Poker & Fast Intra-Session Trading

[UrmaBlume 10]

I do all the training for a small, closed, private group of traders. Those trainees that do the best are almost all online poker players.

 

In poker everybody at the table has access to the same information. Each player can see the amount of money bet or raised, the amount in the pot, the amount in front of each other player and the physical actions and reactions of everybody at the table.

 

It is the player who can best input and analyse all of this to make timeley, strategic moves that will win the most over the long haul.

 

In the markets all technical information is derived from ticks. No matter what technical work we are talking about - it is all formulated from some combination of tick data. Everybody has access to this same tick data - it is the processing and trading protocols that separates the winners from the others.

 

My best trader is a young man from Denmark who, when he is not trading, plays in 10 short-handed no-limit holdem games at the same time. That is close to 1,000 hands of poker per hour. On a busy day he will make close to 200 round trips in the S&P day session.

 

We find that the shorter term the projection the more reliable the projection and that the best place to trade is just one notch above where order decends into chaos. This threshold is different for everybody.

 

Long-term successful intra-session trading is not about instinct, divine inspiration, spontaneous intellectual combustion or any other human quality. It is about method and data processing.

 

Every transaction creates a particle of data - the tick. All technical market trading information is derived from these ticks. Ticks are the atoms of information about the technical condition of the market. Each tick is composed of the sub-atomic information particles of time and date, exchange, price, bid/asked and the size of the transaction.

 

These atoms are combined into such familiar data vessels as a single bar on a 5-minute bar chart, a profile of the market or a candlestick. For a 5-minute bar all of the ticks during a given 5-minute period are combined into a data vessel and present such molecules of information as the open, high, low, close, total volume, up-volume and down-volume for that particular 5-minute period.

 

Further, these molecules of information from data vessels such as the 5-minute bar or the 500-share/contract/tick bar are combined and manipulated into countless indicators over time frames that range from the tick to years. The sums of all these particles of information represent the price/time/volume continuum that is the essence of every market.

[BlowFish 10]

I Have to say I have little more than a cursory interest in poker though there are a several members here that are players.

 

As to your second thesis I have to say its a very eloquent description of a 'bottom up' approach to viewing market data, mind you I would hardly expect a top down you (based on what you have posted here so far). A good analogy all the same.

[UrmaBlume 10]

I Have to say I have little more than a cursory interest in poker though there are a several members here that are players.

 

As to your second thesis I have to say its a very eloquent description of a 'bottom up' approach to viewing market data, mind you I would hardly expect a top down you (based on what you have posted here so far). A good analogy all the same.

 

BlowFish,

 

Thanks for more kind words.

 

It says mostly Europe, lucky you. I miss it. Used to trade from an office in Finnsbury Circle, London, did a bit of consulting for a poker site in Gibraltar and, ever since my days as a sailor, have alway loved Amsterdam.

 

cheers

[brownsfan019 17]

I enjoy playing - online and live.

 

There are similarities between poker and trading; and there are some considerable differences as well.

 

In terms of poker playing, been having fun playing these 'double or nothing' tourneys on pokerstars. 10 person sitngo where the top 5 get their entry fee doubled and that's it. Don't play down to top 1, just top 5. I'm enjoying this structure much better than the standard tourney format.

[darthtrader3.0beta 10]

In poker everybody at the table has access to the same information.

 

Ehh...wrong.

The only reason poker is fun is exactly because of the skew of hidden information.

[darthtrader3.0beta 10]

In terms of poker playing, been having fun playing these 'double or nothing' tourneys on pokerstars. 10 person sitngo where the top 5 get their entry fee doubled and that's it. Don't play down to top 1, just top 5. I'm enjoying this structure much better than the standard tourney format.

 

What do you play on? I have an account on full tilt but its only 50 bucks.

I would like to check this out but so far it seems like online tournaments are highly flawed and boring. An interesting observation is that if you go in a play money tourney, people quickly figure out the optimal strategy is to go all in ASAP to get a big stack. With real money they try to grind it out more and play technical. The fact that real money vs play money on the line does not change the optimal strategy for the rules of the game, it only changes the way the players play. The cool part of that though is that with real money on the line, real money tournament players are actually playing far more sub optimal strategy than play money players..at least in the early rounds..

http://www.youtube.com/watch?v=Gq3zZbj8TDE

[UrmaBlume 10]

Ehh...wrong.

The only reason poker is fun is exactly because of the skew of hidden information.

 

The point is not about how well someone might be able to hide information but rather about what indications there are about such hidden information is available to everyone at the table as well as the more obvious inputs - Main point is that it is the superior processing of raw raw inputs that give the winning player better information and we believe that information = equity.

[UrmaBlume 10]

What do you play on? I have an account on full tilt but its only 50 bucks.

I would like to check this out but so far it seems like online tournaments are highly flawed and boring. An interesting observation is that if you go in a play money tourney, people quickly figure out the optimal strategy is to go all in ASAP to get a big stack. With real money they try to grind it out more and play technical. The fact that real money vs play money on the line does not change the optimal strategy for the rules of the game, it only changes the way the players play. The cool part of that though is that with real money on the line, real money tournament players are actually playing far more sub optimal strategy than play money players..at least in the early rounds..

http://www.youtube.com/watch?v=Gq3zZbj8TDE

 

I appreciate your references to game theory jargon.

 

I wrote a book on odds, probabilities and game theory in Holdem and Omaha, have done consulting for one of the major online players and I must say your point is wrong about optimal strategies in play and real money games because the play is different. The near "all in all the time" strategy some use in play money games won't work at all in real money games and further is not even the optimal strategy for play money games.

 

There are million dollar tournaments every week, 6 figure tournaments every day and cash games with hundreds of thousands of dollars on the table and you call that boring? As to the tournaments being flawed, certainly some are structured differently from others but the complete player should know these differences and be able to compete in all of them. Though with 50 bucks in your account and plainly not much knowledge about the game I can see where you miss both the action and the point.

[brownsfan019 17]

What do you play on? I have an account on full tilt but its only 50 bucks.

 

On pokerstars. As my post said.

 

[darthtrader3.0beta 10]

I appreciate your references to game theory jargon.

 

I wrote a book on odds, probabilities and game theory in Holdem and Omaha

 

Well then what is that book? I just got Bill Chen's book a month ago and I can easily say its the most mind blowing book I've ever read. Exactly because someone without the math background can extract concepts from it and apply it to other things. I will buy your book in a second if you "give away" the author and title....

[darthtrader3.0beta 10]

your point is wrong about optimal strategies in play and real money games because the play is different. The near "all in all the time" strategy some use in play money games won't work at all in real money games and further is not even the optimal strategy for play money games.

 

That begs the question then that Gus Hansen's play in that game was sub optimal? Considering he had to win, I don't see what else he could have done better. The real variable there was when to let off.

I don't see how that play is different than a tourney....actually I would think that kind of play becomes more optimal with the number of players in the tourney...

[darthtrader3.0beta 10]

The point is not about how well someone might be able to hide information but rather about what indications there are about such hidden information is available to everyone at the table as well as the more obvious inputs - Main point is that it is the superior processing of raw raw inputs that give the winning player better information and we believe that information = equity.

 

Well no..you come from this from the perspective of the "quant trap"...You miss the obvious context of the information that there even IS hidden information...Nothing could be more obvious.

Do you really want to argue there is not hidden information in poker of all games? We play heads up, I obviously don't know your hole cards and you don't know mine..thats pretty obvious hidden information. The interesting part of that function though is that the hidden information is actually the most important variable to the function you are trying to model.

It matters not at all how fast you can compute dividing by nothing. That to me is the "quant trap" and macro why we are in the state we are in macro economics wise.

The more interesting part of your post is there is probly an edge even to flawed models that are better than REALLY flawed models...that does not change the fact your models are still flawed..sub optimal..

[UrmaBlume 10]

Well then what is that book? I just got Bill Chen's book a month ago and I can easily say its the most mind blowing book I've ever read. Exactly because someone without the math background can extract concepts from it and apply it to other things. I will buy your book in a second if you "give away" the author and title....

 

Bill Chen wrote a great book but most without a math background find it to be a bit tough.

 

My book, and since you ask, "Practical Poker Math," is a much more basic work. It is aimed at the broader market of beginning and semi-pro players. It gives a brief introduction into the concepts of game theory in poker and is the only work I know of that presents a complete workup of the odds in Omaha as well as Holdem.

 

I must take small issue with your points on optimal play - Just because Gus did it doesn't make it optimal as eveidenced by the fact that many player have learned how and when to come over the top of his bets. Also be assured that in the real poker world play money strategies get killed in real money games.

[brownsfan019 17]

Found the book on Amazon for anyone interested.

[darthtrader3.0beta 10]

Bill Chen wrote a great book but most without a math background find it to be a bit tough.

 

My book, and since you ask, "Practical Poker Math," is a much more basic work. It is aimed at the broader market of beginning and semi-pro players. It gives a brief introduction into the concepts of game theory in poker and is the only work I know of that presents a complete workup of the odds in Omaha as well as Holdem.

 

I must take small issue with your points on optimal play - Just because Gus did it doesn't make it optimal as eveidenced by the fact that many player have learned how and when to come over the top of his bets. Also be assured that in the real poker world play money strategies get killed in real money games.

 

Well if I want to call myself "darthtrader" on here you are certainly the "emperor"...

 

I'm not going to buy your book though because I understand the marketting behind it, its quite clever and fills a niche like any good business idea.

Chen is a shitty poker book from the standpoint of selling books, but a lovely intro to bayesian ideas with a context, which to me is what every single intro to bayesian probability lacks.

Have you ever got into Jaynes "The Logic Of Science"?

As far as Gus I was trying to bait you into an arguement to vet you but you crushed me with one punch.

I think what he shows is there is basically too much randomness to poker to really game it optimally, his stategy has been gamed, why he is bankcrupt.

Thats not evidence though that kind of strategy is not optimal if you "need to win" like in a tourney...against the "herd"..To me its evidence that the entire idea of a poker tourny is flawed.

Which is why I only have 50 bucks in my poker account...I don't make stupid bets I don't understand.

[UrmaBlume 10]

Darth,

 

I am humbled by your words, thank you.

 

As to poker, there are more than a handful of, mostly young and tech savvy, players who have "gamed" the game of online poker and make well into 6 figures each year playing it. Some at home listening to loud music and one guy I know doing it from a coffee shop on a canal in Amsterdam.

 

The point for you is that I don't know any of them that have a bacground more suitable to the task than yours. If you could bring yourself to think of what you call flaws as opportunities to out game it, you would be a killer.

 

 

cheers

[shortline 10]

Hey all,

 

I've just joined the forums here - I'm actually a former online poker player who is graduating from college and now looking to make it in the world of trading. I used to play shorthanded cash on 8-12 tables as well as multi-table tournaments. I have noticed a vast amount of similarities in both the technical skills and psychological skills required as I've tried to make the switch.

 

There are basic profitable systems in poker that are of course subject to the user's discretion when implementing. Good players commit to such a system - they only play certain hands before the flop, and only from certain positions, and a certain percentage of the time they will raise, and a certain percentage just call. From a game theory standpoint their approaches are rarely exploitable, and they often succeed in the short run.

 

But great players have to understand so much more than this. You have to understand the dynamics of a table - how many players are seeing the flop, how many raises are being made. You have to understand how often you are raising and how other players might see your actions. You can't just look at your cards and figure out if it's the best hand. You might have a great hand, but poker is a game of relativity.

 

As I've transitioned into trading, I've found that I'm far better prepared psychologically than the books tell me to expect. They expect me to be shocked when my trades don't work over 50% of the time. They expect me to be shocked that most traders blow their accounts early. Well, I'm used to giving up on hands when I miss the flop and the setup I was hoping for no longer holds. And most online poker players (including myself) bust quite a few initial deposits before gaining an understanding of the game.

 

There are numerous software programs available for poker players who want to gain an edge on their opponents. You can see the stats of your opponents in real time - you have access to as many numbers as you can conceivably handle. Transitioning to trading, I was surprised by how few indicators I actually tend to check up on compared to when I make my decisions in a hand of poker. It might just be that I'm not sophisticated enough yet, but it's certainly not overwhelming.

 

The difference of course is that in poker, you are dealing with a very small number of opponents who you can profile very well, but you can never see their cards. In trading, you see the same market and the same numbers, but you're not sitting at a table with the whole market, watching their perceptions change, having a solid feel for how they see the trends, etc.

 

Anyway, I've found the transition fascinating and I'm definitely looking to learn a LOT more about trading as I pursue it as a career. If anyone has any suggestions for how to start out as a trader, or if anyone wants to talk about how poker relates to trading and markets, please let me know. Glad to be here.

Edited February 4, 2009 by shortline

[brownsfan019 17]

Hey short,

Good to have you. I enjoy talking poker as trading is my 'job' and poker is my 'hobby'.

 

I think if you've played serious poker then you are ready for the emotional and psychological roller coaster that trading can be at times. You'll be ahead of the game in that aspect.

 

One big difference between poker and trading from my view is that as you've stated, you can profile your few opponents at the poker table and exploit that; whereas in trading your 'opponents' are out there and in huge numbers. Just when you think you've profiled them, they will do a 180 on you and make your head spin.

 

If/when you can get what many call an 'edge' in trading, it can be easy (relative of course) to make money in the markets. There is no getting rivered in the markets - either you are right or wrong. A one outer doesn't appear in the markets and kill your trade - again, either you are right or wrong.

 

I don't want to take up this thread any more, so feel free to start another thread if you'd like. I mod the candlestick corner.

[darthtrader3.0beta 10]

Transitioning to trading, I was surprised by how few indicators I actually tend to check up on compared to when I make my decisions in a hand of poker.

 

The biggest difference between poker and trading is that the gulf between you and Ivey in poker is a million times less than the gulf between you and someone like Simmons...

http://en.wikipedia.org/wiki/James_Harris_Simons

 

The cool part of trading though is that your never "heads up" with Simmons...