The "Ultimate" Holy Grail Of Trading

In this post, I want to talk about the "true" [there's actually more than 1] Holy Grail of trading and point you to it.

I often say that trading is very similar to poker...and it is.  
  • The key to both is risk management
  • There is the potential for both tremendous upside and downside 
  • Decisions must be made with imperfect information based on probabilistic outcomes
  • Emotional control/management is key 
Much of my way of trading is a result of applying the logic of poker to trading.  I taught myself to play by looking up the hands on the internet and playing on a mobile phone... incessantly. 

And I got pretty good...

I took a grub stake of $500.00 and turned it into a bit over $21M in the span of about 2 months before I had to update that phone... Fortunately I took a picture before that RIMM (yes, I still had a RIMM) decided to mandate said update.

Its a bit hard to see, but my cash balance was $18,290,000 and I had $3,360,000 "at the table" at the moment i took this picture. Not bad from a $500 start.

It's worth noting that I blew up several "accounts" before I found my footing and made the run that resulted in the numbers you see pictured. If I add those "failures" in, that makes my starting number look more like 4k to 5k. Still pretty good if you ask me.

How did I do it? I controlled my risk... I rarely went "all in" and I kept my ante small relative to my total bag. I also exploited and leveraged my positive expectancy by playing a massive number of hands... likely far more than a player can find in real life [except maybe online... or in day trading☺].

At any rate, I tell that story because I was watching a bit of the WSOP (World Series Of Poker) recently and found myself getting a bit anxious. 

Not because I didn't know the cards and hands the same way... nor because I was unsure about whether to fold, call or raise based on what was on the table.

No, I started to question my understanding because I didn't know all the "cool" terminology. I didn't know a backraise from a catch up... a dead hand from a dead blind.

I started to wonder if the poker game on my phone was rigged in my favor... and then it hit me.

That's the exact problem many new traders face.  You worry so much about terminology and what you "don't know" that you often forget what's really going on.

Here's the rub... if you buy, it goes up, you sell, you make money.  You buy, it goes down, you sell, you lose money. 

Short selling works the exact same way... Just in reverse.

All the "special" terminology is really only that.


Don't let the fancy terms deter/repel you. The ones you need to learn, you'll learn (there aren't many). And the rest you'll ignore until some later time... if ever.

In other words, keep it simple. That's this Holy Grail.

The Trader

P.S. For the record, I'm not saying you can turn $500, or even $5,000, into more than $20,000,000 inside 3 months via day trading... especially as a "newby." It's possible... but highly unlikely.

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