Friday, January 8, 2010

The Weekend Trader - Poker, Trading & Focus

It's all about focus.

In fact, it's only about focus.

Let's start with last night's odd series of events.

After about going through the roof early in last night's poker tourney as the result of getting called on an all-in where my opponent was chasing a single #$%&#$ card in the deck (the most pi$$ed I've EVER been playing cards) and of course catching it, I was able to somehow come back after that hand knocked me from $8,000 in chips to $1,200 (I had a few more chips than her before the hand ... more on that below) and actually win the event about three hours later.


First the hand. I'm the dealer and had 4 & 5 of Diamonds pre-flop, which came 6-7-Q with one Diamond. One of the three in the hand proceeds to bet about 1/2 of a decent sized pot, which was called by player #2 and myself (I had grown my stack from the starting $4K to $8K, so the % risk/reward seemed OK).

The turn then comes 3 of Diamonds. Bingo. I've got the straight, there's no full house possibility on the board, and on top of that, I've got a flush draw. So essentially, absent some kind of bizarre suck-out, I've got it. Player #1 places a minimum bet (yes!), player #2 raises (double yes!!), and I of course make the easy decision to push all-in ... which was a mammoth raise over both the bet and raise. Player #1 calls (he only had top pair ... not a worry), and then player #2 also calls holding 5-9 and is risking a mammoth chip stack chasing the 8 for the higher end straight.

Sooooo, with three eights already having been folded (we found out later), there's only a single card in the deck that can win it for Player #2. The odds are heavily in my favor ... over 90%. And of course, she hits the case 8 ... and it took all of my sanity and professionalism not to launch the cards across the table and scream, "You bet your whole stack and risked your entire tourney on a chase??" Keep in mind most know I'm a pretty tight player and would never make that move with two others still in the hand unless I had the goods.

Yet as they say, it's often darkest before the dawn, and like December's "Chip & a Chair" post few months ago (one of the more popular posts), I somehow fought back from the brink to ultimately win the event where I was dealt pocket Aces and K-Q suited for the the last two heads-up hands of the night.

The final hands played out like this: On the pocket Aces hand, I was the shorter stack & small blind, and simply called pre-flop (while I'd raise with more players at the table, I was going for the monster trap play). The flop then came K-8-9, my opponent checked, and I went all in. He then asked me if I hit the King, and I said no. After some discussion back and forth where he didn't believe me, I told him "I didn't hit it, and will show you." So he called with his pocket 10s, and I took down the hand after two blanks hit the turn and river. And true to my word I said, I showed him that I didn't "hit the King"!

That put me in the chip lead where I was then dealt K-Q suited, for a flop that came K-10-8. I checked, he bet with a ten, and I went all-in where he immediately called. The turn and river again were of no help to him, and the odd night ended rather "easily" ... at least compared to events a few hours earlier.

OK, so what are the trading lessons?

I suppose the first one reflects a combination of perseverance and focus. Yesterday's trading was a good example where I entered a solid pullback shortly after 3pm with size, and then had the rare "displeasure" of a late-day news item release touting interest rate risk which immediately shot the market down 4 points through the "previous resistance = new initial support" level ... which is similar to the 90% poker play from last night. In both cases I lost the "hand". Yet in both cases, I stayed focused and kept moving forward, and ultimately more than made up for the far lesser probability occurrences. As they say, "sheet" happens.

The second may sound odd, but in my case it's highly relevant and all about momentum. You see, my trading and poker usually go hand in hand. I can't describe why, but they will forever be intertwined. For example, my poker game reached a peak in '08 and '09 when I won several local tourneys, and had both personal focus and good fortune on my side for a long period of time. And the same was true for my trading.

And then as I hit the mid-year 2009 bump, performance in both areas seemed to suffer. I'd often get hit by incredibly bad beats at the table, while at the same time experiencing trading events where I had dentist appointments and critical phone calls at the worst possible moment ... not to mention forgetting to duck last June!

Yet as I get ready to pursue a trading "stride" of sorts on 2010, my focus over the last few days feels ... well, "sharp". It was sharp last night -- especially in the hours that followed the bad beat where I frankly played my a$$ off -- and it was sharp today on a trading day where early precision was mandatory. And it's going to HAVE to be sharp as I continue to work through the process of increasing ES sizes to block status. And believe me, making sure one is constantly focused is an absolute prerequisite for increasing trade size.

Bad beats? They'll happen.

Yet I believe one constant that will help keep you grounded when they do occur is focus.

Focus on the long-term in a business where time and probability do the heavy lifting.

Focus on the short-term as you play each hand or trade each sequence ... both of which stand alone and aren't dependent on prior events.

The rest is just a blur.

An appropriate blur.

Have a wonderful weekend.