similarities between sport, trading and poker

7/28/2019 Similarities Between Sport, Trading and Poker

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he answer is that there are many dierent connections betweenthe three which I have been able to see frst hand in my workas a ormer sports psychology consultant who has or the lastsix years specialised in working with fnancial traders and more

recently added poker players to the roster as well. In this articleI would like to share with you a ew insights into some o thepsychological and perormance actors that successul peoplein all three areas share and to provide you with some o thecoaching techniques and strategies that I utilise with my ownclients to help you to raise your own trading game.

High Performance Is Multi-Dimensional

At the highest levels perormance in sports, trading andpoker are not simply about skill, there are other actors

that determine success.

In sports we can look at perormance across our areas orpillars: skills/technical physical/ftness tactical/strategic mental/psychological

I utilise a similar ramework in trading where categories are skills/knowledge, strategy, risk managemand psychology (see rader Perormance Proile beloand I also apply this to poker with risk managem

becoming staking.

Winning at proessional sport Proftable fnancial trading Successul poker...What is the connection?

Trading Performance Profile

10

10

10

10

0 StrategyPsychology

Risk Management

Skills/Knowledge

Diagram : Trader Perormance Profle

Sport, rading and Poker

Where High Perormance Meet

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FX TRADER MAGAZINE April - June 201


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Te best athletes, traders and pokerplayers are all willing to take risk,

to step out o the comort zone

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64 FX TRADER MAGAZINE April - June 2011


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Create The Conditions and Opportunity ForSuccess

Victorious warriors win frst and then go to war, whiledeeated warriors go to war frst and then seek to win.Sun zu (From Te Art o War)

I n the b o o k hin k L ike A Win n e r a u thYehuda Shinar ta lks about creating tconditions and opportunities or success, wh

I oten reer to as stacking the odds in yoavour . When you turn up to play in spoor poker or trade the markets even beore ystart there are things that you can do or not that wil l e ither increase your chances o succo r d e c r e a se the m. O n e o the mo st b a s ic aundamental perormance processes that I and insti l within my c l ients is to ensure ththey warm-up or prepare . In trading tmeans the research and analysis you do, planna n d str a te g y d e ve l o p me n t , l o o kin g a t p o ss iscenarios that may occur and how you will reactthe m ( Wha t I S c e n a r io p l a n n in g ) , a n d aensuring that you are mental ly and physicaready, in a positive state .

Performance Is State Dependent

It s the last ew seconds o the game and tbasketball player has the ball on the ree thrline to make the winning shot. What inluen

whether he s core s or mi sses ?

It s a ast moving market and the inanctr a d e r ha s a e w se c o n d s to ma ke a d e c i s io nto whether to place his trade or not, and i does, to execute it correctly. What inluen

whether the tra d er e xe cutes wel l or n ot , maye ve n a t in g e r s?

RAISE YOUR GAME

Complete the Trading Performance Prole by rating your currentabilities out of a maximum of 10 on the diagram, where a 10would be your best possible.

Once you have marked your score on each of the four scalesjoin the points together to create a diagram that gives a visualrepresentation of your overall scores (see below).

Look at your relative areas of strength and areas fordevelopment,

1. Build on your strengths.

2. Address the key areas for development. Take action.Implement new ideas, read, ask people, get some training,mentoring, coaching.

RAISE YOUR GAME

What can you do before trading that stacks the odds in youfavour?

How can you prepare most effectively to trade the markets?

Have you considered the What Ifs?

Trading Performance Profile

10

10

10

10

0 StrategyPsychology

Risk Management

Skills/Knowledge

Diagram : Example Trader Perormance Profle Showing RelativeStrengths/Areas For Improvement

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Its a key hand in poker and the player has todecide whether to play or old. What inluences

what the p layer d o es ?

In al l the above cases the one commondenominator is their mindset . In a l l three it i simportant to have the required ski l l s , abi l it iesand knowledge to perorm to a high level ,however at the moment o execution the mostimportant actor is what is going on internal ly and how this makes them ee l . Our ee l ings ,our state, underpin our perormances. When a

proess iona l g oler misses a short putt to win a

big tournament or a tennis player double aultson match point it is not because o a lack o a skillor abil ity it i s because their state has changedand their perormance is inhibited. When tradersdont pul l the tr igger , pul l the tr igger too oten,trade too big , cut proits , run or chase lossesit is not because they do not know what to do,but because they are unable to do so becausetheir state has changed, and their abil ity to actin rational and logical ways is compromised

through a process known as cortical inhibitionwhere bloo d low to the ronta l lobes smar tbrain - is reduced and the emotional brain takesover. Discipline trading is as much a unction oemotional management as anything e l se .

Poker i s math, intuition, nerves and analyti cal

thinking. The moment that emotion enters the

eq u a t i on i s u s u a l l y th e ex a c t momen t w h en th e

trader and the poker player s tart to lose money.

Pe ter Ka r r o l l , CE O o I A M Co r p .

Our emotions have a big impact on how think and this means that being able to make tb e st d e c i s io n u n d e r p r e ssu r e c a n b e d i ic u

he b e st p o ke r p l a y e r s a n d tr a d e r s a r e a b l ema ke the ir d e c i s io n s b a se d o n l o g ic a l , s t r a tethought, with minimal intererence rom themotions. Being able to learn to keep coand coherent under pressure is a key skil l a c qu ir e .

In the world o high perormance sport the neto help players to regulate their emotions

wi de ly re co gni se d as bei ng cr it ic al to su cc es s a

many teams/nations are now beginning to utilbioeedback and neuroeedback training alongstraditional sports psychology interventioto assist with this . his is a process that I currently utilising mysel with my own clienenabling them to develop the ability to establ

pe ro rman ce en ha nci ng st ates on deman d an d build resi l ience to cortical inhibition and whis sometimes termed as emotional hijacking .

Diagram : Our Perormance Is Underpinned By Our State

RAISE YOUR GAME

One very simple way to begin to manage your emotions is tbegin to create an awareness of how you are feeling and thimpact on your trading throughout the day.

On a 1-10 scale where 10 is your Ideal Trading State (how yofeel when you are trading at your best) and 1 is the other end that scale, regularly check in and gain awareness of how yoare feeling.

Good questions to ask yourself to increase your awarenesare:

Where would I rate myself right now 1-10? What is it I am feeling that lets me give myself that score? What am I doing to feel this way? What is the potential impact of this on my trading? What, if anything, do I want to change?

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Confidence Is Key

When e ver I work with sp or ts p e op le , tra d er s

or poker players and we are discussing mentalor emotional states it is an absolute given thatthe word conidence will appear. Conidence is

pr obably the ke y ingre dien t ci ted by my clien tsa s b e in g c r i t ic a l to

p er orming wel l .In sport, conidenceenables you to play

your b est a n d p utyourse l into g amewinn in g s i tuations

- you are wil l ing to step-up. In

p o ker, when yo uhave good cards, conidence al lows you to back

yourse l an d e ven to g o Al l In where re qu ire d .In trading, conidence enables you to back youro w n j u d g e me n t , to ta ke g o o d tr a d e s , b u t a l soimportantly conidence enables you to have thed isc ip l in e to b e se l e c t ive in y o u r tr a d e s , to w a it o r o p p o r tu n it ie s .

Interestingly one o the key outcomes o being c o n i d e n t i s a g r e a t e r w i l l i n g n e s s t o t a k e r i s k .

he best athletes , traders and poker playa r e a l l w i l l in g to ta ke r i sk , to s te p o u t o tc o m o r t z o n e . his r i sk ta kin g i s n o t r e c kl e

i t i s c a l c u l a te d a n d in te l l ig e n t . E mb r a cin g ris a key actor visible not just in top traders a

p o ker p lay er s b ut in su c c ess u l p e op le a cral l spectrums o l ie . Psychological ly howev

most people prec o m o r t a n d sa to r i sk . Pe o p l e wlack conidence l e s s w i l l in g to tar i sk , the y a r e mo

pron e to sta yi

c o m o r ta b l e asae, and as a resrare ly perorm

the ir p o te n t ia l .

Decisions Making Know When To Hold EKnow Wh en To Fold Em

here is a large e lement o randomness in pok- y o u d o n o t g e t to c ho o se the c a r d s tha t y

are dealt and variance is high. It is possib

RAISE YOUR GAME

Here are 5 steps that you can take to develop and buildcondence:

Develop your trading skills and knowledge competence isthe key underpinning to condence Be prepared the feeling of being ready and prepared plays a

big part in creating condence Learn to attach condence to how well you have traded andnot just to how much money you have made. A tough onefor traders, but for those who make the transformation it is apowerful and positive one. Become aware of the self-talk you use your thoughts whennegative can be very destructive to your feelings of condence;aim for a more positive and optimistic explanatory style Build on your strengths and successes.

Learn to attach conidenceto how well you have tradedand not just to how much

money you have made

RAISE YOUR GAME

In his book Success Principles Jack Caneld introduces thfollowing formula:

E + R = O

Events + Reactions = Outcome.

We cannot control the events that happen to us, but we can contr

our reaction to those events and therefore we can inuence thoutcome. It is important to recognise that sometimes we have tlet go of ideal outcomes as the events we are encountering wnot allow for them, and so the goal when faced with any giveevent is go for the Best Possible Outcome. Having the mentexibility to be able to react in more positive and performancenhancing ways is a skill shared by top performers, after all oexperience of any event we encounter is purely in relation to ouown perception of that event.

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Susquehanna has held in-housepoker tournaments to recruit tradersand monitor decision-making skills

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to ha ve r u n s o b a d c a r d s a n d l ike w ise r u n so good cards and al l you can do at anytime is

p lay them a s b e st a s you can . L ike wis e in sp or t

and in trading we cannot a lways determinewhat e vents a nd opp or tun itie s c ome our way,we cann ot predict the cards as such, so the realskill , and the key to success is how you respond tothose events when they occur .

F o c u ss in g o n the d e c i s io n s ma d e , a n d n o t theresults o them, is one o the undamentals oenhancing trading perormance . he key tosu c c e ss in a n y p e r o r ma n c e a r e n a i s a n a b i l i ty to be able to ocus on the process the how o

p er orman ce a n d to b e a b le to sepa rate outthe process and the outcome when you come toevaluating your per ormance . You can play wel lin sp o r t a n d l o se a n d y o u c a n p l a y b a d l y a n d

win. Like wise in poke r and trading where thed e c is io n s y o u ma ke d o n o t a l w a y s ha ve a n e qu a lr e a c t io n o n the r e su l t o r g u a r a n te e su c c e ss .

Ask yourse l not just How much money havmade or lost? but How wel l have I traded?

Th e i mp a c t o th e c oa c h i n g h a s been th a t I amor e a t ea s e a n d c on i d en t . I a m ma k i n g bet

trading dec i s ions . This has l ead to a l eap in P&

as the resu lt o co nsis tent good tra di ng is pos it

P&L ov e r t i me.

rader , FX Forwards , Deutsche B ank

Resilience Learn To Handle Losses Like

W inn er

Ver y e w p e op le in sp or t win a l l the t ime ; g otr a d e r s c a n b e w r o n g a t l e a st ha l o the t imin p o ke r the va r ia n c e i s so g r e a t tha t ve r y

pe ople at the top le vel win consistently. On to this, athletes may also ace not getting pickor getting injured, traders may ace extend

periods o draw dow n and poke r players l ike wc a n o te n ha ve l o n g p e r io d s w itho u t a g oinish especially in tournament play. What tme a n s i s tha t d e a l in g w ith l o sse s a n d se tb a c k

a key part o the game and this requires a persto be resil ient, to be able to bounce back , aid e a l l y a s qu ic kl y a s i s p o ss ib l e .

POKER AS A TOOL FOR TRAINING TRADERS

Susquehanna International Group (A US trading group) hasbeen using poker to teach its new traders since it was foundedin 1987, said Pat McCauley, who heads the privately held firmstrader-development program.

Susquehanna has held in-house poker tournaments to recruittraders and monitor decision-making skills.

The trainees learn to use information they see in the marketplaceto infer what motivates others, helping them make better prices.Its the same way poker pro Phil Ivey, considered among thegames greats, makes bets based on what he sees among hisopponents, McCauley said.

What professional poker players are really good at is takingthis information thats relatively subjective, quantifying it andmaking it objective, and thats what trading is about, McCauleysaid.

Source: Bloomberg News: Harvard Poker Pro Says Texas HoldEm Can Teach Traders to Fold

RAISE YOUR GAME

I see trading resilience existing on three levels, and idealyou want all three to be strong. Take some time to checyour resilience and address any areas possible to raise youthreshold.

1. Financial ResilienceHow much capital you have available.

2. Physical ResilienceHow much physical energy you have available.

3. Psychological ResilienceYour ability to mentally and emotionally deal with losses ansetbacks.

FXCOACHING

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No one l ikes to lose , our ego certainly doesntlike it, and so learning to accept this and be ableto move on, is a key skil l , but not necessarily ane a sy o n e .

Conclusion

S u c c e ss in sp o r ts , p o ke r a n d tr a d in g a r e ve r y r a r e l y a c c i d e n t a l a n d r a n d o m , i t i s i n s t e a d a u n c t i o n o d e v e l o p i n g t h e r e q u i r e d s k i l l s ,k n o w l e d g e a n d i m p o r t a n t l y m i n d s e t . I na n y h i g h p e r o r m a n c e a r e n a t h e r e w i l l b es o m e c o m m o n a l i t i e s a m o n g s t t h e h i g h e s t

perormers a s is e vident across our three area shere and as the s imilarit ies o the arenas c lose

t o g e t h e r a s w i t h p o k e r a n d t r a d i n g w h ema kin g d e c i s io n s u n d e r r i sk a n d u n c e r ta ina r e k e y t h e n t h e c r o s s o v e r b e c o m e s e vm o r e s i g n i i c a n t . S p o r t s p s y c h o l o g y h a s b eu s e d t o h e l p t r a d e r s a n d p o k e r p l a y e r s . P o k

p s y c h o l o g y h a s b e e n u s e d t o h e l p tr a d eraders have used their ski l l s and abil it ies

b e c o m e s u c c e s s u l a t p o k e r .

W h a t e v e r y o u r g a m e y o u c a n r a i s e i t o c u ss in g o n a n d d e ve l o p in g y o u r a p p r o ato perormance and the mental and emotiocomponent o it .

Stev e Wa

Dealing with losses and setbacks is a key part othe game and this requires a person to be resi l ien

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similarities between sport, trading and poker

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