Newbie from poker

[Swifty]

Hi all,

As with anyone new to the field I have a ton of questions, but I'll try not to make too huge a post because I'm sure I will learn these things in the coming months.

Firstly, a little background of myself; I'm a 25 year old professional online poker player for the last 3 years. One that has lived life a little too lavishly (travel, unnecessary material items, etc) so my savings relative to income aren't what they should be. I have ~50k in the bank, and have an after tax income of ~100k p/a. I'll also be looking to buy a PPR with my partner at the end of the year.
I have no completed university degree - left halfway on a computer science/business electives course before leaving for poker - and little to no current knowledge of the markets. Of course, I am feverishly digging through all the information I can right now.

Now, what currently interests me (I'm sure it will change) is day-trading - It shares the most similarity to poker. I'm more than content to spend 8 hour days in front of the computer as that's basically what I do now anyway. I realise this is for income generation and that I'd like to also have a small percentage of my capital (20%?) in long term investments for capital growth and passive dividend payout.
My vision of day-trading is making as many profitable trades as possible with any assumed edge that covers the brokerage fee (as if I haven't paid enough rake in my lietime!), of course finding those edges are my problem right now but I plan it to be all TA with as small as 1 minute charting. I haven't even begun learning proper strategies, or the lengthy process of paper trading.

Like I said I don't have formal education or knowledge right now, but what I believe I do have is a very high level of tolerance to emotional swings, concepts of expected value, bankroll management, being self-motivated, driven to learn and I did just test in the 99th percentile for quantitative reasoning.

Question time.

Is my vision reasonable? I realise it's not commonly thought to be easy for a novice. I haven't fleshed out any actual plans for starting capital, strategies etc, yet.

Brokerage fee's for day-trading stocks are huge, best markets for this? Forex? Futures?

What is the variance like in trading? I.E how often would an experienced (read: profitable) trader have a positive day/week/month/year?

Is there a good way to review your trades? In poker I can bring up the hand history and decide if I made the best possible play and make corrections if needed.

In poker I was able to work with a mentor/coach and pay him a percentage of my profits, does this exist besides at a prop shop - that I believe only run in sydney anyway?

Do I need to go out and get a formal education?

Where does my edge come from? Is it that being so small I can make profitable trades that advanced huge systems wouldn't bother touching? I make money from the volatility of people investing in longer term strategies? How do I compete with big business?

Hopefully that isn't too much : I really do get the same feeling while learning about the stock market as I did when I first discovered poker. I can't get enough of it. People told me I couldn't make poker my living and how such a small % make it, I did. I hope I'm going down the same path again.

Thanks for any help.

 

[Gringotts Bank]

It's obvious from what you've just written that you're going to succeed, so really what I say here isn't that important. For someone like you, all you need is a broker (CMC, Belldirect are cheapest unless you want the hassle of IB), live streaming data to your charts and away you go. Watch the depth and see if you can tell who's real and who's fake, who's propping the market, who's holding it down to get more, who's day trading, who's a big insto buyer, who's a robot, and so on. Just like poker.

Learn about trend lines and steer clear of stocks ripe for capital raising.

If you like the idea of replaying trades, have a look at Spark Iguana. They allow you to rewind market depth.

 

[Gringotts Bank]

edit: There's limited opportunities in the ASX spec market once your capital is above a certain amount. Anything you do tends to move the market. So you might be looking at a strategy that scalps small amounts from movements in the blue chip stocks. I can't give any advice on futures or forex, but I do know that those with $$$ prefer the higher liquidity, cheaper brokerage and longer open hours.

 

[Tanaka]

Welcome Swifty, I love playing poker, go to Crown whenever the misses lets me out
IMO, if you can manage your bankroll like you do in poker you are ahead of most newbies already. I can't manage my poker bankroll, just because my mindset is totally different to when I am trading.

I think you would enjoy using software to backtest your strategies, by backtesting you would have an idea of your expectancy and probability, something I'm sure as a poker player you fully understand. But just like poker you can have a high probability but still get called on the river by that f*wit chasing a flush when you're holding trips. Damn girl at Crown, the flop was a rainbow why were u chasing a damn flush?!?!
But in all seriousness you don't need a formal education, you can find most resources on the net and they are free! I'm a big fan of www.investopedia.com for free education and if you wanna get into forex www.babypips.com has an excellent free course. And don't forget read ASF!

As for day trading there are a lot of strategies, you just need to find the one that works for you.

IMO, from my experience with poker (3 years), day trading takes more time to learn than poker. Poker - learn the basics in an hour. Day Trading - well... I challenge anyone to teach the basics in an hour. But to perfect either takes about the same I would imagine.

BTW you weren't shut down by the recent FBI action, I used to use Full Tilt Poker, think I have about $100 sitting in my account, not sure how to get it back. Poker sites money laundering, no one saw that coming LOL

 

[nomore4s]

You really need to look at trading futures or forex imo, so you will need a broker like IB. Trading stocks in the method you described would need a considerable bankroll and your results would not be as consistent imo. Good luck on your journey.

 

[Tanaka]

You really need to look at trading futures or forex imo, so you will need a broker like IB. Trading stocks in the method you described would need a considerable bankroll and your results would not be as consistent imo. Good luck on your journey.

Totally agree, esp. in regards to futures, why play limit hold 'em when u can play no limit?

 

[Misterlazy]

Hi Swifty,

I too am / was a poker professional, so you can be rest assured that there are more people out there who are similar to you and transitioning into the share market.

I have also started reading lots of books and self educating myself, but the one area i haven't tackled is that Tax area.

Any guidance from others around here, with a person who technically has no job and 0 income, what are the rough guidelines to consider when starting up a portfolio with regards to filing forms to the ATO etc.

Cheers

 

[TulipFX]

Video about how good poker players and good traders have similar characteristics. From the movie 'Broke: The New American Dream'.

 

[white_goodman]

which poker site you playing now that FT, pstars etc are looking iffy?

 

[cityburke]

Yo,

I am/was in a pretty similar position to you and thought my story my help a little. I played professional poker for like 4 years on stars and ftp while completing my degree and am now moving into high frequency futures trading. I traded on a sim for a couple of months ago and did alot of research. I then looked for a prop firm and I start at a prop firm propex derivatives in may. I believe its a lot easier to become a consistantly profitable trader working at a prop firm than it is doing it on your own. My understanding however is that it is possible to become successful on your own. Prop shops don't require a formal eduaction I believe if you want to try that route but they do require a passion for trading so it's almost essential to get some experience first.

Anyway here are some thoughts (Acknowledge that I am only a beginner and you should confirm these thoughts before acting on them.)

-I agree with those mentioning futures trading (e.g. the SPI) as a good place to begin thinking about trading. I think interactive brokers has the lowest brokerage you will find and it will probably cost like 100 a month data and news.

-In terms of developing as a trader it appears that quality resources are far fewer than in poker. Some of the courses are good but relatively expensive and I'm not sure if there are training sites or anything for high frequency day trading. There is however a mountain of bad information out there so be wary. Also there doesn't seem to be many good forums openly discussing strategy like for example 2+2 was a few years ago. I don't know if you can get coaches. It just appears to me that the trading community is far more guarded in general and only wants to reveal winning strategies at a heavy price. I have some thoughts on why this is but that's going a bit far off topic.

In regards to reviewing your trades. I know some people film their trading (using perhaps camtasia) and then look over them later. However it seem far harder to determine if a trade is +ev than it is to assess a bet/call/fold in poker(this however is probably due to my advanced level and poker and beginner level in trading). I think(and from everything I read) alot of your education is going to come from experience and in the case of a prop firm mentoring or discussing with other trainees. That is why it may take longer to learn on your own.

-Compared to poker you are probably going to have to spend alot more time in the initial stages not making money and just slugging it out watching the DOM and looking for patterns and doing research and understanding whatever market you decide to trade as unlike poker you don't start playing with people of comparative skill. The upside of this is once you have become consistantly profitable you can increase your volume (akin to moving up stakes) without having to compete against better traders/systems.

For more answers I would recommend the book One Good Trade. It was recommended to me and it probably answers alot of your questions. It is technically about an equity prop firm in the US but it covers alot of what trading is and how traders operate. It mentions that the better traders at their firm are profitable between something like 80-90% of trading days which seems pretty amazing to me.

adam

 

[Swifty]

It's obvious from what you've just written that you're going to succeed, so really what I say here isn't that important. For someone like you, all you need is a broker (CMC, Belldirect are cheapest unless you want the hassle of IB), live streaming data to your charts and away you go. Watch the depth and see if you can tell who's real and who's fake, who's propping the market, who's holding it down to get more, who's day trading, who's a big insto buyer, who's a robot, and so on. Just like poker.

Learn about trend lines and steer clear of stocks ripe for capital raising.

If you like the idea of replaying trades, have a look at Spark Iguana. They allow you to rewind market depth.

Thanks for the advice, it seems right up my alley.
If I may ask, what is the hassle of IB?

Welcome Swifty, I love playing poker, go to Crown whenever the misses lets me out
IMO, if you can manage your bankroll like you do in poker you are ahead of most newbies already. I can't manage my poker bankroll, just because my mindset is totally different to when I am trading.

I think you would enjoy using software to backtest your strategies, by backtesting you would have an idea of your expectancy and probability, something I'm sure as a poker player you fully understand. But just like poker you can have a high probability but still get called on the river by that f*wit chasing a flush when you're holding trips. Damn girl at Crown, the flop was a rainbow why were u chasing a damn flush?!?!
But in all seriousness you don't need a formal education, you can find most resources on the net and they are free! I'm a big fan of www.investopedia.com for free education and if you wanna get into forex www.babypips.com has an excellent free course. And don't forget read ASF!

As for day trading there are a lot of strategies, you just need to find the one that works for you.

IMO, from my experience with poker (3 years), day trading takes more time to learn than poker. Poker - learn the basics in an hour. Day Trading - well... I challenge anyone to teach the basics in an hour. But to perfect either takes about the same I would imagine.

BTW you weren't shut down by the recent FBI action, I used to use Full Tilt Poker, think I have about $100 sitting in my account, not sure how to get it back. Poker sites money laundering, no one saw that coming LOL

which poker site you playing now that FT, pstars etc are looking iffy?

Actually it's basically business as usual on the three poker sites indicted - for non-US customers that is. What has changed mostly for me is the traffic decreasing (40% of Full Tilt players were american, 25% on Pokerstars) and the perception of industry safety both personally and those around me!

I'm still playing on FTP at the moment, I'll re-assess once my cashouts are processed. They are taking quite a while because everyone is rushing to do the same.

Also babypips.com is excellent! Going through all the lessons now. I literally have 15+ tabs in my browser that I'm trying to get through but always add new tabs from interesting links/posts!

Hi Swifty,

I too am / was a poker professional, so you can be rest assured that there are more people out there who are similar to you and transitioning into the share market.

I have also started reading lots of books and self educating myself, but the one area i haven't tackled is that Tax area.

Any guidance from others around here, with a person who technically has no job and 0 income, what are the rough guidelines to consider when starting up a portfolio with regards to filing forms to the ATO etc.

Cheers

I'm in the process of visiting a taxation accountant myself and if you want hard answers it's the way to go about it. The was an article in yesterdays age that you might be interested in. A (foolish) player was interviewed about his 2.6m lifetime earnings and was quite candid about not having to pay tax.
Here's the link.



Thanks for the advice all, Forex is piquing my interest for now. I'm sure I'll have a lot more questions once I know more.

One last thing.. for the life of me I don't know what DOM trading means. What I understand is it's a method to read specifics of a market depth? but don't know how to access it etc.

Cheers!

 

[Gringotts Bank]

There's a few IB threads on here. Some people say it's fine, others seem to have a lot of issues. I have no personal experience, it's just that I avoid things that have a history of technical difficulties. Last thing you want is problems when trying to buy/sell. No other brokers have a troubleshooting thread - that, to me, is a warning sign.

 

[ivanyo]

There's a few IB threads on here. Some people say it's fine, others seem to have a lot of issues. I have no personal experience, it's just that I avoid things that have a history of technical difficulties. Last thing you want is problems when trying to buy/sell. No other brokers have a troubleshooting thread - that, to me, is a warning sign.

The only real problem is you need the equivalent of $10,000 USD to get started. Once that's done, its fine.

Some people say there's a delay in execution of your trades because the servers are in Hong Kong, but that problem should be negligible because it's a matter of milliseconds. (Sure it'll be a problem if you are a large multi-million dollar trader - but I'm guessing that you are not.)

Besides that, I'd say IB is the best out there.

 

[skyQuake]

Unlike online poker, there always will be plenty of fish around; The general population's increase in skill level is nowhere near like hold'em. (leave 20 n.l for a year, come back, get trashed in 5 n.l)

Plus the FBI wont seize your broker and freeze your assets. Usually.

And just like poker its key to get a strategy down and risk manage it.

 

[nomore4s]

There's a few IB threads on here. Some people say it's fine, others seem to have a lot of issues. I have no personal experience, it's just that I avoid things that have a history of technical difficulties. Last thing you want is problems when trying to buy/sell. No other brokers have a troubleshooting thread - that, to me, is a warning sign.

I'm sorry Gringotts but that is a really uninformed and very simplistic view.

IB is not your standard retail broker. IB's trading platform is second to none and you cannot even compare it to brokers like CMC and Belldirect. Especially considering CMC is a CFD broker for starters.

It's brokerage is extremely cheap - $6 minimum each way for shares, it gives you access to futures(both indexes and commodities like oil and gold), forex, stocks both local and international. Also how many brokers have representatives posting on the forums here keeping us informed of new features and helping out when they can?

The hardest part of trading with IB is actually opening the account with them as it can be a bit of a drawn out procedure due to the amount of markets they cover. I have been with IB for 2 years and highly recommend them.

 

[Gringotts Bank]

I'm sorry Gringotts but that is a really uninformed and very simplistic view.

IB is not your standard retail broker. IB's trading platform is second to none and you cannot even compare it to brokers like CMC and Belldirect. Especially considering CMC is a CFD broker for starters.

It's brokerage is extremely cheap - $6 minimum each way for shares,

CMC stockbroking. $10 trades. Uninformed?

How many posts are there on the IB troubleshooting thread? That's not my thing.

 

[skc]

How many posts are there on the IB troubleshooting thread? That's not my thing.

Have you looked at that thread?

Troubleshooting also means when people can't figure out how to do certain things...IB's platform offers huge breath of functionalities - no one knows it all.

IB vs standard retail broker is similar to using MS Word vs Notepad. Sure there are troubleshooting sites for Word (and plenty of annoying bits) and none for Notepad, but you see where I am coming from.

Back to the OP's topic...

I don't know much about poker so any observations I make are strickly pedestrian...

Poker and trading seem to share certain mindsets - risk/reward management, quantitative analysis, think/react fast...

But there are 2 big differences imo.

First I call arena. In Poker you are sitting on a table with a finite number of opponents each with a finite resource. Overtime I guess a good player reads what the opponents are doing and gains an edge. In trading, you are trading against, for all intent and purpose, an infinite number of potential enemies and allies with infinite resources. The ability required to gain an edge is significantly increased.

Second I call boundaries (may be that's the same thing). In Poker you have 52 cards, the game process is straight froward and doesn't change much. The realm of possible outcomes are finite. Whereas in trading, there are infinite factors affecting any trade. Again, the ability required to gain an edge is significantly increased.

To me the mindset aspects are 'hygiene factors' (i.e. necessary but insufficient), but the crux of winning in poker (and trading) is your methodology/edge. I guess having a poker background helps, but don't expect the transistion to be straight forward.

How do you find an edge? That's the millienium dollar question...

 

[Wysiwyg]

Poker and share trading are different in my experience and I can't draw any sameness. Some similarities but at showdown in poker it is pure luck from the flop/turn/river.