9 Similarities Between Poker Vs Trading

Is trading a form of gambling? With hesitance, I would say yes. However, I would rather call trading a form of strategic gambling as both require elements of risk, reward, strategy and decision making. In the next two weeks or so, I'm planning to publish a new online FREE book called “Poker Vs Trading”. Who knows, by the end of it all you may take up professional poker playing as well as trading… Let’s start with the similarities. SIMILARITY #1: We can choose when to play (Strategy) Traders and poker players don’t play every hand that is dealt to them. With poker, when a hand is dealt, we can choose to either play the hand, based on how strong it is, or we can choose to fold and wait for the next hand... With trading, we wait for a trading setup based on the criteria of our strategy i.e. MATI Trader System. You’ll then have the exact criteria and money management rules to follow in order to take a trade or wait for the next trade. SIMILARITY #2: Amateur poker players and traders tend to go the ‘tilt’ (Emotional roller-coaster) Emotions are a main driver which leads to traders losing their cash in their account or poker players losing their chips very quickly. With poker, you get players who let their emotions take over where they start betting high with an irrational frame of mind. These emotions lead them to losing their chips very quickly. This is when they enter the state of what is called ‘going the tilt’. With trading, amateur traders also tend to act on impulse and play on gut, instinct, fear and greed after they’ve undergone a losing streak or a winning streak. This often leads them to: ·       Taking a series of losses. ·       Losing huge portions of their portfolio. ·       Holding onto losing trades longer than they should. ·       Entering a mindset of revenge trading. SIMILARITY #3: We know when to hold ‘em and when to fold ‘em (Cut losses quick) We have the choice to reduce our losses when it comes to betting a hand or taking a trade. With poker, if the players start upping the stakes and you believe you have a weaker hand in the round, you can choose to ‘fold’ and lose only the cost of playing the ‘ante’. With trading, if you’ve taken a trade and it turns against you, you have a stop loss which will get you out at the amount of money you were willing to risk of your portfolio… SIMILARITY #4: We know the rake (Costs involved) There are always costs associated with each trade we take or each hand we play, which eats into our winnings. With poker, it’s the portion of the pot that is taken by the house i.e. the blinds and the antes. With trading, it’s the fees charged by your broker or market maker, in order to take your trade. These fees can be either the tax, spread and/or the brokerage. SIMILARITY #5: Aggressive trading and betting before the flop (High volatility) There will always be a time of strong market moves and high betting. With poker, you get times where players like to bet aggressively and blindly before the flop is revealed. It’s these times that lead to the amateur poker players losing their chips very quickly. With trading, you get economic data i.e. Non-Farm-Payrolls, black swan events and Interest Rate decisions when big investors and traders like to drive the market up or down before the news even comes out. NOTE: I ignore both forms of hype as it is can lead to a catastrophic situation. SIMILARITY #6: We bet and trade based on the unknown Every bet and trade we take and play is based on incomplete information of the future. With poker, we are dealt hands then bet on decisions based on not knowing what cards our opponents have and/or what is shown on the river. We then have the options to call, bet, raise or fold during the process. With trading, we take trades based on probability predictions without knowing where the price will end up at. This is due to new information which comes into the market including (demand, supply, news, economic indicators, micro and macro aspects). SIMILARITY #7: We lose A LOT! (Losses are inevitable) Taking small losses are part of the game with both poker and trading. With poker, it is important to wait patiently until you have a hand with a high probability of success. Some of the best poker players in the world, fold 90% of the starting hands, they receive. Some professional poker players can go through weeks and months without a win. With trading, we can lose over 40% to 50% of the time. In general, I expect around two losing quarters a year. I know that when there are better market conditions, it will make up for the small losses. SIMILARITY #8: You must learn to earn (Education is vital) You need to understand and gain as much knowledge as you can about poker and trading before you commit any money.     With poker, you need to understand: The rules of the game. The risk per move. The amount of money you should play per hand. Once you know these points, you’ll be able to develop some kind of game plan with each hand you play. With trading, you need to understand: The MARKET (What, why, where are how?)NB* The METHOD (What system to follow before taking a trade). The MONEY (Risk management rules to follow with each trade) The MIND (The frame of mind you must develop to succeed)   SIMILARITY #9: Perseverance is the key ingredient to success You need to take the time and have the determination to become a successful trader and poker player. With poker, you’ll need to keep at it and apply strict money management rules with each hand played. With trading, you’ll need to know your trading personality, know which trading method best works you and understand your risk profile… I’ll leave you with a quote from Vince Lombardi (American football player, coach, and executive): “Practice does not make perfect. Only perfect practice makes perfect” Do you have any similarities between trading and poker? Let me know and I’ll add it to my new book “Trading Vs Poker”, and I’ll send it straight to your email address… You can email me at www.timon@timonandmati.com.

The biggest trading scam of the century

One of my ongoing quests in life, is to find the scams that are losing traders and investors all their money.

At least once a week, I Google this exact phrase.

“How to get rich quick with trading?"

You'll be surprised at the number of unregistered companies and individuals there are, trying to swindle people's hard earned money.

But the scam I want to talk to you about today is the BIGGEST trading scam I've ever come across.

Unregistered Binary Options

I’m going to expect a couple of brokers to call me up after you read this saying. Timon, you can't write things like this when Binary Options makes up part of our business model.

First of all, I'm not here to make friends. Second, I have my opinion based on experience.

So sure, some brokers may offer legitimate and safe(ish) ways to trade Binary Options and I'm not gunning them down.

I’m warning you about the unregistered Binary Options companies with their sleazy sales pitches that offer a 100% win/rate system.

Stay far away from them as possible...

Why?

Before we go into the reasons why, let me first tell you what the heck a Binary Option is.

I want you to think of the term 'binary digit'.

A binary digit contains two numbers, 1 and 0.

Think of 1 as on and 0 as off.

With trading Binary Options, it's very similar.

1' you win everything and make a 100% return on your trade. And '0', you lose everything you put into that trade.

Easy right? Same principle applies. And this makes sense why people get sucked into trading these ghastly instruments. Because their greed factor kicks in where they feel they can WIN all their money.

But when you have been trading for the last couple of weeks, months and years, you'll find that losing trades are inevitable in any unpredictable market.

So going back to what Binary Options are. A binary option is a kind of option where you put down money to make a fixed return if the option expires 'in the money' or lose ALL your money if the option expires 'out the money'.

But here is the crux of why I believe Binary Option trading is the biggest scam of the century.

Here are my three reasons why I think Binary Option trading is one big scam

Reason #1: False advertising and marketing can lead you to blowing your entire account

Do you know why you feel the need to trade Binary Options?

It's because the advertising companies have been pumping their promotions and adverts on the "false dreams" binary options can 'bring' you.

They promise you how you can buy any car with a Binary Options strategy with a 100% win/rate.

And you never have to work a day in your life because you can invest with Binary options starting from 0 to a million.

Watch me debunk the above in two sentences.

With any investment or trading opportunity, it TAKES money to MAKE money. So you can't start off with nothing and end up with a car. And second, no market has any predictive qualities as we can only base our trading decisions on the past and therefore there is no strategy that can offer a 100% win/rate!

So please do the research first, read up on these instruments and don't let the marketing overwhelm you and bring up your expectations from level 1 to a million.

If it was that easy, you know what would happen.

Reason #2: Many Binary Options companies are unregistered

As I mentioned before, I am not trying to attack any well established and credible broker who offers Binary Options.

I'm only talking about Binary Options companies that are unregistered. Being unregistered means, they can do what they want. They can market the proclaimed 100% win/rate strategy and can very easily give you their banking details where you can deposit money.

But do you know what they'll do with your money?

I'm not sure. I don't know what their favourite restaurants and holiday destinations are.

Ye, they can pretty much do as they please with your hard earned money.

Make sure you find FSB approved companies that are regulated service providers. Also make sure they have a strong track record, before you even think about investing with a broker who offers Binary Options.

Reason #3: You can lose 100% of what you put in at a time

The majority of the novice and unregulated Binary Options brokers, don't offer stop losses and expiry times while you're in your Binary Options trade.

So, the fact that you can risk 100% of the money you put in, is a big risk to your portfolio.

I have a strategy where I don't risk more than 2% of my portfolio. And of the amount I put in, I never look to risk more than 30 to 50% of my initial margin.

(Feel free to skip the maths if you've got the point)

Let's say I have a portfolio value of R100,000.

I don't want to risk more than 2% of my portfolio (R2,000).

And let's say the margin (initial deposit) to put into my trade is R4,000. This means if my trade hits the stop loss, I'll lose 50% of what I put in (R2,000).

I wouldn’t want to risk the full R4,000 with Binary Options, as it will blow my account after a few losing trades.

And that’s why I don’t trade them. And with the unregistered Binary Options brokers, you can clearly see why it’s probably the biggest trading scam of the century.

Testimonials: What my dear readers have to say about Just a lil Trading Note and Trading Tips!

Here's what our loyal members have to say about:

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"Just a note of appreciation Timon, on your money management(Risk calculator)tips on the CFD's. You helped me to better understand and manage my losses by your stop loss tips and how much of my portfolio money i should risk losing. I used to just dive head on when trading and worry about the rest later which now i realise was very foolish."

“Timon is very confident with presenting and the event was very informative."

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"Thank you for your speedy response, the information you have given is worth gold and I hope to implement it by month end." – P
       
“Just a note of appreciation Timon, on your money management (Risk calculator) tips on the CFD's. You helped me to better understand and manage my losses by your stop loss tips and how much of my portfolio money I should risk losing. I used to just dive head on when trading and worry about the rest later which now I realise was very foolish.”
     
   “All can say as someone who has never traded is that now I am more confident to call a broker and start trading. I am more informed than ever.” Samson Molepo
      
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“Dear Sir, Tim is an excellent trader who is cautious, methodical, dedicated and inspirational to fellow traders. He sticks to his trading plan and has excellent money management skills.It is always a pleasure interacting with him as a fellow trader. His advice is normally excellent and he is not a risk taker.” P.S
       
“Timon is very confident with presenting and the event was very informative. I can start trading now.” -  Abdulaziz



Always remember,

“Wisdom yields Wealth”
 

Timon Rossolimos

Senior Editor:  Trading Tips
Head Analyst: Red Hot Storm Trader
Author:          94 Top Trading Lessons of All Time