In the thread we talk about: Risk

    • ramadas
      ramadas
      Bronze
      Joined: 02.09.2011 Posts: 462
      I read this in the Forex article. I was wondering if the same is true for the poker?
      I think so. It is better not to risk unnecessarily, because it is harder then to break even. What are your thoughts?


      The reason that money management is so important with Forex trading is because a small loss requires a larger gain in order to recoup. For example, if you lose 25% of your equity, you would need to gain 33% of your equity just to recoup the loss. If you lose 50% of your equity, then you would need to gain 100% of your equity just to recoup the loss! By the time you have lost 75% of your equity, you would need a 400% return in order to recoup your losses. Despite the reality of this situation, it is common for traders to ignore money management techniques and lose their entire Forex profits in a few bad trades.



      The key to money management in Forex trading is going for the small, low-risk profits. But most novice traders (who will never have the chance to become experts!) are not trading in this way. Instead, they are hoping for that “Big One” in which they make a cool million off of a single Forex trade. It is easy to see how the beginner Forex traders get this idea in their head, especially when tales of traders like George Soros are filling their heads. While it is possible to make massive gains from a single, risky trade, it is much more likely that you are going to deplete your Forex account.
  • 10 replies
    • MatejM47
      MatejM47
      Black
      Joined: 21.01.2010 Posts: 1,193
      The difference is when your trading forex you can have your whole roll on the line on one bad trade. In poker there's BRM. Its like having a 1k roll and play NL1000.
    • pleno1
      pleno1
      Coach
      Coach
      Joined: 19.11.2010 Posts: 5,596
      Hey,

      Maybe you will get more feedback in the learning to win forum and we can discuss risk here. Will rename the thread :)
    • pleno1
      pleno1
      Coach
      Coach
      Joined: 19.11.2010 Posts: 5,596
      So who is experienced with risk? Who practices cautious brm? Who practices aggressive brm? Why? What would make you change this? Is age important? Does our edge change things?

      Very interested.
    • stripofbacon
      stripofbacon
      Bronze
      Joined: 08.11.2011 Posts: 367
      Originally posted by MatejM47
      The difference is when your trading forex you can have your whole roll on the line on one bad trade. In poker there's BRM. Its like having a 1k roll and play NL1000.
      Highly doubt this is true.
      There must be some sort of BRM in forex, too.
    • Spungeh
      Spungeh
      Bronze
      Joined: 29.06.2011 Posts: 1,212
      forex is rigged.

      and on other news.. forex BRM = like 3% for each trade, all the way to 10% for each trade.. Even thats a gamble if you dont have inside info.. (which is (un)fortunately illegal)
    • NIVEKii
      NIVEKii
      Bronze
      Joined: 01.01.2009 Posts: 1,097
      I came here hoping to discuss the board game :(
    • eXtremeACE
      eXtremeACE
      Bronze
      Joined: 22.02.2011 Posts: 267
      Originally posted by pleno1
      So who is experienced with risk? Who practices cautious brm? Who practices aggressive brm? Why? What would make you change this? Is age important? Does our edge change things?

      Very interested.
      I guess the more inexperienced you are, ie the less edge you have, you're better off going with cautious brm, and the opposite is true, ie the more skill/experiences equals the more edge - you can play if aggressive brm if you feel like it.

      Because while playing you'll also keep improving, and the more room you have to play longer (more BIs), the better you will be and will be avoiding stupid mistakes (= losses) further on.

      That's my philosophy on that, but to connect with your question

      Is age important?

      I've actually read a book, where author said age plays a good role, and basically the younger you are (and the money for poker isn't crucial for your living at the time) it's better to go aggro brm, because you can hit midstakes sooner, and had you lose it all - hey you're young, you can deposit again..

      But I like my philosophy better :D
    • MisClick
      MisClick
      Bronze
      Joined: 30.05.2008 Posts: 1,186
      (in reply to OP)

      No, I don't think it is any different.

      In Forex trading (or any other kind of commodity trade), what you are talking about in your example is your return. It is the same in poker. Your return is you BB/100. In Forex and any other trading markets, you use what is called the Kelly criterion in order to avoid risk of ruin. Usually when trading you roughly take a 5% at risk per trade rule until you can kind of know your win rate and adjust accordingly. So in trading the Kelly criterion gives birth to Portfolio management while in poker gives place to BRM.

      Something that adds extra risk in commodities/forex trading is leverage. Usually you buy leveraged, and you 'bet' per pip. This can give place to terrible losses as you can loose more that what you invested, so all becomes a little bit more complicated, while in poker you don't loose more than what you sat at the table with. So risk in poker is much less and it is capped to your brm reaching 0. Also it is easier to assess your overall true win rate in poker than it is while trading markets.

      Hope that helped.
    • Kyyberi
      Kyyberi
      Coach
      Coach
      Joined: 09.07.2010 Posts: 10,511
      I don't think you can compare forex trading and poker here. Let's say you have a bankroll of $1000. You lose $250 of it. Now in forex, you lost 25% of your bankroll. But to get back to $1000 you need to increase your bankroll (which is $750) by 33%. And as your winrate is %, you need to win more than you lost to get back to level 0.

      In poker, you lost $250 which might be 1000bb. To get that back you need to win 1000bb. To get back to level 0, you need to win as much as you lost.

      At least in cash games it works that way. But if you are using Kelly-method to calculate your buyin and playing tournaments, you could compare forex and poker.

      In cash games, your mindset should be like this when you face a risk:

      1) Is it +EV? If yes, go to line 2.
      2) Does my BRM allow it? If yes, go to line 3.
      3) Proceed.
    • MisClick
      MisClick
      Bronze
      Joined: 30.05.2008 Posts: 1,186
      You can look at your buy-in as the amount you are putting at risk. That is not any different than sngs. That is how you choose what level of cash game you play, and you do it according to your win rate, in both cases of sngs and cash games.

      In poker, you have a bankroll of 1000. You lose 250 of it. You lost 25% of your bankroll. To get back to 1000, you need to increase your bankroll by 33%.

      Looking at your second point from the trading point of view is not any different. You lost 250 in a trade. You need to make 250 again in order to break even.

      I think there is some way to look at it (not sure here how the equivalence will go though). Say you have some xbb/100 rate. You lose $y in a hand badly played. How many more hands do you have to play to wipe out your mistake? Or, for waht percentage you need to increase the number of hours played to make up for it? (Again, I need to think more about this way of looking at it)