I have recently become very interested in Forex and the future possibility of making a living from it. I have played poker professionally since 2009 and recently got turned onto Forex after watching an interview with a successful trader. I was really encouraged by how transferable the skills are in playing poker and trading currency. The key to sustained success in both fields is bankroll management, self management and continuous self education. If you play poker for a living, you must only risk a small percentage of your total bankroll in any one game to reduce your risk of ruin to an acceptable level. You must also learn to cope with the psychological aspects of the game such as the brutal downswings and inevitable long break even stretches. I know that this sounds very familiar to successful Forex traders. Since my background in poker is mostly online, I am able to run software that collects statistics on my opponent’s play and past results. I use these in conjunction with other reads to improve my decision making during play. What I saw Forex traders doing during the interview looked very similar to what I do, from their use of statistics to improve their decision making to the necessity of self discipline and self belief to get them through hard times.
Unfortunately, for most professional players, poker is a game of diminishing returns. Every player wants to move up in stakes to make more money. In an ideal world, we would move up as our bankroll increases. In reality, what happens is that the higher you play, the more pros you encounter, and so the lower your win rate becomes. Lower win rates lead to increased volatility in results (and more grey hairs). For 99.9% of pros, there will be a stake they reach where if they play any higher, their win rate would be diminished to the point of reducing their overall $ hourly. I may be wrong, but I do not see such ceiling in trading, and this is the main reason why it is so attractive to me. If I’m not mistaken, your investment size per trade can increase proportionally to your account size.
At present, I am a complete beginner, but my plan is to open a demo account and try learn everything that I can. Thankfully, my job affords me a lot of free time for study. I will only deposit a penny into a live account until I manage to churn out profits regularly in a demo account over the course of several months. I will then gradually start adding money to a live account until I am comfortable that I am still trading profitably. I will use my same money management ethic. For example, if I win or lose I will increase/decrease my investment size accordingly. I’m sure that to experienced traders, this all may sound very naive coming from someone with no experience. I guess I’m an optimist! If I find during the demo period that I have no sustained success, I will simply not invest a penny.
I would urge any long term successful traders looking for alternate sources of income to try their hand at poker. If anyone has had sustained success at trading, they can almost certainly enjoy the same at poker as they have already developed many of the key skills. I would be happy to recommend good educational sources via pm if it is not breaking this sites TOC. Anyway, I hope to learn from all of you and would be very grateful for any advice or insights. Good luck and good trades,
Chiquinho
Trading is not gambling. I don’t see how your skills in poker will help you here.
I should shut up now. And yes, one more thing. Run through the School of Pipsology. Try to learn what the Foreign Exchange Market (Forex) is, and then you’ll see how much it is different from poker.
Playing poker profitably is not gambling. Conversely, trading unprofitably is arguably gambling. In poker, you are playing against other people instead of the house. If you make less errors than your opponent, in the long term, you will profit over them. When I said that my skills in poker will help me with trading, I was referring to the psychological aspects as well as the extensive experience I have in managing money effectively in order to minimize my risk. Poker is a game of skill in which you use information to profit in the long term. Do you still not see any similarities? Obviously there are several massive differences between poker and trading, but my point is that many of the skills are transferable.
Psychology! You got me there! If you’re psychologically stable when you sustain loses in poker, than you have huge advantage over many market traders. I agree, that skill is transferable.
I’ve read quite a few books and articles that it’s much the same probabilities, risk management, and psychology. I’ve also talked to an amateur blackjack player he told me the same. Wait until the odds are lined up in your favor and take your chance.
Odds? Your odds in trading Forex are 50:50. In any given time, price will go up or go down. Therefore, your odds at succeeding in Forex trading are much great than in blackjack or poker.
Now I’ll stop talking about “odds” because I never think of any odds when I’m about to open position.
I don’t agree with that. Go back over the charts and tally up which hour posts the high and low. Then turn it into percentages. Just curious do you trade on fundemantals? If the odds are 50-50 this game gets much easier just open a position with a 1:2 risk:reward ratio.
I plan to use my Dec. break (and into New Years) to study some more regarding poker. And yes the skills are transferable. What I like about online poker is that no one cares about Greece, Bernanke, what time of day it is, etc. If I could work up to $1/$2 Hold’em and be a consistent winner then forex would be a part time hobby.
I don’t see any problem with my previous statement. Open long position on XXX/YYY. If you take profit of, let’s say 20 pips, that’s because price has moved up. If you sustain loss of 20 pips, that’s because price has moved down.
Now, maybe you think about the case when market neither goes up nor goes down. That’s something different, and that won’t happen if you know when to trade.
Also, I don’t say that chances of you succeeding as trader are 50:50. I say that when you open the trade, either you’re lose it, or take profit. Why? Because price has moved up or down since you opened your position.
I don’t predict and I hate to predict. Every time when I predicted something, I was wrong.
While I was beginner, I used to gamble, rather than read the news and do analysis. And it was alright for some time. I managed to make profit just with pure gambling.
Then things suddenly went down. I realized that market don’t act as I want, and that all my “predictions” are in fact useless.
I would have to say its an entirely different “game” and although you may somewhat transfer skills its so incredibly different. You may think that you know money management and “odds” and I believe you do and I know it would make sense that they would transfer but you will feel an entirely new emotional setting that you are unfamiliar to. In poker you only have 52 cards to worry about 5 on the table and 2 in your hand. You know exactly what you have as each card flips and what it would take to beat that hand. In forex you will never have the luxury of knowing for positive how the market will react even if you know the news before its released. Fundamental or technical or both the degree of risk is higher especially when you (I don’t know your case just assuming) don’t know anything about each governments policies bonds equity markets and historic forex movements. When I say historic forex I don’t mean ready past data from charts. I mean remembering how you emotionally felt towards a specific currency pair at a specific price in a past moment of time what was different or the same economically and in terms of monetary stance and how you dealt with it then and of coarse what happened immediately after. I’m not a pro trader but I’ve been in the game for over 2 years full time (not full time earning mind you, simply full time because I work for myself and have the gift of unlimited time). I’m not saying don’t trade. I encourage anyone with risk capital to try trading whichever market you feel your interested in. I’m just trying to say you are going to feel a lot bigger than you are and after a couple huge demo wins you’ll be live and ready to lose. Learn as much as you can you will think after a couple months of 16hour charting days and reading that you “know” the market. Each month after that as you learn more again and again you’ll feel you’ve conquered the market. Your going to lose money and probably a fair amount but if you stay at it eventually you will find yourself in a place where you are earning decent returns. Hope my ridiculously long rant helped at all. Goodluck!!!
Ohh and quick to the 50/50 guy I completely understand what you were trying to say in literal terms you could completely guess and one choice (buy/sell) ultimately will be correct in immediate and long terms. I think the others believed you were saying your “odds” could never surpass that. Another thing since I just used the word “odds” and didn’t want to… Poker odds and forex odds are extremely different because in poker the odds are fixed and definite. No matter what the cards themselves will always be the same. If every doji candle was a reversal on Eur/usd for one year straight it could still be false Anytime where as a royal flush will forever and always be the best hand possible and a guaranteed win.
I really appreciate your reply and will take heed. Poker is a game of uncertainties though to an extent as it is a game of incomplete information. You have far more information to take in than just your 2 cards and the 5 on the board because your opponent often has a wide range of possible holdings that need to considered on every street. Still, your reply has made me appreciate that there is a huge amount of information that I am completely ignorant to at the moment and that it will take a lot of work to become a break even trader, let alone profitable.
One problem with poker that I addressed in my original post was that it is a game of diminishing returns (The higher you play, the lower the win rate due to tougher games). Is there a similar ceiling in Forex trading, or can you just continuously increase the size of your investment as your account size grows? Are there any factors that would affect your ROI as you invest larger amounts?
I admire that you’ve been able to make a living playing online poker in the post-UIGEA days. I am also a relative newbie to trading, and I played poker for about 2 years as my sole source of income from 2004-2006. Ahh, the good old PartyPoker days, how I miss you.
I’ve been studying and learning Forex since about May of this year, but I’ve yet to place a real money trade. I’ve demo traded different systems and tested different concepts, and I’m now putting together a solid plan for 2013 and beyond. There is a steep learning curve, but I believe the end result is well worth the effort.
I completely agree with you that the skills you mentioned will transfer well to trading. You already know how to think about the long term, how to think in probabilities and EV instead of absolute dollars, how to deal with downswings (and that 989-1 perfect/perfect beat), bankroll management. Just because the game is different doesn’t mean these skills won’t help.
I really get you on the diminishing returns with poker. I believe trading is far more scalable. From what I can tell, the ceiling you can run into is when you are trading such large position sizes that there isn’t enough liquidity to fill your orders at your desired price. For me personally, getting to that point is so far out there that it doesn’t concern me at all at the moment.
Figured there would be some other poker players here. I also miss the PP days. Between 2004-2006, I was a fish myself on Party so maybe you relieved me of some dollar at some point! I did manage to spin up my bankroll from a small deposit on that site even though at that time I played fairly horribly. If I tried that now I’m sure I would have been wiped out pretty quickly so I was pretty lucky with my timing. Playing post UIGEA was easier for me because I was not based in the US. I had access to the Euro sites which had slightly softer 6 max games than FTP and Stars. As of Feb 2012, what I did was spread my bankroll across most of the major poker networks, sit at as many heads up tables as possible and just wait for action from fish. I decline action from other regulars. Many people look down at this approach, but every year when I was playing the tough 6max games at some point I would have 5 figure downswings. And I’m talking at the 1-2 to 3-6 level. I remember towards the end of 2010 I had a break even stretch for over 250k hands. Now with my new approach, I am a lot less stressed out as those break even stretches last a lot less hands. The critics of my method who think I am being unsporting can suffer the 40 buy in downswings and the ulcers that come with them. Poker is not a sport for me. Game selection and exploiting bonus offers to got me through UIGEA.
I agree with you that the learning curve is very steep for trading and there is so much to take in. Since I am completely new to trading, I’m at a point in my development where I’m pretty excited about it and so it’s a good time to try and learn as much as possible. I’ve decided to take December off poker to commit it purely to study of Forex and a couple of other advantage plays that I have in mind.
Given how much money there is in the Forex market, the ceiling you talked about sounds like it would only really be affecting banks or major corporations? I hope it is a problem I someday have, although somewhat doubt it!
