Poker – Day Trading? Trading Probabilities Not Possibilities

Poker and Day Trading.  Trading Probabilities not Possibilities Warren Buffett once said:

“I am a better investor because I am a businessman, and a better businessman because I am an investor.”

I feel the same way about trading. I am a better trader because I am a successful poker player and I am a successful poker player because I am an experienced and disciplined trader day trader.

Poker and Day Trading.  Trading Probabilities not Possibilities

Each = zero sum games against flawed human competitors favoring courage, discipline, creativity, emotional control, deep analytical ability, and risk and money management.

The skilled poker player never has full certainty… one reason is he never gets to see his opponent’s hole cards.

What’s more, the skilled poker player never has advance knowledge of what cards are coming out next on the board. — he only has the valuable ability to estimate probabilities… and attempt to understand various scenarios based on situational events.

A professional class poker player, never has access to full information, Ever. His data is always imperfect.

How is this you may ask?

The answer, above and beyond the combined impact of superior decision making, is that poker is a game of expectation, and so is trading. When you realize the deep implications of this, you stop worrying about certainty and focus on probabilities.

Experience is a very big asset in poker and trading. Gigantic. But why is experience so valuable in both games?

Not because experience helps you predict the future… but because experience helps you properly game plan and thus arrive at accurately discerned probabilistic outcomes.

Poker and Day Trading.  Trading Probabilities not Possibilities:

  • No one knows the future, including you or me.
  • But some understand situational content and probabilities better than others.
  • This understanding gives us a handle on probabilistic outcomes.
  • We can then use that understanding to make +probability (EV) decisions.
  • Not on a certainty basis for any individual trade or hand
  • But on a positive expectation basis via repeated trials over time using information and probabilities.
  • It’s like having the “house edge” in a casino.
  • You don’t always win…
  • But the odds are always conspiring in your favor…
  • This long-run result that approaches certainty over time and we want to be in this for the long run.

The worst day traders in the world as well as the worst poker players play “Possibilities not Probabilities

Both professions require the same 4 skills:

  • Discipline (know your responsibilities to yourself and bankroll)
  • Patience ( are you going to play every hand or make any and every trade?)
  • Bankroll management ( Odds, odds, odds)
  • Psychological and emotional control. (traders and players risk capital and must be able to handle profit and loss fluctuations like a robot. If they do, they can quickly begin to excel in both professions.

Poker and Day Trading.  Trading Probabilities not Possibilities

Just crunch your numbers, run the odds, and come up with the right decision based on awareness of contingent probabilities (not possibilities), from the perspective of always making the move that proves profitable over thousands of repeated trials over time.

If you trade or play on possibilities, find another job and fast, then you may thank me.

If you trade and play based on probabilities, dig in deep, do your homework and join many of us who have been playing and trading for decades successfully, because we recognize and respect what skills are necessary to be consistently successful.

Trade on Probabilities NOT possibilities.

Poker and Day Trading.  Trading Probabilities not Possibilities

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