There are a lot of factors that playing poker and trading forex, stock, or any other types of such markets have in common. playing poker can really change and improve your trading career. Even if you don’t intend to play for a long time, playing for a short period of time can give you a better understanding of trading especially if you are a beginner in those markets.
In poker, like trading, you have a chance to know yourself more and more and see parts of your personality that you haven’t noticed. It makes them bold and put it in front of you. Every hand is a combination of fear, bravery, stupidity, or wisdom, and you feel them from the point when the cards are dealt. It’s the same for trading. All those feelings attack you at the same time from the moment you want to enter a position, and you need to manage them and make the best decision.
In both of them, you need a set of rules and a concrete money management to create a strategy based on them and chain those wild emotions.
In this post, you can find my experience in poker as a forex trader, and how it helped me to understand one game by the other one. Plus, I’ll talk about the steps I took to learn poker on pokerstratey and started to implement them on an online poker room by $50 real account they give away.
How Did I Start Online Poker
The first time that poker grabbed my attention was when I was surfing t forex sites and forums like every day. It’d been a while since I’d started forex trading, and I was still in the searching mode to find a flawless strategy. I’d had burnt a few micro accounts because of the positions that I 100% thought they had to be winners, so I let them grow against my position until they razed my accounts to the ground.
Although there were small accounts, the reality that they’d destroyed what I’d thought was true, hurt me a lot. I couldn’t accept the losses when I believed that I’d figure everything out. That was really stupid and the market doesn’t play that way.
Anyway, I accidentally saw a thread about how good poker players can be profitable in trading. There were the names of some victorious players who were successful in trading as well. Plus, there were the rules of Texas hold ’em, which is the most widespread poker game, and a few basic information about the whole picture, for example, types of players or types of games like sit and go or main tournaments, etc. I read the entire thread that day. Next day, I was at a table on an online poker room playing with play money which is somehow the same as a demo account in trading with some differences.
Playing Poker With Play Money And Trading A Demo Account
First off, I have to say that playing with play money or fake chips is not even close to real money. Unlike other factors coming in this post, this one can’t improve anything in your trading. It’s just for learning the rules of playing. It’s like a demo account that gives you the opportunity to be familiar with the software and tools and how to open/close a position as well as basic information like spread and things like them in trading.
Like a demo account, if you continue playing, it grows bad habits.
Overtrading / Play Loose
Plying a loose style in poker is similar to overtrading. You play every hand that is dealt. There is no fear of losing money so you plunge into all hands. The result is that you never get to make a strategy and practice that. You can’t find the flaws of your play or trade.
In play money, you don’t fold where you should, and let the loss grow. You go all-in with no reason, and just because you want to take revenge or see what comes next. You call every raise and raise or re-raise where you shouldn’t.
In demo accounts, you do the same. You open multi positions, sometimes against each other, without any plan. You break the rules of your strategy, if you have one, and try to fix everything by trading more lots than your account can bear — going all in.
There are some exceptions to this style that is related to highly experienced people who can make profits by doing that. We’ll talk about that at Types of players/traders
No Respect For Money Management
When you play with paly money, you’ll never learn money management, and you’ll spend unreasonable chips for the hands that your chance is like 5%. In poker, you can calculate the odds of your hands or pots and you know how likely it is to win or lose a hand in every round to a good extent, so you can measure how much of your money or stack you should spend to be a winner in long term. Don’t be confused, it’s not rocket science, and you’ll learn that pretty easily — you won’t need a calculator every time you want to take action.
In a demo account, even if you set some rules for using technical tools or fundamental approach and try to follow them to some degree, there is 99% chance that you won’t follow the money management of your strategy, if there’s any. You have the power to go with big lots to quench your thirst, why not? The problem is people get used to what they regularly do and the brain accepts them as rules. You know what happens next.
You Can’t Find A Strategy
In terms of having a strategy, nothing works in play money. It’s like a bull in a china shop. Everyone is throwing fake chips at each other. No strategy, no patience, nothing. It gives you everything you need to be a loser at poker. When you want to play decent and wait for reasonable hands to play, you learn nothing from your opponent’s behavior except who’s drunker. When it’s your turn to play your decent hand, every hand, or maybe leg, is on the table and they are with you to see the end — showdown! Every strategy based on this loony bin is doomed to failure.
On the other hand, in trading demo you can find a strategy if you treat it as real, which I highly doubt that, but still possible. The condition in demo accounts is so close to the real one except for a few things like widening spreads at the news or stop hunting. The chart is normally the same as real. You’re watching real trades, not a bunch of stoners. Everything is up to you in terms of making a strategy.
Playing And Trading With Real Money
Starting To Play With Real Money
After the play money stage, I had a chance to find pokerstrategy where I learned a lot. There is a lot of free stuff plus $50 they give you to start and practice on the best online sites and increase your points so that you can release more courses. Of course, you can pay them at first and buy everything if you don’t have time to play and gather strategy points. But if you have time and don’t want to spend money, you’ll have $50 free that not only can you play poker online with, you also learn more as you proceed.
I made a few thousand dollars from that money as well as releasing strategy points and learning materials. Although it took more than 6 months and half of my time, it was worth it, and I made some good money and moreover a very prolific experience that had changed my mindset to trading.
By the way, in 2011, Black Friday of online poker in the US, Pokerstars, Full tilt poker, and Absolute poker were sealed by DOJ and then they made online poker illegal in the US. As a result of that, pokerstraegy can’t give $50 to US residents, but you can still use free materials and buy courses or other stuff. Of course, online poker is not completely illegal in the US nowadays (2019). The law has changed, and there are websites you can play with real money legally. One of the best ones that I play and is reputable in the online poker industry is Intertops.
They’ve been around since 1998 and performed pretty well. they have a decent amount of tables and games. Because Intertops is not too big, there aren’t grinders or sharks who play multiple tables and try to take advantage of beginners, so it’s a very good place for beginners who are just learning poker.
After I started to play with real money, I saw everything differently. Although in low-stack there are still stupid players who are gambling, the number of these kinds of players is not even close to play money. They are called fish who are the best players you can make money from. On the other hand, we have sharks. These are good players that are hard to beat, and you need to play more decent against them.
Money Management Concept
Honestly, I hadn’t had any idea about this one until I started playing poker. Before that, every time I‘d visit a topic about MM I’d get bored and confused with all those lots, pip values in different currencies, margin and leverage, etc.
As a beginner, all those things seemed non-sense to me because first, I was looking for a flawless strategy with 100% accuracy, after a year I lowered my expectation and set the bar to 90% lol, so who cares about a few percents or different values in pips. Secondly, my accounts were micro or mini, so I thought it wasn’t so important by the time.
All in all, I was mesmerized by technical tools and I didn’t think that MM is that much important. The worst part was not setting a stop loss and diving into a position with an account that has leverage like 1:500. You know who’s gonna call you next, Margin, and you can’t call it back. J
The poker part was so much easier and understandable. At first, you just need to divide your capital, your bankroll, into several parts (buy-ins). That’s it. Then you can play with each buy-in. The bigger your capital is the smaller those parts should be. You have $50, divide it into 10 and play with 10% of your money each time, aggressive! I know. If you have $500, divide it to something like 40. The numbers are related to the value of money for you and the whole money, or the bankroll; you want to spend on poker in general. The more sophisticated part comes after that when you learn odds and outs and the probability of winning or losing hands in different situations.
The most important part that helped me and I haven’t lost my main trading accounts since then was that you lose many times and it doesn’t matter as long as you’ve made profits in the end. You can’t win every battle and you don’t need to. You might lose when you have a chance of 90%, but that’s rare and most of the time you’ll win that fight.
In online poker, you see this numerous times every day so you get used to and accept it faster than trading any markets. You just can see something close to this if you are a scalper in M1.
Setting Rules And Making Strategy
You always need to have a plan and a road map to tell you what to do in different circumstances. Whether it’s simple or a little more complicated, you have to be able to implement that and try not to cross your rules. If there are situations you can bend the rules, they have to be defined in your strategy. Poker can help you in this concept as well.
After a year of trading, I really didn’t have a stable strategy. There were just a bunch of technical tools that I tossed onto the chart and tried to make a sense out of them. Then I picked the one that I had the least understanding and jumped in the middle of the market.
The reason was either I couldn’t make sense of the more familiar ones or they gave me a no-enter signal, so I looked at the one that I was testing, and I forgot that this was the real trade, not a demo. The candles had reacted to that nicely and probably would continue doing so. Pff, I couldn’t believe how many times I made this mistake and irrational decision. Not to mention, there weren’t any money management plans in the strategy. I didn’t even have basic rules, something that you learn in poker from the first step.
In the market, there aren’t any preset rules. The only one is if the market gets to your TP you win and if it hits the SL you lose. You are all by yourself to set some rules so that you can make any decision or you can take the no-plan road and get yourself in trouble.
In poker, finding strategy was easier for me because there is a set of rules that each game such as Texas holde’m has, so your mind subconsciously accept that you need to have rules.
First, there are some preset rules that tell you where you stand from the moment that the cards are dealt. Then, there are rounds you need to make a decision whether to continue or fold, something that in trading you have to set by yourself. In other words, there are stop signs in the poker game that poke you and make you aware of your options.
After that, you learn odds and outs and the probabilities that you have in a hand in different rounds. For example, in Texas hold ’em, you’re given two cards at first. Then you can choose whether to continue or fold based on the strength of your hand and other people’s reactions (call, raise, etc.) to that round (pre-flop). The next round (flop) is when 3 cards are shown and you can calculate the winning or loss probability of your hand to a reasonable extent, again based on remaining players, your cards, flop. It goes the same for the two next rounds (turn and river)
Of course, you don’t need to pull out a calculator every time they give you a card. You’ll get a good grasp of the strength of each combination after a while and can use the rule of thumb to do the math, plus there are software and tools you can use that do everything for you.
Another portion of your strategy is based on your opponent’s play. There are different types of players based on their behaviors and characters of playing. It’s more like the market that makes different movements. Some of them are aggressive and the price tears like crazy, and some are slower. Sometimes the market is confused and indecisive. you need to either have a strategy for each one or avoid the ones you are not comfortable with.
The aggressive ones in poker are the ones you need to be careful about. They are like fast movements in the chart. The passive ones are more likely predictable or at least much less harmful. They are like a neat trend that you can read more easily.
So you need to make your strategy based on the cards you hold, the cards that will be faced up in different rounds, and your opponents. You also need to have a basic MM so you risk a percentage of your bankroll each time. In this case, you have enough chance to make money if you have a winning strategy, so it won’t be a one-time treat if you win or a disaster if you lose. You also know the value of your hands in each round. Then you can decide whether to play or not and how much money it’s worth to spend.
That’s how poker gave me a good understanding of making a strategy so that I could use that to make a strategy for trading. The steps are: Knowing the sates of the market. Is it range or trend? (opponents). Setting a part of your bankroll for each position by SL, TP and Lot. Setting rounds based on the market movements and see if it’s worth staying, adding more money, or closing the position according to signals (cards) you get.
Controlling My Feelings
First off, I have to say that both of these fields can be really stressful especially when you don’t know what you are doing. But they are very exciting even at that time. When you start any of them, your body keeps oozing adrenaline and your heart pounds rapidly. It’s a combination of fantastic feelings and awful ones. The more money is involved the more emotional you become, and making right decisions become harder and harder.
As a beginner, you always seek revenge, and you want to compensate by spending more money. This is where you lose more money because first, you’re not used to the level you’ve entered, for example, a bigger lot size in trading or a higher stack in poker, and second, you’re making such an important decision when you are emotionally engaged. There are very few times that you win a gamble, but you definitely lose more than you ever thought. One day, I lost 30% of my account while trying to make up for a few bad beats in poker. Not to mention, I’d had the same experience in forex before that.
I have to admit that controlling emotion takes a lot of time, and after years of experience, you still go nuts every now and then and do silly stuff.
Keeping your feelings on a leash is a little bit harder in poker because you play against people who try to take advantage of you and your faults and you know that. Market never picks on you or tries to mess with you. But in poker, it happens.
You have weaknesses at the early stage of playing and the sharks (good players) know that and find that ASAP. You need more emotion management at that time. You need to be more resilient until you get more experience and become a shark, then you know how to handle them.
When you’re exposed to this level of playing with your feelings, market seems nicer and more generous to you. You at least get free from vindictive shackles and that’s really a milestone. The rest can be fixed by money management.
Something that can really help you with your emotion is to play or trade multiple tables/charts.
This is another similarity between forex and poker online and it can improve your trading when you trade multiple charts. This is awesome when you are experienced but destructive for a beginner. You have the liberty of opening as many charts or tables as you like, but you need to be careful about that at first.
The best way is by adding one by one. Opening several tables/charts at the same time for a beginner can be daunting and it definitely makes you lose your concentration and money. At first, when you don’t have a solid strategy or a quick call-to-action method you just get more confused and make a lot of mistakes.
You don’t even know what exactly you are doing. You want to catch up with everything happening so you get panic and enter a position you didn’t want to or call a raise at a wrong table.
I have to say that it’s really tempting when you have that kind of freedom and now you need to control yourself not to jump in the middle of that. You see experienced sharks or traders have all those monitors full of charts/tables and playing/trading like a robot and making money, now you have to stick to one and try to find something in them, but it doesn’t matter because you’ll get there soon.
First of all, in online poker, you can’t open something like 20 tables and try to somehow manage them, because you have a limited time to react and then the countdown starts and a buzz alarms you to hurry if you want to be in the game. If it happens several times you are removed from the table, in ring games. So you already can’t bite more than you can chew.
The best and practical way is to add one more table as you’re being experienced. It’s really simple to figure out when it’s time to add more. Every time that you’re messing around and have more time than playing the tables, it’s time you added another one.
If you have a pre-defined strategy, it’s far easier for you to add more. This was the lesson I learned from multi-tabling and tried to implement it for multi charts.
I set my strategy based on different types of players. We have Tight Passive, Loose Passive, Tight Aggressive, and Loose Aggressive. I’ll explain them in the next section more. I also categorized them based on multi-table players and single-table players. You can’t exactly figure out whether someone is multitabling or not. The more tables you are playing at the easier it is to figure it out because you see more players and if they are at your table, you’ll notice them.
At first, I categorized them as regular (multi-tables) and recreational (single-table) players. Regulars were red, and recreational players were yellow. Then, I played a few numbers of hands to recognize every one of them according to their types of playing.
After that, I divided them into aggressive and passive. I turned the color for passive ones to a lighter level, for example, light yellow for passive recreational players. Then I labeled them T (tight) and L (loose). There are some types of software that do it for you and I’ll talk about them more. Now I had a map to make faster decisions. There are straightforward strategies for them so you can implement a strategy related to that kind of players. Of course, there are lots of other human factors you need to consider to improve your win rate which is not the case here.
In trading, I used to open as many charts as I could, then I would look at them one by one for a few minutes and toss any tools I though do the work better. Then I would come back but I’d forgotten why I did that to chart in most cases. I would do the same foolish thing over and over.
After I set a few steps like what I did for poker, not only has the multi-chart trading been fun, it’s brought more profit. You don’t use random tools and you know what exactly you’re looking for. so I analyze the chart. Put an R for range and T for trend. Then, put an upward arrow if I’m going to take a long position and a down arrow if I’m going to open a bearish position. After that, I put a horizontal line on the place I want to open a position if the price gets there. Playing multi tables really improved this one for me.
Types of players/traders
As I mentioned before, we have 4 general types of players in poker. Of course, these are also methods of playing which means you can switch from one to another and make a different image based on your opponent’s type.
- Tight Aggressive
- Loose Aggressive
- Tight Passive
- Loose Passive
These kinds of players play a few strong hands but they play them aggressively and efficiently. They raise and add to the winning hand, sounds familiar?, and try to make the most of a few good hands.
They don’t just call a bet, and when they have a strong hand, they raise the bet so either the opponents fold or they can make the most of them.
They are more like patient traders who wait for the best signals of their strategy and when they get that, they try to make the most of that by adding to the winning position.
Both of them don’t overdo and never let a winning situation get the least profit.
They are either very good or very bad, but definitely the hardest ones to play against. They play a big range of hands and play all of them aggrievedly. It’s hard to understand whether they are playing a good hand or a terrible one.
They raise and re-raise almost everything and never call a bet. Whether you want to play against them or you want to be in this category, you need to be absolutely experienced otherwise you look foolish and lose all your money.
In trading, there are traders like them who do the same. They open lots of trades and add to them even if the price moves against them so if the price reverses and moves to their favor they can close all the position in profit.
We have good and bad ones here as well. The bad traders in this category don’t know the market and enter in every state, no matter whether it’s range or trend or what the main direction of the trend is. They also don’t have a limitation for adding positions or even lot size and they have no stop loss.
The good ones try to take advantage of reverses and try to exploit the most by finding retracements. They add to the positions until they either find the peak of the correction so the trend comes back and they rip the profit or they get signals that they can’t continue more.
They are also called Rock. They play a few strong hands and they take a passive approach to them. They hardly raise and just call other’s raises when they have a really strong hand. If they call your raise you are almost sure they have a better hand.
This style works best when you are playing against loose-aggressive players, especially the bad ones, because they take care of raising stuff and you just need to call and you’ll be profitable against them in long term.
The problem is so long as you pick a few hands you don’t get to play enough so your ROI (Return On Investment) is very low.
Traders who take this approach have the same problems. They can’t gain a reasonable profit. They are too passive so they enter the market very few times. They choose the positions that they think is safe but those happen rarely.
When they finally open a position they never add to that. The problem here is, there is no one here like poker to help them and do the raising for them so that they can benefit the most from those few trades unless they at least have a reasonable TP which I doubt that because they usually want to see the result soon.
They are the best players to play against, but it’s the worst style to adopt. They just call everything to see what comes next. You can see plenty of them in paly money. They are the best fish in the world and when you recognize them you have to hook on them. You can find them mostly in the recreational category or single table.
Traders in this category are often beginners and I don’t think a trader does this even after 3 or 4 months. This is the stage that you just want to press the open button and see how it goes. You probably get a margin call if you have a real account in this stage and lose that if you are in forex with leverage like 1:500 or something like that.
Indicators are technical tools that measure some factors to give us information about the market and different moves in charts. I’ve written a post about moving average which is one of the best and the base of many other indicators.
Based on your strategy they give you signals that can help you make better decisions. The best way of taking advantage of them is to know what they do. If you understand them well you don’t even need them and you can see them on a chart without having them.
There are trackers in poker that do the same. They gather information about you and your opponents and show you what you need about them. Remember I told you the color strategy I used to categorize my opponents, they do something like that but with more information and of course they do it more precisely.
They collect a history of hands that you and your rivals have played and tell you what types of players they are. You don’t necessarily need them but they are really come in handy when you play multiple tables.
The Bottom Line
Playing poker online, and trading forex have some similarities that you can take advantage of one to improve the other one. the only aspect that I believe poker has an advantage in terms of improvement of the other one is that you see experienced players who play in front of you and they have solid strategies and money managements which they perform them beautifully. They can control their emotions in hard situations and they don’t panic or get carried away.
On the other hand, you see people who are exactly the opposite. They don’t have strategies. They spend chips unreasonably where they shouldn’t and add to losing hands. They get emotional all the time and try to take revenge after every hand they lose.
I’ve experienced numerous times that when players at a table see a good player playing decently and gathering all the chips, even if they are doing stupid stuff, they look up to him/her and try to get themselves together and play well. So all the principles you need to become a profitable player or trader are more tangible in poker online than forex and you learn them sooner.
That’s why good poker players are potentially good traders.