Let it Go...

Some behind the scenes psychology of trading and poker:
A healthy ego is needed for both stock trading and poker playing.  It's when it blinds you from doing the right thing that it becomes a problem.  Certainly an obstacle to overcome if you choose to persist in either game.  My ego introduces stubbornness into my play.  It is good stubbornness that keeps me involved to learn and improve, but it is also stubbornness that made me hold on to trades too long when I first started, and now making me hold on to a losing hand too long in poker!  This is not to be mistaken with arrogance or any other unhealthy ego characteristics, it is simply human nature to not want to take a loss.

When I started trading after reading many books on technical analysis I was ready to conquer the stock market as I knew all about setups, chart patterns, and technical indicators.  I would get into a trade and all of a sudden the pattern would break down.  "No, this pattern should hold here and the stock will come back."  Yeah.  Apparently the stock didn't read the same books as it plummets further and further due to some fundamental change in the company.  Now I'm facing a much bigger loss than the small one I had after the breakdown.    One of many lessons learned the hard way in trading, don't be stubborn, let it go.  After experience and discipline I have rid myself of this "leak" in my trading.

Now this is clearly showing up again in my poker game where I find myself holding a likely losing hand post flop and taking risks betting when I have some indication that I do not have the upper hand or I don't have good odds to stay in the game.  "But I'm right and he's bluffing", I convince myself, or "I'll hit my Ace on the turn.... the River" when there is a possible flush or straight or even a pair on the table and a player is betting aggressively. (Of course this is simplified as there are many other factors to consider before folding, such as what type of player I'm facing, how they played their hand so far, pot odds, etc.. the usual variables in poker.) Just as I once hoped that the stock will bounce, I'm now hoping that I will get hit on the turn or the river even with unfavorable odds.  Hope is not a good strategy when you're trading or playing poker.


Common lesson to learn: Hope is not a strategy.  Take your losses early and let your winners run! 

stocknuts