I was thinking about you because I remember when I was new when to the stock market and what it felt like. I replayed those feelings again after I played poker the other night.
I remember when I played my first poker tournament, because it was almost exactly like when I first got into the stock market.
My first experience playing big tournaments was in Atlantic City at the Trump Taj Mahal Casino. The first one was the Trump Classic $300 buy-in and the second one was a regular $100 tournament at the same casino. There were about 140-150 players at each event.
I enjoy playing poker and play in a regular game once a week at home. Poker and the stock market are similar games. They are about understanding psychology, controlling your emotions, and managing risk. Of course, the risk to reward ratio in the stock market gives you a much greater pay off than a poker tables does, but understanding how to play one game can help you succeed at the other one.
No-Limit Hold'em is, in my opinion, the best poker game to play. If you've seen poker on TV it's likely that you were watching No-Limit Hold'em. It's a great teacher of decision making because of its fast pace and the many different situations in which you find yourself.
Trump Classic - $300/buy in 1st place $16,000
I got action in the first tournament almost immediately. On the second hand I got a pair of queens. It's a good hand and right after I saw it I raised before the flop in order to flush some players out. When I am in a pot with a hand like that, I want fewer callers on the flop to cut down the odds of someone hitting some lucky combination of cards. One person called my bet and the flop came with a king. I bet and got raised by the other player.
I folded the hand. I respected their bet, assuming they had a king. It's a disappointing hand to have to fold.
But I had no reason to suspect that he was bluffing. Poker is a game of people as much as it is cards and you have to watch the action carefully to get an idea of what kind of player you are up against. You have to watch their betting patterns and try to match that with their demeanor. Are they playing lots of cards or are they playing few hands, which means they are usually playing strong ones. Do they bluff a lot? Or do they fold all of the time when
they have nothing? Or do they call no matter what?
I tend to play more conservative than most players and am very selective with my starting hands, entering pots 10-20% of the time during a tournament. But I got cards over the next ten hands and entered the pot about 4 times. Each time I didn't get anything that helped me on the flop and tried to bet to make people fold only to find myself reraised. I folded each time.
I felt frustrated. I had lost five straight hands in a row and a quarter of my chips. Although I am a winning player at home and when I play online occasionally, I began to wonder if I was just outclassed here. I worried there might be something in my demeanor that let them know I didn't have anything on those hands. I doubted that though. Maybe they just had good cards.
A lot of times when someone plays a poker tournament they reach a point where they get frustrated and give up. They start to play junk cards or make stupid calls. In poker this is called going on tilt. In the stock market people do the same thing. If someone makes a bunch of losing trades they'll often quickly jump into other stocks with marginal risk/reward ratios in the hopes of making their money back. Or else they'll refuse to sell losers and
ride them down. Or, if they sell and the stock goes up they'll get annoyed and buy it back at the top. In the stock market, the way to counter this tendency is to take a break from trading.
I was starting to feel ready to give up. I thought to myself, maybe these people are better, but I'm not going to give up. I came a long way to play in this game and I'm not going to go home thinking I lost because I did something I know I shouldn't have done. I'm going to play the best I can and, if I lose, so be it. I'll just sit back and wait for good cards.
Evaluating the Situation
In order to play well at a poker table you need to figure out what your opponents are doing and play in a way that works best against their style of play. It usually takes a good twenty hands or so to get a feel for the players at the table. With only a few hands into the game I really had no proper evaluation of my opponents. However, they just saw me fold after betting on five hands. I've been the most active player at the table. I know they think that I'm going to be a big bluffer. And that's good, because that's not
my playing style. I figure that from now on when I get something and bet I'm going to get paid off.
And that's exactly what happens. Over the next hour, I hit some hands, get called, and build my chip stack back up. Four people bust out. The tournament director splits our table up, moving me and a woman sitting next to me to another table that has lost some players.
As I sit down, I look around at the other players. To my left are a man and a woman in their thirties. They don't know each other but over the next hour they talk with each other constantly. They are friendly and I join in their conversations. I like a friendly
game.
To their left, and right across from me is an older, overweight, white haired big mean bear of a man. When I sit down he doesn't look at me and, as the game goes on, he doesn't look at anyone else either. He reads a newspaper, bets, and then goes back to his paper. The only time he looks up, it seems, is when he collects chips from the pot. And he's got a lot of them. He has the most chips at the table. After him, I have the biggest stack or am tied
with another person for second. It's close. I have to watch this chip leader.
Right when I sat down I made some quick prejudgments about this white haired man. Frankly, I thought he was probably a jerk and a probable chip bully. He didn't look at me when I sat down and seemed to be oblivious to everyone at the table. A lot of time when people are jerks at a poker table they play extremely aggressively, bluffing with big bets and stealing pots. They tend to accumulate lots of chips and then lose them suddenly in a hand
or two. Not all people who play aggressively are jerks, but most jerks play aggressively. And this guy is strange to avoid all contact with everyone else at the table. Maybe he wasn't a jerk and just shy or quiet. I don't know him, but poker forces you to make quick judgments of people. But, whatever the case, he had 'chip-bully' written all over him.
I watch him closely over the course of the next forty-five minutes and his play confirms my initial opinion of him being a chip bully. He enters lots of pots and bets all of the time. There is no way he is hitting his hands all of the time. Although I did that in the first few hands of play, I don't always bet when I don't have anything. In fact, most of the time I'll just fold or check to the other player and let them bet. I think it's important to show some respect to the other players so that they will respect your bets.
Then a lot of them will fold when you enter a pot or when there are close odds between the both of you. They won't go over the top and try to bluff when you make a bet.
Then an interesting hand comes. The white haired man enters a pot with a young girl at the table who is already getting low on chips. The dealer is sitting in between them. An Ace comes on the flop. He bets, but this time he leans over and looks at the girl. This
is the first time he has looked at anyone at the table. She calls. He bets each time another card is turned over and she calls. He turns over two pair, a strong hand, and she busts out. This time it wasn't a bluff. And this time he looked at his player. Most
people don't show such tells when they play, but this guy just did.
A couple of hands later I get two queens again. I bet big. Everyone except for the white haired man folds. He calls me. The flop comes and there are three low card hearts. I don't have a heart. A bad flop for me, because five hearts would make a flush,
which would dominate my hand. But I do have two queens. It's a big pair. I have about 12,000 chips and bet 1,000.
He goes all-in. This makes me nervous. But I realize what it means too. Again he doesn't look at me when he bets. He wants me to fold. He wouldn't bet so much if he already had two hearts and the flush made. If he had the hand won he would bet like he did against the girl, trying to get my chips on each card, instead of trying to scare me with such a big bet. I figure he is holding an Ace, because he called my first raise before the flop, and probably
has another heart in his hand. So if another heart comes on the next two cards he will win the hand. But, if the hand ended now, I would win.
Odds are 56% to 43% that I will win the hand. Not bad, even though they feel like a coin-flip to me. However, in a tournament you have to double up two or three times to get to the end. That means you have to take a few big chances. The trick is to make sure
that, when you take these big chances, the odds are in your favor and the payoff is going to be worth it. I'm going to have to double up my chips at some point to win this thing and I'm willing to take that chance now. If I bust out, so be it. But if I double up, I can go all of the way to the end. The odds are in my favor and this is about playing situations like this when they are.
I look at the guy. He won't look at me. I tell him, "I know you have an Ace and a heart. I've got two pair." He won't move and I interpret that as him being nervous. I'm nervous too. Because I know I'm risking everything on this hand.
"I call. Let's gamble." I tell him. I flip my cards over. He shows an Ace and a queen of hearts. No hearts come on the next two hands. He's busted.
When he leaves, someone at the table tells me they are glad I busted him out because, before I was there, he was rude to them. This table lasts for another hour. I play very few hands, only playing good cards. But, on every hand I play, the other players fold.
A few people bust out at our table and I'm moved to another table. About two-thirds of the starting players are gone. A young white kid (probably a college student, I surmise) in his early twenties is seated to my left. He's got a nice chip stack, about as big as
mine. There is an Asian fellow about the same age on the other side of the table who has the biggest chip stack at the table. He looks like another super-aggressive player. I decide to watch him carefully to see if that first impression is correct.
Someone walks up to the table and talks with the kid. When he leaves the guy across from me asks the kid how he knows that guy. There is a professional World Series of Poker event with a $10,000 buy-in going on being filmed for television and, it turns out, he is one of the players. The kid explains that he is one of his friends. He plays cards all of the time and travels with some of the pro's. He plays in a lot of tournaments and has finished in
the money in the World Series of Poker.
"Geeze," I think to myself, "I'm screwed now." This is probably the best poker player I've ever seen at a table. He's probably a professional. The guy across from me gets knocked out and a young black guy takes his place. He knows the kid and when he sits down he says, "I hate being at a table with you. I'm going to lose now." It seems that they know each other and have played on the same cash tables before.
Having a Plan and Sticking To It
I stick with my tight-aggressive game - being selective about what cards I play, but betting them for value and betting big on the flops when the situation calls for it. Personally, I like for people to know what I'm doing and I'll occasionally turn over a winning hand when someone folds so they know that I'm not bluffing.
That way they'll fold more against me, and fold when I do make an occasional bluff. When people fold, they just hand over their chips to you and your risk goes down. I get a few opportunities to turn over winning hands. I want to show the people respect. The people paying attention, and I know the kid is. He knows I'm playing good cards. I'm trying to send a message to him, not to bluff me or run over the top.
We've been playing for four hours now and the antes and blinds have gone up. On each hand we all have to put in $25 and the small blind has to put in $150 and big blind $300. I have about $20,000 chips. But the antes and blinds mean there is money worth winning
in each pot before anyone even bets. This is always a key point in a tournament.
At this point I play even more selectively, but when I enter a pot I bet $1,000 chips. This forces people to pay up if they want to play against me, and they are already wary of doing so, because they've seen me play good cards. Over the next half hour, I enter the pot about half a dozen times. And, every time someone folds,
I'm picking up more chips.
Then I enter a hand in which I am the big blind. The small blind, who is sitting to my right, was on an earlier table with me. When he played he entered lots of pots, but then folded constantly when the flop came. This means he was playing lots of marginal hands,
and just folding when he didn't hit anything. I don't think he bluffed once, so when he calls or raises it means he has something.
But it is easy to make him fold.
Everyone folds their hands except him. He just calls. I call. I don't have anything. The flop comes and there is an Ace and a Ten on the flop. Normally I'd just check or fold in this situation, but because of the way I've seen him play I bet $1,000. It puts
the pressure on him.
He pauses. He's nervous. But he's thinking. Makes me a little nervous. He has something. But I'm calm. He can't tell that I'm nervous. I look at him. He folds. If he had the Ace he would have called. He must have had a pair of tens and sat there trying to
figure out if I was bluffing. I'm relieved and raise my eyebrows and shake my head a little as I scoop up the chips. It is only the second stone cold bluff I've made all day.
The kid notices my mannerisms and says, "I don't want to get in any hands with you." He knows exactly what happened on that hand.
He's been watching me play carefully for the past forty-five minutes and is scared of my play. He knows I play selective cards, good cards, and am also capable of making big bluff.
That means I'm not afraid of putting my chips in the pot. Many selective players are afraid of betting and are easy to chase out of a pot with a bet. However, I don't think that he knew I was bluffing on the last hand until it was over. That makes me a very tricky
opponent.
Coming from this guy, this is the best compliment I've ever had when it comes to poker. It pumps me up. Whatever happens, the trip was well worth it. I wanted to play well and I've done it. I'm hanging in there with the best poker player I've ever played with.
It's been five hours into this tournament and I've been playing great. I look up and there are about 30 people left. I start thinking about getting in the money - making it to the final 18.
And I think I've got a shot to do better than that. To make it to the end. The top prize is $16,000. I start thinking if I get near the end I'll try to split the price with the last couple of people.
That's how confident I'm feeling at this point. If I can double up one more time I can do it.
After the next ten or fifteen minutes I find myself dealt a pair of fours. It's not a great hand. But if I can get in and hit another four on the flop I'll have a great hand. Three of a kind is tough to beat. The odds of improving to three of a kind are only 11.7%
when you start with a pair and the odds of just starting with a pair are 5.88%. So three of a kind is a rare hand. I've been playing for eight hours since I've been in Atlantic City and
haven't had it yet.
Three people limp in the pot in front of me, calling for three. I call too. The kid and his friend (the young black guy) after him folds. The super-aggressive Asian, who is still the chip leader, calls. And he's been aggressive. Betting constantly and making
people fold as I first assumed he would.
The flop comes 10-4-3. I hit three of a kind. I bet 2,000.
Everyone folds but the Asian who raises me another 2,000. This is interesting. I'm confident I have the winning hand. He probably has a pair. Maybe a pair of Tens and an Ace.
Normally I would just bet down to the last card and try to make a big pot. But super-aggressive players will often call in this situation if you go All-in on them. They bluff a lot, and have a tendency to think that others are bluffing too if they all of a
sudden go All-In on them because this is something they would do themselves.
So I go all in. He turns over a pair of Fours and Tens. Two pair.
It's a bad hand, and I wouldn't have called if I was him. I would have figured I was beat. And, either way, it wouldn't be worth risking every chip I had for this pot, but this is a
super-aggressive type and these types will do that kind of thing.
I'm a huge favorite to win this pot. The odds are 92% to 8% in my favor. But you never know. My biggest fear is he'll catch another four or ten to give him a full house. The dealer puts the next two cards down and neither one shows up. However, two hearts hit the
board. I don't see it, but the last card gives him five hearts for a flush. I'm busted out. The kid says, "Man that's a bad beat."
Yep, sure is. I congratulate the guy, wish the kid good luck and leave. I finished 32nd in the tournament. Losing like that makes people really mad. But those type of plays don't anger me. I made the correct play and lost. That's poker. What I don't want is to
lose because I got caught bluffing or made a stupid play in which
the odds weren't in my favor.
Job Well Done
I was really happy with my play. I did great. Played the best I could and left satisfied. I had a shot to win. I leave, go to dinner, and come back a few hours later and see the final table. There are about 6 people on the table including the kid and the
Asian fellow. They both have big stacks. Yep, if that hand went the other way I might be there instead of him, I think to myself.
But it proves to me that I can compete in these things and that's a good feeling.
I think about the tournament over and over, about the last hand a lot of course. But one thing I realize is that it seemed like whenever I bet it scared the other players. I got a lot of folds.
Of course it is because I entered less pots and therefore people who paid attention new that I was always starting with good cards, increasing the odds that I had something. They respected my bets. But I think to myself that there was more to it than just that. I
don't think people could just look at me and tell when I had a great hand or was bluffing. I think I was very difficult to read.
In one of the casinos there was a poker newspaper with an interesting article in it about "Poker Faces," by someone named
John Carlisle. He writes:
"We are conditioned to think of a poker face as one that intentionally displays no emotions. It is empty, cold, and almost stone-like. Similarly, body language is expected to follow suit
with no emotional motivations. Movements and facial expressions are to be nothing short of robotic."
"In reality, our faces are not built to be emotionless. Most of us can easily decipher the difference between a smile produced by pride versus a grin produced egotistical overconfidence. We, as human being and social creatures, are simply not built to be
emotionless. Even when actively trying to display little emotionality and to remain flat, we often still show obvious signs of feelings such as boredom, worry, suspicion, or veiled
excitement."
"To attempt to force an absolute emotionless state upon yourself will only increase the likelihood of giving off information to your opponents. The players who attempt to remain completely still while playing are speaking volumes within that attempt. Likewise,
it is often within those awkward moments that the player is most likely to crack, as the pressure at that time is more concentrated than ever."
"The poker face, with our current common definition and expectation, is an undeniable fallacy. Those players who devote hours and days of effort, energy, and concentration on trying to master a truly placid poker face are wasting their valuable resources and time. Over the course of several hours of play, you will inevitably display numerous conscious and unconscious cues that indicate feelings and emotions. In actuality, in only a few
moments of play will you give away such cues. Instinctually and intuitively we see these cues in others, and we can instantly profile them as confident or insecure, comfortable, or distressed, etc."
"At its essence, a good 'poker face' isn't about withholding all your emotions. Instead, it is simply not revealing the cards that you hold in your hand. Evaluating yourself and your play to identify common patterns and tells is a part of this. Mostly, though it is about mentally preparing yourself for battle before you peek at your hole cards each and every hand. The best players find a way to reach an unflappable comfort level within them. With
that, they are able to be competent and profitable players with a consistent basis. When they have the nuts, they do indeed show characteristics of comfort and confidence. Don't hastily expect that to be a tell, though, as when they have nothing and bluff all-in, they still truly exude comfort and confidence! When you believe in yourself and your skills at this same level, you'll never find yourself needlessly spending time or exerting energy
working on a poker face."
Does this have anything to do with trading stocks???
Boy you better believe that it does! People think you have to have good nerves and be able to control your emotions to make money in stocks. And stock market success is indeed 90% psychology. But it isn't so much about controlling your emotions. It's more about
understanding them and trying to remain focused on the right things.
Success in the stock market is about having a strategy and method to invest in the market and sticking to it and not getting discouraged when you have a temporary setback. The reason I
believe I was hard to read at the poker table is because when I made a bet I had a strategy in mind. If I was bluffing I was using a betting method and if didn't work then I was well prepared to fold and go on to the next hand. I didn't think about controlling my emotions or movements at all. I just focused on the game and what my opponent was going to do and thinking about what I was going to do in response. Since I appeared to bet with confidence
it made my bets look even stronger than they were in some instances, causing people to fold a lot of hands.
Payoff Time
In the second tournament, the next day, I made it into the money. When we got down to 18 players they put us all on two tables and we automatically got our entry fees back plus a little. I looked around and saw that I had the smallest chip stack. The antes and
blinds were big and, if I didn't win any hands soon, I would eventually get blinded out of the tournament. The chip leader was at my table and, as the play resumed, I told him that I was in a desperate spot.
"I don't have enough chips to get in a hand with you and do anything after the flop comes. I'm just going to have to sit here and wait until I get two Aces and then I'm going to go all-in and double up," I told him.
"That's what I expect you to do..." he replied.
Well, of course you can't just sit there and wait for two Aces. But the basic strategy is exactly what I did. I decided to wait until I get a pair or an Ace and a card higher than a 10. Those are all decent hands that give you an over 50% chance to win when only one other person is in the pot. It's the best I could hope for.
I went all in about eight times and, every time, the entire table folded. Odds are some people had a few decent hands but folded anyway. I think part of the reason I got a lot of folds is because I appeared confident when I made the bets. I was telling myself I
was sticking to this strategy and would just hope for the best.
Enough people got knocked out that they moved me to the FINAL table! I went all in again and everyone folded. Then I got an AK. The small blind and big blind were to my left. Everyone folded up to me. I then went all-in.
The small-blind folded. The big blind sat there and pondered his decision. He looked ready to call. And I was in a spot were people often try to steal the blinds so he was considering whether or not I was bluffing. He folded and turned over an Ace and a Ten.
I showed him my cards. I was amazed that he laid down that hand.
I ended up finishing in sixth place. Looking back, we went from eighteen to six people really quickly. I think a lot of people just went on tilt because of the pressure.
Stock Market Lessons from the Poker Table
I'm pretty sure the only reason I went from eighteen to six was because I appeared confident about my bets. Instead of worrying about what I looked like to the other players I just stayed focus on playing my strategy. I had this demeanor not because I am some
sort of great poker player, but because I have had to learn this attitude from years of trading stocks.
I follow my indicators and game plan and get in and out when they tell me to do so. I never suddenly stop following my strategies and buy simply due to emotional factors and nothing else. I am going to stick to my strategies and that means I wait until the risk/reward ratio comes back into my favor.
You see this is how success in the stock market is very similar to success on the poker table. Both are about sticking to a strategy and not getting fazed when a turn of events doesn't exactly go your way. At one table, I sat next to some guy who would cry when he
folded two low cards and they appeared on the flop. If only he held them he would mutter to himself. Well, he did the right thing. You don't play crap cards if your going to win. But he had loser written all over him for crying over such things. When someone complains over and over about something like that they usually become impatient and bust out on a stupid hand. He busted out.
In the market, it is the emotions of fear and greed that cause people problems, making them do stupid things like at the top when things have been going straight up for several weeks and is now more technically overbought than it has been during the past five
years.
Oh yeah. By the way, I saw the kid again right before the second poker tournament started. He told me he won the first one.
I know there are a lot of people who saw this message and didn't get past the first paragraph, because they thought "what does this have to do with me or the stock market."
Well, it has everything to do with you and your trading.
EVERYTHING.
When we get into something new that seems so big like a poker tournament or stock trading it can make us feel small and worry about making a mistake. But imagine the price you'll feel when you know that your children are taken care of for the rest of your life and the rest of theirs, no matter if you work another day again.
That's the type of financial security the stock market can bring out.
But more importantly is the feeling of achievement of being a winner at this game.
That's why you need to get the Stock Market Mastery Course. You just need to step up to the game and do the work needed to be a winner at it: [1]
-Mike
Links:
[1] http://www.wallstreetwindow.com/masteryorder1.htm