Friday, June 27, 2014

Mucking Your Trading Hand

So you draw a poor hand at poker.  What do you do?  You "muck" that hand:  you fold and wait to bet a better hand.  Good poker players know that there are times to bet and times not to bet.  They bet when odds are in their favor and when they perceive weakness among the other players.

Suppose a poker player was into the thrill of betting and played every hand.  Over time, the odds would catch up to him and he would lose his stake.  You can't win at poker until you master the art and science of not playing.

It's a lesson worth heeding for traders.

If you only traded on days when you had objective, tested odds in your favor, how many trading days would you play?  How many would you muck?

Perhaps one reason so few traders succeed is precisely because they have a "passion for trading".  If they had a passion for markets and the calculation of odds, they would be far more likely to win by knowing when to not play.

Further Reading:  Poker and Trading