Zen and the Art of Poker

[DbPhoenix 42]

RULE#10: Begin by playing tight, but don't forget to stay tight... The important thing is not who possesses the control and discipline at the start of the game, but who possesses it at the middle, the end, and all points throughout.

 

It is easy to have faith in yourself and have discipline when you're a winner, when you're number one. What you've got to have is faith and discipline when you're not yet a winner. (Vincent Lombardi)

 

Stick to a plan despite what happened before and what will happen after. It is less about fighting and more about surrendering. (William)

[DbPhoenix 42]

RULE #11: Don't fall into the "Now Trap."... Players want to win now, today. Results must happen now, in this hand, the one right in front of us... We assign a little more importance to where we are. We make it bigger, more important... But we do this timewise , too - we assign things more importance because they are happening in the present moment... Yet giving greater importance to the present in the game of poker allows us to imagine marginal hands into good hands and good hands into great hands.

 

The market doesn't know you and couldn't care less. Couldn't care less about your entry price, either. Nor about your agenda. It's gonna do what it's gonna do, and that most likely will not include plunging as soon as you've entered your short, or rocketing the moment you've gone long. If whatever the market is doing is inconsistent with your agenda, then get out. But don't expect anything magical simply because you've pressed a key. (Db)

[DbPhoenix 42]

RULE#12: Detach yourself emotionally from the game.

 

Please don't think... that I am showing off when I say that I know the secret of how not to lose but win. I really do know the secret; it is terribly silly and simple and consists of keeping one's head the whole time, whatever the state of the game, and not getting excited. That is all, and it makes losing simply impossible... But that is not the point: the point is whether, having grasped the secret, a man knows how to make use of it and is fit to do so. A man can be as wise as Solomon and have an iron character and still be carried away. (Fyodor Dostoyevsky)

Edited April 10, 2008 by torero

[DbPhoenix 42]

RULE#13: Don't be impatient about patience... Your brain is telling you to play patiently while your emotions are saying, "What's taking so long?" These two must be in alignment.

 

The gatekeeper of our subconscious keeps us from constant behavioral modifications, which means that if you are not a patient type, there is probably more work than just telling yourself to be patient. I think one might have a chance in two ways:

 

1) If you are an enlightened kind of guy, you can tap into your own innate essence for power. The power comes from your strong awareness. All your subtle self-talk and make-believes and all the games your ego plays will evaporate in the expanse of your wisdom. Just like an old man watching children play.

 

2) Change your internal self-talk. Bypass the gatekeeper and do some behavioral modification. There are two ways to bypass the gatekeeper: (1) use sheer will and persistence and (2) keep changing your self-talk on the conscious level. Eventually you will have nagged your gatekeeper to death. (William)

[brownsfan019 17]

RULE#13: Don't be impatient about patience... Your brain is telling you to play patiently while your emotions are saying, "What's taking so long?" These two must be in alignment.

 

So true on so many levels in poker and trading. Excellent rule!

[DbPhoenix 42]

RULE #14: The long run is longer than you think... Playing only the best hands can be frustrating... Anger and irritability can arise. The emotions can be severely tested. This is where Zen comes in.

 

The only way to turn the corner is to get rid of marginal trades. It is ALREADY a very fine balance. If one injects a few marginal trades into the picture, he quickly screws up the Profit/Loss equation. Making the matter worse, doing so will create chaos in both one’s equity curve and one’s head. Just get rid of marginal trades, don't stare at the monitor the whole day, and learn to maximize profits WHEN appropriate.

 

If we fail to take the responsibility for getting rid of marginal trades, we lose the privilege to trade. Provided one does have a good method, it’s meaningless to try to fix things any other way.

 

Trade LESS, make more. (William)

[Guest forsearch]

Trade LESS, make more.

 

Oh so true.

 

Even more so is the related corollary:

 

"Fast charts, more trades, less money. Slow charts, less trades, more money."

 

Or something like that.... :haha:

 

-fs

[DbPhoenix 42]

RULE#15: When you take your emotions out of the game, other players' emotions become visible.

 

When we are focused exclusively on our own emotions (as we often are), the emotions of others tend to be obscured. When we make ourselves neutral, however, we find that the canvas suddenly becomes blank and the emotions of others begin to appear.

 

You can't be "good" by pushing away "bad". If anger arises, instead of getting involved with the content of the thought, rest in the awareness of it. The angry thought dissolves, and a clone arises. Rest in the awareness again. Don't fight the thought or get involved. Give it enough space and it will dissolve. (William)

[DbPhoenix 42]

RULE#16: Be wary of pushing forward aggressively when encountering resistance.

 

This goes along with the concept of non-coercive trading. You don't fight the situation. The cheetah waits only for the weak prey even though it is capable of catching any animal.

 

Besides external conditions, it is also important to be aware of the internal conditions such as H.A.L.T. (Hungry, Angry, Lonely, Tired).

 

So why does one press it? Because one wants perfection, and perfection loses. One has to let go of his agenda and listen to the market. You should know by now that I believe a "natural" trader is the best trader and in order to be a "natural" trader, one CANNOT be the "perfect" trader.

 

For all beginner traders like me, if one truly truly thinks it through and gets this point, it will stop the bleeding. The number of trades (including marginal trades) will go straight down significantly and the whole profit/loss equation will turn around. Only then will one have a fighting chance. (William)

[Jakew 10]

Zen and the Art of Poker is one of the best books on trading. It was a pleasure to read this collection of thoughts - I'll add one minor quatations from the book but isn't original and potentially thousands saving?

 

And remember to play your game right also when upset and out of Zen calmness because there is no reason a player can't be upset and yet at the same time play right

[DbPhoenix 42]

RULE#17: Develop a true indifference to the game. George Leonard writes in Mastery that mastery's true face is often "relaxed and serene, sometimes faintly smiling." You sometimes see this with good poker players - a kind of smiling, ironic indifference to the vicissitudes of fate and the outcome of hands.

 

1. Under emotional distress, people shift toward favoring high-risk, high payoff options, even if these are objectively poor choices. This appears based on a failure to think things through.

 

2. When self-esteem is threatened, people become upset and lose their capacity to regulate themselves. In particular, people who hold a high opinion of themselves often get quite upset in response to a blow to pride, and the rush to prove something great about themselves overrides their normal rational way of dealing with life.

 

3. Self-regulation is required for many forms of self-interest behavior. When self-regulation fails, people may become self-defeating in various ways, such as taking immediate pleasures instead of delayed rewards. Self-regulation appears to depend on limited resources that operate like strength or energy, and so people can only regulate themselves to a limited extent.

 

4. Making choices and decisions depletes this same resource. Once the resource is depleted, such as after making a series of important decisions, the self becomes tired and depleted, and its subsequent decisions may well be costly or foolish. (Baumeister)

[FX_Cowboy 10]

RULE#16: Be wary of pushing forward aggressively when encountering resistance.

 

For all beginner traders like me... (William)

I remember how much I enjoyed the original thread when it appeared, and it's great to be reminded of the wisdom of these "rules". If I recall correctly, William was interested in Zen in its own right, and I'm struck by his comment here that he is a "beginner trader". I believe that it is a precept of Zen to be "always a beginner", always open to learning more. Given the quality of his comments, I wouldn't be surprised if he was an experienced trader, and -- if he took his own advice at least -- a successful one.

[jasont 10]

Great thread DB. I haven't read it yet but Zen and the Art of Poker is next on the must read list. Thanks for the great posts and rules.

 

Regards,

 

Jay

[brownsfan019 17]

Great thread DB. I haven't read it yet but Zen and the Art of Poker is next on the must read list. Thanks for the great posts and rules.

 

Regards,

 

Jay

 

LINK TO AMAZON

 

Jay - that link will take you to Amazon if you'd like to purchase there. Took me a bit to find it, so I copied the link here for anyone interested. Saves a little time b/c Amazon isn't the easiest site to navigate sometimes.

[DbPhoenix 42]

RULE#18: Learn from your mistakes... When we factor past lessons in for future play, losses are not losses, but rather stepping-stones toward future correct play. Failure, by its nature, moves us in another direction, away from failure. We need to treat these lessons neutrally. Simply learn from them. Don't take them too much to heart or put too much emotion into them.

 

# Make journals a part of the daily routine. Even if you don’t trade on a particular day, it is valuable to review the day’s setups and behavior at key price levels. Reviewing patterns on different time frames can also help traders internalize the context of the markets they are trading, as well as the interrelationships among those markets. The French scientist Louis Pasteur observed that, in matters of observation, “chance only favors prepared minds”. Replaying market days, reviewing your own performance, and identifying missed opportunities prepares you for future performance, as your increasing familiarity with trading patterns sensitizes you to them in real time (while static charts are better than nothing, they do not capture the unfolding of patterns, the very thing that traders need to be able to recognize and act upon; replay provides the opportunity to see patterns over and over again, accelerating the recognition process).

 

# Incorporate specifics in your journals. If I had to identify the single most common shortcoming among trading journals, it would be their absence of detail. Entries such as, “I lost my discipline; I have to be more patient,” might be nice as post-it reminders, but are inadequate as journal entries. Journals need to clearly state what happened, your assessment of why it happened, and the specific steps you intend to take to deal with the situation in the future. A good rule is that anyone reading your journal should be able to identify and follow the exact same steps that you intend to take in the future. Your journal should be a planning document, not a statement of intentions. (Brett Steenbarger)

 

[DbPhoenix 42]

RULE #19: Make sure you know when you're on a cold streak... You’re not aware of your condition. You’re not stepping back from it and seeing it -- and, more important, not acting on this information. As a result, as cold as you are, you often find yourself right back in there on the next hand, fighting, struggling, betting...

 

You need to be two people-- one is the guy who is doing it, and the second is the guy who steps back and watches the other guy from a slight distance and evaluates whether the first guy is too tired, too upset, too unfocused, too much on tilt, etc, to be sitting at the poker table, trading, or whatever. Most important, this second guy must have the AUTHORITY to pull the first guy out of the chair if he doesn't like what he sees. (William)

 

The first step in the process of creating consistency is to start noticing what you’re thinking, saying, and doing. Why? Because everything we think, say, or do as a trader contributes to and therefore reinforces some belief in our mental system. Because the process of becoming consistent is psychological in nature, it shouldn’t come as a surprise that you’ll have to start paying attention to your various psychological processes.

 

The idea is eventually to learn to become an objective observer of your own thoughts, words, and deeds. Your first line of defense against committing a trading error is to catch yourself thinking about it. Of course, the last line of defense is to catch yourself in the act. If you don’t commit yourself to becoming an observer to these processes, your realizations will always come after the experience, usually when you are in a state of deep regret and frustration. (Mark Douglas)

 

[zdo 20]

]... Because the process of becoming consistent is psychological in nature' date=' it shouldn’t come as a surprise that you’ll have to start paying attention to your various psychological processes.

 

"The idea is eventually to learn to become an objective observer of your own thoughts, words, and deeds... If you don’t commit yourself to becoming an observer to these processes, your realizations will always come after the experience, usually when you are in a state of deep regret and frustration. [/i']"(Mark Douglas)

 

 

An excellent ‘rationale’ for practicing real time vipassana

[DbPhoenix 42]

 

Zen and Art of Poker

Ipersonally am starting to question even this neutral level of 'learning from mistakes'...

 

Depends partly on whether or not the trader has accepted the fact of loss, regardless of how well he follows his plan, assuming that that plan is based on a consistently profitable strategy. If it isn't, and he doesn't, and he hasn't, then he isn't going to learn much if anything from his mistakes.

 

"... 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’

 

So good before the fact journaling is 'what is being considered in this particular situation before determining what to do?" and good after the fact journaling is 'what else could have been considered to improve that trade and its management?' etc

 

(PS Thanks to idax and dbP for the digests of these books)

 

This is why I like Wyckoff's approach: gathering data, weighing the evidence, making the best decision one can based on that evidence, understanding that things don't always work out the way they're "supposed" to, regardless of how diligent one is. T

[zdo 20]

db Thanks for keeping us all inside the normal box

[crabbydog 10]

That wasn't really my question... :\ Ofcourse I know that 14 losing trades in a row isn't "normal", which I why I stopped trading.

 

Depending on the kind of trading you do 14 losers in a row may well be quite possible in a profitable system. If you have say 30% winners and you make 4 points in each winer and 1 on each loser you will have a nicely profitable system (many trend following systems work much like this) but the losing runs could easily reach 14 or more and a drawdown of 50% or more is also quite possible.

 

If you have analysed your trading approach thoroughly in advance you would know this and be prepared for it mentally an duse money management to keep profitable and keep drawdowns acceptable to you.

Edited February 17, 2009 by DbPhoenix
To conform to previously edited post

[traderpsyches 10]

RULE #19: Make sure you know when you're on a cold streak... Y

 

The idea is eventually to learn to become an objective observer of your own thoughts, words, and deeds. Your first line of defense against committing a trading error is to catch yourself thinking about it. Of course, the last line of defense is to catch yourself in the act. If you don’t commit yourself to becoming an observer to these processes, your realizations will always come after the experience, usually when you are in a state of deep regret and frustration. (Mark Douglas)

 

[/i]

 

This is great stuff - the only thing I would add is to become an objective observer of what feelings you have - ... because they are there - underlying the thinking and the doing. By bringing the feelings to the surface, it become much easier to interrupt their ability to drive the auto-trade which is really a function of acting out a feeling rather than noticing it. ..jmho.

[Flojomojo 10]

Don't know wether there is more to come, but for those wanting to file this nice thread I put the rules together in a word file.

 

Enjoy reading,

Flojo

Zen_and_the_Art_of_Poker.doc

[evolved trader 10]

very nice, thanks for sharing.

 

Thats great advice. Being present and witnessing our emotions while trading.

 

Cheers,

Ryan

[892king 10]

This is a good book although I prefer Poker Mindset.

How many of you are, or were, poker player btw?

[Sherlock 10]

Oh so true.

 

Even more so is the related corollary:

 

"Fast charts, more trades, less money. Slow charts, less trades, more money."

 

Or something like that.... :haha:

 

-fs

 

The timeframe that a trader is using to make trade decisions is in direct proportion to the experience that the trader has.

 

Sherlock