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#2
10-01-2007, 02:03 PM
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Re: Difference Between Poker and the Stock Market
[ QUOTE ]
Here's one that Barrons screwed up when they wrote about me and other poker players. They suggested that investors should take a hint from poker players who realize that they should quit a game when they are losing, ignoring ego and realizing their results might indicate that they are an underdog . But the analogy is badly flawed. Because your losses only tell you that you might have made a mistake when you SAT DOWN. In poker that usually means you should quit. But in the market it very often does not. Reason being, of course, that the "bad" buy, could have turned into a good hold, at the new lower price. [/ QUOTE ] No, I think you have it backwords, regarding the last paragraph. 
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#3
10-01-2007, 06:38 AM
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Re: Difference Between Poker and the Stock Market
[ QUOTE ]
In poker, you're betting on cards; in the market, stocks. Can anyone come up with another? I can't. [/ QUOTE ] You're kidding right? We can beat this subject to death again but one is a zero sum game more or less while the other isn't. Honestly I don't see too many similarities.
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#4
10-01-2007, 06:47 AM
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Re: Difference Between Poker and the Stock Market
[ QUOTE ]
[ QUOTE ] In poker, you're betting on cards; in the market, stocks. Can anyone come up with another? I can't. [/ QUOTE ] You're kidding right? We can beat this subject to death again but one is a zero sum game more or less while the other isn't. Honestly I don't see too many similarities. [/ QUOTE ] If OP is refering to stock trading then there are many similarities. They are both negative sum games. Poker has the rake and stock trading has commissions and spreads. Both are very difficult to overcome for the vast majority of people. There are also similarities with psychology, variance, risk management, position sizing (stakes in poker), EV plays, knowing when to push your edge, taking shots and calculated risks. There are so many similarities (IMO) but they've already been widely discussed. I believe there'd be distinctly fewer similarities between poker and investing than poker and trading.
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#5
10-01-2007, 08:02 AM
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Re: Difference Between Poker and the Stock Market
Why do people insist on comparing the two? The stock market significantly affects/is affected by our economy. Poker is a stupid game that a handful (relatively speaking) of people make money with.
Poker has various complexities but one can be successful at lower stakes by reading an easy book and applying a few basic concepts. It's a [censored] card game. The stock market isn't. As a side note: It pisses me off whenever I read here, "Oh I run so good at poker maybe I should become a trader because OMG they're so alike."
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#6
10-01-2007, 10:25 AM
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Re: Difference Between Poker and the Stock Market
[ QUOTE ]
Why do people insist on comparing the two? [/ QUOTE ] Maybe because poker and financial trading are both negative sum gambling games that can be profitable through risk management, skill, and a bit of luck. There are valid similarities.
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#8
10-01-2007, 02:36 PM
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Re: Difference Between Poker and the Stock Market
[ QUOTE ]
They are both negative sum games. Poker has the rake and stock trading has commissions and spreads. Both are very difficult to overcome for the vast majority of people. [/ QUOTE ] Commissions are really insignificant IMO. If I buy $100,000 of stock with a $10 commission that's nothing. The rake in poker is much more difficult to overcome. Second of all even if one is doing day trading in a very limited number of stocks, they have the upward bias of the market working for them. I realize that people are not compensated for taking individual company risk and the systematic risk varys from stock to stock (GE correlates more with market movements than somehting like KKD for instance) but there is an upward bias nonetheless. Not true in poker. Sorry the market makers in stocks and the house in casino poker are not the same thing at all, not even close.
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#9
10-01-2007, 03:08 PM
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Re: Difference Between Poker and the Stock Market
[ QUOTE ]
Commissions are really insignificant IMO. If I buy $100,000 of stock with a $10 commission that's nothing. The rake in poker is much more difficult to overcome. Second of all even if one is doing day trading in a very limited number of stocks, they have the upward bias of the market working for them. I realize that people are not compensated for taking individual company risk and the systematic risk varys from stock to stock (GE correlates more with market movements than somehting like KKD for instance) but there is an upward bias nonetheless. Not true in poker. Sorry the market makers in stocks and the house in casino poker are not the same thing at all, not even close. [/ QUOTE ] If you're relying on the 'upward bias' in the US market as a day trader, then you're in the wrong biz. Just buy bonds and forgo churning commissions. Being a market maker is more analogous to table games in the casino than to the rake in poker. The casino, or market maker, can lose on any given bet but in the long run EV becomes actual value.
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#10
10-01-2007, 09:09 PM
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Re: Difference Between Poker and the Stock Market
[ QUOTE ]
[ QUOTE ] Commissions are really insignificant IMO. If I buy $100,000 of stock with a $10 commission that's nothing. The rake in poker is much more difficult to overcome. Second of all even if one is doing day trading in a very limited number of stocks, they have the upward bias of the market working for them. I realize that people are not compensated for taking individual company risk and the systematic risk varys from stock to stock (GE correlates more with market movements than somehting like KKD for instance) but there is an upward bias nonetheless. Not true in poker. Sorry the market makers in stocks and the house in casino poker are not the same thing at all, not even close. [/ QUOTE ] If you're relying on the 'upward bias' in the US market as a day trader, then you're in the wrong biz. [/ QUOTE ] Of course I made no such recommendation or claim. [ QUOTE ] Just buy bonds and forgo churning commissions. [/ QUOTE ] Of course this has nothing to do with the OP or what I wrote about. [ QUOTE ] Being a market maker is more analogous to table games in the casino than to the rake in poker. [/ QUOTE ] Nope. [ QUOTE ] The casino, or market maker, can lose on any given bet but in the long run EV becomes actual value. [/ QUOTE ] Market makers don't fade "bets" from investors offering odds that are unfavorable to investors and they don't cut pots either.
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