I read it all the time on trading blogs. Blog-traders say something along the lines of I am going to set aside this amount of time to trade and will try to make (insert some arbitrary number) of trades and strive for (insert another arbitrary number) in profit.
Even though I did something along these lines when I first began trading (with limited success), the more I trade, the more I realize that you cannot force yourself to take a certain number of trades every day, and you have no way in knowing exactly how much you will make in a day.
In poker you should never say, "I am going to play 1 in 3 hands," or "20 hands every hour" or anything along those lines. If you get dealt a 2/7 offsuit four times in a row, on the fourth time I would fold just as I did the first three times. Letting ideals and shoulds get in the way will end up ruining your game, forcing you to play hands that, overtime, will drain your bankroll. The same goes with trading--albeit, it is sometimes harder to tell whether you have been dealt crap. But, in time, you should definitely know when to "fold" and should never, ever let "goals" focused on uncontrollable events get in the way of solid trading or poker playing.
Do not fight it when you get crap after crap after crap. Statistically, it will happen--so don't play it! You do not want to be down half a stack (or 10, 20, 50+%) when a good trade (or pocket aces) comes along.
In the long run, it is those who are able to sit back and wait for the good setups who get paid off. Playing every hand is for the fish.
Great analogy Anon,
ReplyDeleteFor the benefit of readers who don't read Long & Wrong I've copied below a comment that I made on their "P Word" post about the subject of your post:
Psychology of boredom – poker and investing
On the subject of psychological analogies between poker and investing, a major similarity that is often overlooked is that good investing, like good poker, is often a boring occupation. And this in itself can cause problems on the psychological side.
In Texas Holdem it does require discipline to sit through many bad hands since there are only really about 20 of the 169 (12%) possible starting hands that are worth investing in. Discipline needs to be maintained so the player does not make speculative bet on a marginal hand just to break the monotony.
Similarly, with investing, there is a constant barrage of news and a general impetus to act on perceived opportunities. However, the right thing to generally do is sit and wait until opportunities come along that are high quality. As with poker, the temptation is to place a speculative trade to break the monotony.
When learning to invest, playing poker can help to develop the discipline of sitting and waiting more quickly than investing, since you can get through more poker hands in a single day than you can investing opportunities.
"The urge to trade is greater than the urge to trade profitably" GB007
ReplyDeleteI enjoyed the clarity of your "Psychology of boredom." Without discipline, I could see myself chasing every straight draw and every little move (i.e. noise) in the markets.
ReplyDeleteSolfest, so concise! I like it.
Damn! I've been a fish for the past 15 months??
ReplyDeleteGreat post, Anon :-)
I don't know about that ;)
ReplyDeleteThank you for the comment and take care, Jules!