this online store. Shop for NBA Signature Basketball Shoes from atasale.com. You can find pages with details of the NBA players that wear these brands and wich model of shoe they wear.
This New Allen Iverson Shoes : Reebok Answer XII Invictus shoes will be printed in the history. Allen Iverson is a great scorer that will have a place in the House of Fame. His sneaker has a fabulous history. If you are Crazy about Kobe Bryant Shoes, there are Nike Zoom Kobe Shoes Mens and Womens Collection for you. Or Lebron James is your idol aslo can collect all his Signature Shoes there.
The eastern part of the all star line-ups list: Dwight Howard, LeBron James Shoes, Kevin Garnett, Dwyane Wade, Allen Iverson; West all star line-ups list: Kobe Bryant, Yao Ming, Tim Duncan Shoes, Chris-Paul, Amare Stoudemire. And as we know, there are so many fans, men even women, are bound up in NBA. Atasale.com, he can support you the NBA Shoes about those NBA MVP. /You xiaoyan

Our aim is to make customer

Submitted by kei111 on Sun, 02/07/2010 - 7:00am.

Our aim is to make customer satisfaction, mbt shoes clearance ease of purchase.Free shipping, 9-14 business days for delivery.A pair of mbt women shoes would make a fantastic holiday gift for someone who is always hobbling around,mbt shoes outlet complaining of pain. But most importantly, your feet deserve a pair. Save your pennies and get a pair of womens mbt shoes, and enjoy a new feeling.happy feet! mbt uk shoes, fashion and equipment health ! Mesh lining helps wick away moisture for a healthy foot environment.

chi straightener I have

Submitted by kei111 on Sun, 02/07/2010 - 1:11am.

chi straightener I have spent my adult life searching for ways to make my ghd hair look like I just walked out of a salon on a daily basis, ghd straighteners.Chi Hair Products and 5 Most Common Mistakes People Make When. ...9 Dec 2009 ... chi hair straightener and 5 Most Common Mistakes People Make When Creating ghd hair straighteners style ischi hair iron using the chi hair product for their hair type.cheap ghd.Search Results for "chihairproducts.com"Also try: ghd mk4, Chi Flat Iron, ghd pink, Silk Therapy, ghd uk. Farouk Chi Hair Products Save 30-75% on chi flat iron.Open Discussion about ghd flat iron Any luckchi iron sale with them?

I recommend you go to online

Submitted by myuggbootssale on Sat, 02/06/2010 - 2:36am.

I recommend you go to online store, there have a lot of ugg boots sale,If you want to buy a pair of cheap ugg boots uk.More and more people choose ugg boots uk. So you know that ugg series of the most famous is the ugg boots.bailey ugg boots.UGG Classic Tall Boots UGG Classic Short Boots UGG Kids Boots.

replica A.Lange & Sohne

Submitted by marcia on Thu, 02/04/2010 - 11:57pm.

replica A.Lange & Sohne
replica Alain Silberstein
replica Audemars Piguet
replica Bell & Ross
replica Breguet
replica Breitling

Cheap price with nice

Submitted by kei111 on Thu, 02/04/2010 - 9:27pm.

Cheap price with nice quality,nike 360 for more discount nike air 360, at our website online sale.air max 90 for sale, best quality and credit accept,nike air max fast and free delivery.air max 180,and for over twenty years now people had said they were air max 360.air max 95,The sale of fake goods is air max shoes likely to jump over the holiday air max 2010.

Handbags are best liked by

Submitted by xiyang on Thu, 02/04/2010 - 8:43am.

Handbags are best liked by women as it has proven their best friend.Kobe Bryant Yellow Jersey Pau Gasol Blue Jersey Pau Gasol White Jersey Pau Gasol Yellow Jersey Anaheim Ducks Jerseys Women's handbags serve double purpose. One as the keeper of their valued belongings and the second as reflector of their status in the society.

uggbootonsale shox shoes

Submitted by kei111 on Thu, 02/04/2010 - 12:07am.

uggbootonsale shox shoes nike mbt shoes mbt m.walk mbt shoes sale anti shoes mbt cheap dunks shoes Cheap ugg boots men's nike mid dunk shoes women's high nike sb dunk shoes women's high dunk shoes women high nike dunk black women high nike dunk shoes women's low nike sb dunk shoes women's low nike duke shoes sale women dunk shoes nokia phone bluetooth adapters bluetooth headsets bluetooth car kit car accessory car alarm/security car dvd player car mp3/mp4 player Cheap nike air max nike air max shoes air max 2009 mens air max mesn air max shoes Nike Air Max Shoes Nike Air Max 2003 Shoes Nike Air Max 2009 Shoes cheap timberland boots timberland sale timberland boots timberland shoes cheap timberland shoes timberland boots sale timberland mens boots Kids Timberland Boots UGG Classic Tall UGG Classic Tall Stripe 5822 NFL Jerseys NHL Jerseys MLB Jerseys NBA Jerseys Nike Air Yeezy Dunk SB Air Force One Air Jordan Retro Nike Jordan Fusions Air Max Shoes Nike Shox Air Rift Brand Boots Brand Sandal BAPE Belt BOSS Belt BURBERRY Belt CA Belt CHANEL Belt D&G Belt Diesel Belt ED Hardy Belt FENDI Belt GUCCI Belt LEE Belt LEVIS Belt LV Belt Prada Belt VERSACE Belt Handbags Handbags AAA Women Bikini Women Jeans Women T-shirt Women Hoodey Women Jacket Women Long Sleeve D&G SunGlasses DIOR SunGlasses LV SunGlasses Cartier Glasses Nike SunGlasses OK SunGlasses Adidas SunGlasses Armani SunGlasses Burberry SunGlasses Chanel SunGlasses Fendi SunGlasses Gucci SunGlasses Police SunGlasses Prada SunGlasses RayBan SunGlasses VERSACE SunGlasses ED Hardy SunGlasses OKLEY SunGlasses Coach SunGlasses Brand Eyeglasses GUCCI Hats

aion gold aion kina aion

Submitted by aiongold on Mon, 02/01/2010 - 5:07am.

aion gold aion kina aion kinah aion power leveling aion time card aion cd key aion accounts buy aion gold cheap aion gold wow gold wow power leveling aion kina buy aion gold aion gold aion power leveling aion gold aion kina aion power leveling aion time card aion cd key aion accounts buy aion gold cheap aion gold cheap wow gold wow power leveling wow power leveling wow cd key wow cd key buy wow power leveling cheap wow power leveling cheap wow gold Ugg Boots wow cataclysm cd key world of warcraft cataclysm cd key wow cataclysm cdkey world of warcraft cataclysm cdkey star trek online enery credits sto enery credits sto gold buy star trek energy credits buy sto energy credits cheap star trek online enery credits cheap sto energy credits star trek online gold star trek online cd key star trek cd key buy star trek online cdkey star trek game card sto game card buy star trek cd key star trek cdkey buy star trek online cd key star trek online game card buy sar trek game card buy sar trek cdkey

Handbags Wholesale

Submitted by aa on Mon, 02/01/2010 - 3:02am.

Handbags Wholesale louboutin Lancel Handbags Anya Hindmarch Handbags Ferragamo Handbags Goyard Handbags UGG Roxy Boots UGG Tall Stripe Cable Knit Jimmy Choo Handbags Miu Miu Handbags Versace Handbags UGG Sundance II UGG Sundance Limited Edition Gucci Fake Boston Handbags Replica Gucci Hobo Cheap Gucci Messenger Fake Gucci Monogram

There are wide variety of

Submitted by cheapuggboots on Sun, 01/31/2010 - 10:40pm.

There are wide variety of Nike Shox for both men and women's selection.The Nike Shox Sale are best selling nowadays.Get your own Cheap Nike Shox now. Ugg London is stylish and cozy UGG Boots.Visit Ugg-Boots-London, you will have unexpected surprises from UGGs London. Get your own UGG London Now!

Welcome the presence, the

Submitted by samenzhen on Sun, 01/24/2010 - 2:34am.

Welcome the presence, the head store main management Replica handbags , the tidal current Replica bags, the pretty women's designer handbags, the replica watches in the quality, are Replica Breitling watches because of the service, lets reassurance which you buy, buys happiness! Is also trying on each kind of beautiful swiss replica handbag you, whether also what appearance to choose a section of the Replica Hermes handbags to worry? Cheap replica handbags .Cheap handbags.replicas handbags handbags purses.brand handbags all cheaps detal stayle as follows Gucci replica handbags|Gucci Hobo Bag |coach wallets|Dolce&Gabbana replica handbags|Givenchy replica handbags|Juicy Couture replica handbags|Juicy Couture handbags|Kooba replica handbags|Lancel replica handbags|Loewe replica handbags|Marni replica handbags|Thomas wylde replica handbags|Valentino replica handbags|Versace replica handbags|Yves Saint Laurent replica handbags|Alexander Wang replica handbags Replica watches Replica watch Cheap replica watches Fake watches Luxury watches best swiss watches high quality replica watches replica swiss watches fake watches wholesale Panerai replica watches Panerai Luminor Panerai radiomir replica Omega watches omega speedmaster watches omega seamaster watches omega railmaster watch omega Constellation watch Omega deville watches

Hello friends! Today I will

Submitted by aionkinah99 on Sat, 01/23/2010 - 3:36am.

Hello friends! Today I will introduce the Daeva and the Atreia in the aion world. First, we could have a look at the aion items on our site. aion cd keys and and aion time card are on sale and you could buy them at a low price. Buying aion cdkey could active an aion account and aion timecard can offer you a longer game time. I believe you must have ever been chill when you enjoy your game but suddenly the game time is ran out of. Now if you have a aion timecard, you will not be anxious about this problem.

Daeva-the Players Act as

aion powerleveling aion kinah aion cd key aion account

The players play a role of Daeva who are the reincarnation of the God to protect the tower of the eternity. They are superior to the mortal in the terms of wisdom of?mind and constitution. Simply speaking, Daeva is a kind of flesh with the superhuman strength and they can control a kind of Aether. Duo to this kind of strength, Daeva could take advantage of the a strong power even recover from the death. Although they can not keep a eternal figure they live in another immortal form. Their assignment is guard aion, manage other things and protect their clansmen from the harm. They fight for their clansmen. Clansmen adore their god and respect their Daeva.

Atreia

Aion is a mythical world which is composed of Eloys, Asmodians and Dragon. The Atreia is where the three races live in and handle their daily life.

Are you still worried about

Submitted by silence0510 on Fri, 01/22/2010 - 12:39am.

Are you still worried about how to put the song to iphone ringtone? iTunes Ringtones Creator is the answer, which can make your own ringtones from a wide range of video and audio files in your library and send the created ringtone to your iPhone 3G and all other models directly. You may also interested in this ultra iPhone 3G Ringtone. AVCHD Editor AVI to DVD Creator Custom iPhone Ringtone Video to iPod Touch Blu ray Ripper