{"id":1955,"date":"2009-10-01T11:28:47","date_gmt":"2009-10-01T16:28:47","guid":{"rendered":"http:\/\/leavittbrothers.com\/blog\/?p=1955"},"modified":"2009-10-01T11:28:47","modified_gmt":"2009-10-01T16:28:47","slug":"business-poker-trading","status":"publish","type":"post","link":"https:\/\/blog.leavittbrothers.com\/?p=1955","title":{"rendered":"Business, Poker & Trading"},"content":{"rendered":"

Tony Hsieh, CEO of Zappos.com, is writing a book titled: Everything I Know About Business I Learned From Poker. Here are some of his notes in bullet-point form with my own trading-related comments thrown in. …
\n<\/span>
\nEVALUATING MARKET OPPORTUNITIES<\/strong><\/span>
\n\u2022\tTable selection is the most important decision you can make. <\/span>
\nI could not agree more. There are many ways to trade. The key is to find something that jives with your personality, focus on it, get good at it and do it over and over. This takes a bit of experimenting, and is without a doubt the first major decision you as a trader need to make. What trading table will I sit at? <\/span><\/span>
\n\u2022\tIt’s okay to switch tables if you discover it’s too hard to win at your table. <\/span>
\n$1000 in profits is $1000 in profits. A one-point move with AAPL counts the same as a one-point move with some no-name stock that no one follows. Certain stocks or products are inherently hard to trade for unknown reasons. There\u2019s nothing wrong with getting up and finding a different table to play at. There are no bonus points or badges of courage or honor for playing at any particular table. Your goal is to make money, period. There\u2019s nothing wrong with jumping from table to table to find the one that\u2019s most profitable for you. <\/span><\/span>
\n\u2022\tIf there are too many competitors (some irrational or inexperienced), even if you’re the best it’s a lot harder to win. <\/span>
\nMARKETING AND BRANDING<\/strong><\/span>
\n\u2022\tAct weak when strong, act strong when weak. Know when to bluff. <\/span>
\nThis is one point that doesn\u2019t apply to trading. You should never act strong or tough. You can’t bargain or negotiate with the market. It is boss; you are subservient to you. Way too many people have gone broke acting tough when they should have been scared and getting out of the way. <\/span><\/span>
\n\u2022\tYour “brand” is important. <\/span>
\nNot in trading. Again, there are no bonus points for bragging about being a certain type of trader. Trade for the right reasons, not for bragging rights, not so your friends can label you a certain desirable way. <\/span><\/span>
\n\u2022\tHelp shape the stories that people are telling about you. <\/span>
\n This does not apply. As a trader, you need to live in the real world, not a fantasy world you’ve created in your mind. <\/span><\/span>
\nFINANCIALS<\/strong><\/span>
\n\u2022\tAlways be prepared for the worst possible scenario. <\/span>
\nThis speaks for itself. Control your risk, manage your positions and never ever ever no matter how sure you are of something put too much into one idea. If you\u2019ve accepted what the worst case scenario is, you\u2019ll be much more relaxed. <\/span><\/span>
\n\u2022\tThe guy who wins the most hands is not the guy who makes the most money in the long run. <\/span>
\nSo true in trading. I know some traders who have 80-90% winning percentages but don\u2019t make much, if anything, over time. As soon as they have a profit, they take it because they\u2019re afraid to give it back. You can\u2019t win big if you constantly take profits so soon. Your goal is to make money, not have a high batting average (although you\u2019ll need a decent batting average). <\/span><\/span>
\n\u2022\tThe guy who never loses a hand is not the guy who makes the most money in the long run. <\/span>
\nTrading is a game of risk. You can\u2019t win if you don\u2019t play, so if you\u2019re the type that hesitates, you need to overcome this trait. <\/span><\/span>
\n\u2022\tGo for positive expected value, not what’s least risky. <\/span>
\nIf you want least risky, trade PFE, but you\u2019ll never make any money trading PFE. <\/span><\/span>
\n\u2022\tMake sure your bankroll is large enough for the game you’re playing and the risks you’re taking. <\/span>
\nMoney is your inventory. If you run out, you\u2019re out of business, so make sure the risks you take are appropriate considering your situation. <\/span><\/span>
\n\u2022\tPlay only with what you can afford to lose. <\/span>
\nThis goes beyond trading. Don\u2019t trade your kids\u2019 college fund (unless they\u2019re newborns and you have plenty of time to get it back) and make sure you have lots of money in the bank to live on \u2013 you need a cushion. Don\u2019t assume you can live off your trading income until it\u2019s obvious, and don\u2019t quite your job until\u2026well when it\u2019s time, you\u2019ll know. <\/span> <\/span>
\n\u2022\tRemember it’s a long term game. You will win or lose individual sessions, but it’s what happens in the long term that matters. <\/span>
\nI wish traders would realize this. Short term goals in my opinion are very dangerous. They cause you to chase and tense up because you\u2019re constantly under pressure to perform. But if you\u2019re goal is to make $X over the next three months, you can have a couple losing trades and not worry about hitting your overall goal. Having longer term goals enables you relax, be human, make a few mistakes but stay on target. <\/span><\/span>
\nSTRATEGY<\/strong><\/span>
\n\u2022\tDon’t play games that you don’t understand, even if you see lots of other people making money from them. <\/span>
\nThis a dangerous trap traders fall into. They see someone else successfully trading a product, so they want to try. Or they see someone successfully using a certain indicator. There\u2019s nothing wrong with changing tables, but before you jump in, know that you\u2019re starting over, and a lot of seat time is needed to study. <\/span><\/span>
\n\u2022\tFigure out the game when the stakes aren’t high. <\/span>
\nSo true. Many decisions are made at night or on weekends rather than in the heat of the battle. <\/span><\/span>
\n\u2022\tDon’t cheat. Cheaters never win in the long run. <\/span>
\nThis doesn\u2019t apply\u2026unless you\u2019re able to plant friends in decision-making roles in government who can pass laws to your benefit. <\/span> <\/span>
\n\u2022\tStick to your principles. <\/span>
\nStick to your plan. <\/span><\/span>
\n\u2022\tYou need to adjust your style of play throughout the night as the dynamics of the game change. Be flexible. <\/span>
\nWhen trading, I don\u2019t advise changing mid-game. If you\u2019re confused or the game has changed such that you don\u2019t recognize it, go to cash. <\/span><\/span>
\n\u2022\tBe patient and think long term. <\/span>
\nDitto my comments about having longer term goals. Jesse Livermore said: \u201cIt was the waiting that made me the money.\u201d <\/span><\/span>
\n\u2022\tThe players with the most stamina and focus usually win. <\/span>
\nIn business, if you can survive, many of your competitors will eliminate themselves. In trading, your biggest competition is the person in the mirror, and he\u2019ll never go away. It\u2019s better to conquer him than assume he\u2019ll suddenly step aside and allow you to succeed. But having said that, the longer you can stay in the game, the higher the odds you\u2019ll eventually figure this \u201cthing\u201d out. <\/span><\/span>
\n\u2022\tDifferentiate yourself. Do the opposite of what the rest of the table is doing. <\/span>
\nThis doesn\u2019t apply to trading. You need to do what\u2019s best for you, and that may or may not have anything to do with others. <\/span><\/span>
\n\u2022\tHope is not a good plan. <\/span>
\nIt\u2019s not a ticker symbol either. <\/span><\/span>
\n\u2022\tDon’t let yourself go “on tilt”. It’s much more cost effective to take a break, walk around, or leave the game for the night. <\/span>
\nAbsolutely. Hit a rough patch? Don\u2019t compound losses. Go to cash and take a break. <\/span> <\/span>
\nCONTINUAL LEARNING<\/strong><\/span>
\n\u2022\tEducate yourself. Read books and learn from others who have done it before. <\/span>
\nYes but once you\u2019ve found \u201cyour trade,\u201d I\u2019d hesitate to expose yourself to many other methodologies. It\u2019ll just confuse you and cause you to second guess yourself. Read biographies, but stay away from the how-to books once you\u2019ve gotten pretty good.<\/span> <\/span>
\n\u2022\tLearn by doing. Theory is nice, but nothing replaces actual experience. <\/span>
\nMy favorite trading quote of all time. Jesse Livermore said: The game taught me the game.<\/span> <\/span>
\n\u2022\tLearn by surrounding yourself with talented players. <\/span>
\nYou do that here at LB. Not only with my writing but also with the many talented members on the message board. <\/span><\/span>
\n\u2022\tJust because you win a hand doesn’t mean you’re good and you don’t have more learning to do. You might have just gotten lucky. <\/span>
\nLet me put it this way. Don\u2019t let a good trade grow your ego to uncontrollable levels.<\/span> <\/span>
\n\u2022\tDon’t be afraid to ask for advice. <\/span>
\nAt the end of the day, the only thing that matters is your bottom line. If you had to ask 100 questions to get there, so what. <\/span><\/span>
\nCULTURE<\/strong><\/span>
\n\u2022\tYou’ve gotta love the game. To become really good, you need to live it and sleep it. <\/span>
\nI don\u2019t know anyone that didn\u2019t lose a handful of friends on the way to successfully trading the market. Yeah, I know. It sucks. But if you want to be good, you\u2019ll have to say \u2018no\u2019 to those Sunday football parties. <\/span><\/span>
\n\u2022\tDon’t be cocky. Don’t be flashy. There’s always someone better than you. <\/span>
\nSo true. As soon as you think you\u2019re good, as soon as you think your you-know-what don\u2019t stink, the market will whack you upside the head.<\/span> <\/span>
\n\u2022\tBe nice and make friends. It’s a small community. <\/span>
\nThis isn\u2019t always easy (see today\u2019s message board). I believe in what Teddy Roosevelt said: \u201cSpeak softly and carry a big stick.\u201d <\/span><\/span>
\n\u2022\tShare what you’ve learned with others. <\/span>
\nCall it the boomerang effect. I share what I consider to be a \u201csecret,\u201d and it comes back 5-fold. Share your ideas, share your strategies. Odds are you haven\u2019t figured something out that no one has already thought of. Throw it out there and you\u2019ll get much in return, and who knows, you may end up \u201cstealing\u201d a key element of your trading along the way. <\/span><\/span>
\n\u2022\tLook for opportunities beyond just the game you sat down to play. You never know who you’re going to meet, including new friends for life or new business contacts. <\/span>
\nDoesn\u2019t apply specifically to trading, but I know friendships have been formed on the message board. That’s nice.<\/span> <\/span>
\n\u2022\tHave fun. The game is a lot more enjoyable when you’re trying to do more than just make money. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Tony Hsieh, CEO of Zappos.com, is writing a book titled: Everything I Know About Business I Learned From Poker. Here are some of his notes in bullet-point form with my own trading-related comments thrown in. …<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/posts\/1955"}],"collection":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1955"}],"version-history":[{"count":0,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=\/wp\/v2\/posts\/1955\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1955"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1955"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.leavittbrothers.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1955"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}