Parallel Lives: Poker Player and Stock Trader
By Davida MintzPoker players and stock traders walk in the same circles. They’re both tough ways to make a living, but those who succeed have the money to show for it. Another reward is the adrenaline rush that comes with winning a tournament, or watching your stock soar. The same skills are necessary to survive in either of these high stakes games …discipline, an understanding of risk management, a head for numbers and the ability to make quick decisions under pressure. This combination of traits along with the drive to win makes poker players a valuable commodity on Wall Street.
Poker Player Turned Options Trader
The L.A. Times ran a report about a Wall Street firm that broke out a deck of cards for a few hands of poker at the end of every job interview. The candidate the Times was shadowing made a living playing online poker. He landed the job trading options at Toro Trading without a business degree or Wall Street experience. Like Toro, a number of trading desks have become believers in what poker has to offer the investment world. According to the L.A. Times, Texas hold ‘em is a central part of the training program at trading firm Susquehanna International Group. New hires spend one full day a week playing poker, and bone up on the books, “The Theory of Poker,” and “Hold ’em Poker.”
How Shorting Stock is Like Aces
I read an article on the stock market website RealMoney.com, by trader and poker player Brett Jensen. He doesn’t like aces because you can win a lot of small or medium pots with them, but when your aces get cracked Jensen says, “your stack of chips can take a major hit. They are also hard to get away from if the “flop” does not come down well for your aces as you only get this starting hand dealt to you one out of every 216 times.” He compares aces to the practice of shorting stocks, which he considers dangerous. Shorting means you make money when your stock goes down and lose when it goes up. Here’s what happens when you sell your aces short: A stock can only go to zero, capping your gains as in the small and medium pots. A stock can go up exponentially. Jensen says the cost of being wrong can blow a major hole in your portfolio.
From Successful Trader to Poker Champ
Two-time bracelet winner Andy Frankenberger told Business Insider his strategy and eccentric plays come from his career as an equity derivatives trader. He learned to manage risk in the markets, and isn’t afraid to fold. Frankenberger found instant success on the poker circuit. In his first year, he won two major tournaments, and was named World Poker Tour Player of the Year. If Frankenberger the player, were publicly traded, his stock would shoot through the roof.
Wall Street Loves Playing Poker for Charity
Wall street sponsors at least one charity poker tournament a month. You can count on a lively game, a well-known poker pro in attendance and Billionaire David Einhorn. Einhorn shows up at every game on Wall Street, and makes it to Las Vegas for the big events. Last year he finished third in the World Series of Poker Big One for One Drop. He donated the $4,325,000 winnings to City Year, a charity focused on increasing high school graduation rates. In 2006, Einhorn finished 18th in the WSOP Main Event and donated the winnings to the Matthew J. Fox Foundation.
In July, Einhorn, Bill Perkins and four other hedge fund managers decided to mix things up and met at the Borgata in Atlanta for a secret charity poker night. They each bought in for $50,000. The secret game raised $300,000 for charity. It caught the interest of Bloomberg TV, which recorded Poker Night on Wall Street for television.
Two-days later Einhorn attended at a charity poker event in Midtown Manhattan, mingling with pros Andy Frankenberger, Olivier Busquet and Erik Seidel. Most of the players were Wall Street heavyweights, paying $1000 a chair. The tournament was a fundraiser for Education Reform Now, an organization committed to making sure all kids have access to a quality public education.
Poker players aren’t making a mad dash to Wall Street. They’re happy in Las Vegas, or at home in front of a computer. Designer suits and ties don’t work with a player’s wardrobe, and morning comes sometime before noon, not before the bell. Poker does give you an edge when it comes to trading the market, particularly because it teaches you how to cut your losses.
About Davida Mintz
Davida Mintz discovered poker out of a desire to learn a live table game to play during trips to Las Vegas. Little did she know that poker would become her life. Accustomed to trading stocks and options, her brain quickly adapted to analyzing and sorting through poker stats and information. Soon, she started playing online poker daily, joining training sites, reading books and articles, as well as reviewing and analyzing hands using popular software. With a degree is in broadcast journalism and years of experience in television and radio news, her next logical move was to write about the game she loves.
Link to Davida’s Google+ …here