Quote:
Originally Posted by pure_aggression
I can see there are many crossover traits between trading and poker. I've been dabbling a little bit of the last year.
Just wondering, how is the skill vs luck quanitfied? How long does it take to estimate your skill edge (or determining if you have one)?
**** lol. I been gambling since I was 18 years old. Gambling is not the right word. I became good at putting money on the line when I think I have an edge over the long run. If you can spot a car worth $4k and you can get it for $3K, well you buy the car then sell it for a profit. Sometimes you buy a car for $3K and end up selling it for $2K but if you are right more than wrong over a large sample size, you make money. I don't think this has anything to do with luck over the long run.
It takes time and effort to become a good day trader. Most people lose money in year 1,2 of day trading. Only a few are green after the first year. These are in the order of the level of difficulty for me to become profitable from easiest to hard in terms of the number of years I spent to become profitable:
Poker back during the boom.
Day Trading (green but have not completed 12 months yet)
Sports Handicapping
Horse handicapping
There are similarities between poker and day trading. They are bankroll/risk mgt, not going on tilt, table selection which is similar to picking the right stocks to trade for the day, hand selection which is similar to waiting the right setup show on on the stocks you are looking to trade. If it wasn't for poker, day trading would have been harder for me to pick up.
Just like poker where you become better as you play hands and get experience, you become better as you trade and get experience with entries and exits. Some guys use play money/simulation for 6 months before they use real money. I did not do that. I lost money the first 3 months and then started to break even. About month 6 I started to turn it around. I always had a ratio of 2 green days to 1 red day so my issue was easy to fix and that was to cut my losing trades quickly which reduced the size of my losses. I am usually in 10 to 15% of my bankroll and will cut at a 10% loss so that equates to 1 to 1.5% loss of my bankroll.
My issue was easy, but there are other rules I picked up like don't short any stock under 8M float unless I downsize for fun. I don't short any stocks that pop day 1 and is overcrowded and has too much volume trading. I picked up these rules to filter out stuff that causes head aches. There are a ton of other things I picked up from profitable traders who been at the game for 10+ years. I am 90% shorting stocks that are pumped.
Ya, not sure how many trades u need to come to realize u are profitable. Maybe 1000 trades if you have that solid grinding consistency day in day out.