I'm going to list some of my favorite sandwich places in NYC. All of these sandwiches are not cheap, and start above $6. If you want something cheap or something that is more of a traditional sandwich, the $5 footlong at subway really is a good deal. I usually get the banana peppers to add flavor without adding something cream/fat based. This list is by no means comprehensive, but I'm at work now with nothing to do so here goes.
Lamazou
http://lamazoucheese.com (3rd ave/27th st)
Lamazou is a small cheese shop that has a large selection of premium quality meats and cheeses. Almost every sandwich there is good. I tend to have my sandwich on their ciabatta, but I also listen to their suggestions as they seem quite knowledgable. My favorites are the 1. Smoked Salmon with Lemon dressing, Capers, Onions, Cornichons, the 4. Mortadella, Salami with Provolone cheese (must add roasted red peppers, this sandwich becomes amazing) and the 21. Chicken Salad, Cheddar & Sundried Tomatoes. Another great thing there is their roquefort egg salad. Yes, egg salad mixed with a good amount of one of the tastiest blue cheeses. Fattening for sure, but oh so good.
Baoguette
http://baoguettecafe.com/index.html (Murray Hill, East Village, West Village)
I will not debate whether this banh mi is authentic or not, and I understand that it's hard to justify the higher price when cheaper banh mis are to be had all over NYC. However, their ingredients are fresh, the bread is nice, and I'm mostly there for the curried catfish sandwich that comes with cucumber relish, pickled red onion, and honey mustard sauce. While catfish is a relatively cheap fish, a fish sandwich for $7 is not horrible.
Num Pang
http://www.numpangnyc.com/index.html (University Pl/12th st)
The sandwiches here are amazing in their variety and the freshness of their ingredients. Whatever needs to be grilled is grilled to order before being put in the sandwiches. Everything on the menu looks good and they have a good array of daily specials that actually change frequently. While the size of the sandwich doesn't look like a lot, the semolina bread is quite hearty and should fill you up quite easily. When I ordered the shrimp and spanish mackerel sandwiches, the portion sizes were good too.
Monday, June 8, 2009
Sunday, June 7, 2009
Running score (bridge, sport)
Just finished watching the early afternoon vugraph on BBO of this year's team trials for selecting the representatives for the US in this year's world championship. In two of the round of 32 matches in this session, there was a "state of the match" gamble on the final board.
In one match, one player made a leap to slam which made on some helpful lies and won the match despite trailing by 5 imps going into that board. While the auction made it seem that the jump to slam was a calculated risk, it was still very likely that the perceived score influenced the decision.
In another match, one player bid a grand and went down while the other table bid and made the small slam which decided the match. I did not kibitz this match, but I was told that bidding the grand might have also been a "state of the match" decision. The problem was that the team that bid the grand was actually up 5 imps going into that board!
This brought up a very good point among the specs. Bridge is the only sport (or mindsport if you want) where there is no running score known to the players up to the last decision to be made. In all physical sports there is a running score, in poker there are chip counts, and in a race you can always look back and see where your opponents are. In bridge, depending on the number of boards designated per set, you can only know the running score up till that last set. The only argument for a sport where the running score wasn't known was boxing, but that score is a subjective tally and I think that's different.
What's also different with bridge is that it's the only sport where there are a set number of boards that are played. Because of the need for comparisons across the duplication, this is different from a "timed" event. I'm not sure I know any other sport/game that does that. In the end, bridge cannot do a running score without slowing the game down tremendously. Because of the duplication, both sides would be restricted to playing each individual board within a specified time frame, or else the table that plays faster would be disadvantaged by the lack of score comparison. This is also why a barometer style pairs is ok, because it's normal to expect all pairs to finish a round simultaneously.
This is just something we all have to accept as bridge players, and it might also be another reason in support of why bridge is not a sport, but a game or mindsport if you will.
In one match, one player made a leap to slam which made on some helpful lies and won the match despite trailing by 5 imps going into that board. While the auction made it seem that the jump to slam was a calculated risk, it was still very likely that the perceived score influenced the decision.
In another match, one player bid a grand and went down while the other table bid and made the small slam which decided the match. I did not kibitz this match, but I was told that bidding the grand might have also been a "state of the match" decision. The problem was that the team that bid the grand was actually up 5 imps going into that board!
This brought up a very good point among the specs. Bridge is the only sport (or mindsport if you want) where there is no running score known to the players up to the last decision to be made. In all physical sports there is a running score, in poker there are chip counts, and in a race you can always look back and see where your opponents are. In bridge, depending on the number of boards designated per set, you can only know the running score up till that last set. The only argument for a sport where the running score wasn't known was boxing, but that score is a subjective tally and I think that's different.
What's also different with bridge is that it's the only sport where there are a set number of boards that are played. Because of the need for comparisons across the duplication, this is different from a "timed" event. I'm not sure I know any other sport/game that does that. In the end, bridge cannot do a running score without slowing the game down tremendously. Because of the duplication, both sides would be restricted to playing each individual board within a specified time frame, or else the table that plays faster would be disadvantaged by the lack of score comparison. This is also why a barometer style pairs is ok, because it's normal to expect all pairs to finish a round simultaneously.
This is just something we all have to accept as bridge players, and it might also be another reason in support of why bridge is not a sport, but a game or mindsport if you will.
Tuesday, June 2, 2009
The greatest poker advice I've ever read (gambling)
The WSOP started a few days back and the big 40kNLHE already has a winner. While that was certainly the big news especially with all the NLHE fans out there, I was more interested in another event. The 1.5k limit Omaha/8 produced Thang Luu as the winner yet again. In the last 3 versions of this event, Thang has won it twice and come in second the other time. The only other time someone has gone 2nd or better 3 years in a row was Johnny Chan, when he lost that third main event to Phil Hellmuth.
I was reading the results on the WSOP site and came across an interview with Thang Luu. He gave one of the most ineffable pieces of advice/strategy I've ever read/heard about poker. He says, "This is Hi-Lo, not No Limit. Other players in this game wait for a big hand to come, but not me. I play every hand because every hand can win." He LITERALLY plays every hand. Not all the way to the river, but it seems like from what I've read online he does see practically every flop. Obviously he has other poker skills like people reading, but it's still an amazing strategy nonetheless. In a way, it kinda makes sense. He's playing in a weak field (not sure if he'll use the same strategy in the 10k LO8 event) so there are good value betting opportunities and good fold vig. He's right that it's limit and not NL, so no matter how huge a hand you have, you can only win so much. More importantly, it's omaha/8, so the preflop dominance isn't as big as it can be in hold'em and so if he's going to outplay people after the flop, he increases his edge by seeing more flops. With regards to play, it makes it near impossible for someone to put him on a hand, and I'm sure the stuff he shows down with will tilt a lot of people. This whole strategy goes against practically everything I've ever read about poker, but the results speak for themselves.
I was reading the results on the WSOP site and came across an interview with Thang Luu. He gave one of the most ineffable pieces of advice/strategy I've ever read/heard about poker. He says, "This is Hi-Lo, not No Limit. Other players in this game wait for a big hand to come, but not me. I play every hand because every hand can win." He LITERALLY plays every hand. Not all the way to the river, but it seems like from what I've read online he does see practically every flop. Obviously he has other poker skills like people reading, but it's still an amazing strategy nonetheless. In a way, it kinda makes sense. He's playing in a weak field (not sure if he'll use the same strategy in the 10k LO8 event) so there are good value betting opportunities and good fold vig. He's right that it's limit and not NL, so no matter how huge a hand you have, you can only win so much. More importantly, it's omaha/8, so the preflop dominance isn't as big as it can be in hold'em and so if he's going to outplay people after the flop, he increases his edge by seeing more flops. With regards to play, it makes it near impossible for someone to put him on a hand, and I'm sure the stuff he shows down with will tilt a lot of people. This whole strategy goes against practically everything I've ever read about poker, but the results speak for themselves.
Another book (entertainment, sport)
Since I'm still the market's whipping boy, I've had more time to read and just finished another book. This one is "7 Seconds or Less" by Jack McCallum about what goes on behind the scenes of an NBA team during one of the more entertaining recent playoff runs, the Phoenix Suns of the 2005-06 season. I think any real NBA fan would enjoy the book, but I especially liked the book because I'm always curious about how things (businesses, etc.) are run and I love interesting characters and that team was full of them.
Only one more book left from my recent Amazon purchase and that is "Breaks of the Game" by David Halberstam. Let's see what all the Bill Simmons fuss is about.
Only one more book left from my recent Amazon purchase and that is "Breaks of the Game" by David Halberstam. Let's see what all the Bill Simmons fuss is about.
Saturday, May 30, 2009
I finished a book!!! (entertainment, stock)
Over the week that I took off (should have taken more time off as I am still the market's whipping boy), I started and finished "A Demon of our own Design" by Richard Bookstaber.
Bookstaber was an insider and high level risk manager during the heydays of Salomon, LTCM and the big hedge fund boom. The book mixes anecdotes about some of the biggest moments in finance with technical information about trading, risk, and market crises.
I really enjoyed the book. I thought it was clear he was an academic (he began his career teaching) based on the examples he used and his knack for repeating himself every now and again. The anecdotes were great with just enough name-dropping to allow the reader to understand where the author stood in the food chain. I think it is unfair to compare the anecdotal parts to "Liar's Poker", as Michael Lewis ended up being one of the more respected writers of his generation.
The technical stuff was actually more interesting for me. It explained many trading styles, approaches, and instruments instead of just giving them names. If you asked the people on the floor that I'm trading on what stat arb is, I would assume most of them didn't know, even though they are essentially doing the same thing on a smaller scale. Bookstaber's explanations were simple enough that I think even someone without much trading knowledge would be able to understand. He also provided insight into possible reasons for certain market crises of the last 3 decades.
The more complex stuff actually came from the examples he used from other fields to describe certain phenomena, which seemed more in line with the way a well-rounded academic thinks. He seemed especially caught up on cockroach behavior. While I appreciated the examples and how they compared to real life finance, I'm not sure they'd be everyone's cup of tea.
In all, I highly recommend the book, and I took away two main things from it. First, the market in the short term is always liquidity driven. Price is useful in as much as a way for a large liquidity demander to acquire the liquidity he seeks. Second, humans tend to focus on reducing known risks, sometimes at the cost of and even being the cause of unknown risks that we can't deal with, such as certain financial crises.
Bookstaber was an insider and high level risk manager during the heydays of Salomon, LTCM and the big hedge fund boom. The book mixes anecdotes about some of the biggest moments in finance with technical information about trading, risk, and market crises.
I really enjoyed the book. I thought it was clear he was an academic (he began his career teaching) based on the examples he used and his knack for repeating himself every now and again. The anecdotes were great with just enough name-dropping to allow the reader to understand where the author stood in the food chain. I think it is unfair to compare the anecdotal parts to "Liar's Poker", as Michael Lewis ended up being one of the more respected writers of his generation.
The technical stuff was actually more interesting for me. It explained many trading styles, approaches, and instruments instead of just giving them names. If you asked the people on the floor that I'm trading on what stat arb is, I would assume most of them didn't know, even though they are essentially doing the same thing on a smaller scale. Bookstaber's explanations were simple enough that I think even someone without much trading knowledge would be able to understand. He also provided insight into possible reasons for certain market crises of the last 3 decades.
The more complex stuff actually came from the examples he used from other fields to describe certain phenomena, which seemed more in line with the way a well-rounded academic thinks. He seemed especially caught up on cockroach behavior. While I appreciated the examples and how they compared to real life finance, I'm not sure they'd be everyone's cup of tea.
In all, I highly recommend the book, and I took away two main things from it. First, the market in the short term is always liquidity driven. Price is useful in as much as a way for a large liquidity demander to acquire the liquidity he seeks. Second, humans tend to focus on reducing known risks, sometimes at the cost of and even being the cause of unknown risks that we can't deal with, such as certain financial crises.
Thursday, May 21, 2009
More great food (food)
Had lunch at Eleven Madison Park last week and it was fantastic, as expected. They do a 2 course prix fixe (app, entree) for $28 during lunch and the most impressive dish for me was the suckling pig. Everyone does suckling pig and pork belly nowadays, but this dish was just a great example of a chef who knows what he's doing. At too many places, they just give you some variation of pork belly, and the fattiness is usually all the flavor anyone gets. But here, you get a piece of extremely flavorful and tender pork loin, a square of confit, as well as a piece of pork belly. There is real pork flavor to every bite, and it's not just eating a mass of fat. I also had the 11 course gourmand tasting menu for dinner here a couple months back, and it was the best meal I had in about a year and a half. I didn't blog about that meal but I hope to go back and try it again and I promise to write about it then. Eleven Madison Park is right now on the top of my list for top end places to bring someone to impress. I, along with many foodie forum people, am still astonished that it doesn't even have one Michelin star.
Also fantastic was the ramen lunch special at Tsushima in midtown. This probably is the best ramen I've had in NYC. The noodles are thin but springy, unlike the thin and limp ones at Ippudo. The pork has the best meat to fat ratio I've seen from any of the ramen places, and they even toss in a whole scallop in the bowl (no shell). It is a shio ramen, so the best comparison is with Setagaya and not with Ippudo. Again, Ippudo does have an amazing porky broth, but like I wrote in the above paragraph, anybody can get flavor out of pork fat. The broth at Tsushima was better than at Setagaya in my opinion. It wasn't salty at all, and there was just enough of the hint of the scallop that I think it was simmered in the broth (I wish it came out more clearly though). The best part is the price. For the $13.50 set, I had the bowl of ramen and a side bowl of rice topped with ikura (salmon roe). And not just a tiny spoonful, there was a good amount of it. From what I've read online, they used to only make like 30 portions of this ramen and would sell out quickly. Nowadays I think they make more. The ramen lunch special is only available on Wednesdays, but they have very good lunch deals throughout the week, and their normal bento-like lunch special also caught my eye. One maki, one appetizer, one entree, and one dish of tempura with rice and salad for $16.
When the weather gets warm, street fairs are very common in NYC. Usually held almost every weekend, they close down about 10 blocks on one avenue (locations change) and many stalls are set up with different ethnic foods, fair foods, and even crappy game stalls with crappy stuffed animal prizes. Last weekend, I went to the ninth avenue international food festival, which is essentially a big street fair out in the Hell's Kitchen area. This one is better than most normal street fairs because there are more restaurants on ninth avenue that operate food stalls to give you a sample of their food.
Among the usual suspects in terms of food cultures were the italians (italian sausage, zeppoles), the fried foods (fried oreos, they even had a stall that did a bloomin' onion, and of course, the worst food in the world, funnel cake), the latin americans (colombian steak, tacos, tamales), the west indians (oxtail, goat curry), the indians, the thai (satay, pad thai), and desserts (pies, italian ices). In terms of stalls that I patronized as well as stalls that wouldn't necessarily be at all street fairs, there was cajun (from the Delta Grill, crawfish boil, etouffee, jambalaya), fried seafood (whole fried soft shell crabs, terrific fried scallops), fresh seafood (raw bar, I couldn't get myself to eat more than one oyster from a guy shucking in the street on a hot day), and pulled pork sandwiches (whole roast pig out in the open, run by a bar).
There were also some interesting non-food items there. There was a stall for the "super sham-wow" which is essentially a larger piece of sham-wow. I gotta say, that thing looks more and more impressive. For $20 you get essentially 6 times the amount of shamwow goodness of the TV ad. There are usually people selling sheet sets. Best deal I saw was $20 for 1000 count king size, which will easily run $120 at Macy's. Then there was the guy who was selling containers of spices. I don't care if you're the greatest, most diverse chef in the world, I'm willing to bet that you don't have that container on the right in your spice rack/cupboard.
Tuesday, May 19, 2009
On tilt (trading, poker)
The market has me on tilt right now. I haven't been this frustrated with daily trading in a long time. Right now I'm going to take a break for the rest of the week to avoid tilting any further. To fully complete the metaphor, the feeling I have right now is just like when a donk is sitting at the table with no fear and major aggression.
You continue to sit at the table because, after all, the guy is a donk and is frequently risking a lot while behind. The problem is though, that if you don't get dealt the right cards to take advantage, it can be a very frustrating experience. The irrational play of a donk can make it hard for you to play your game and make your usual moves. Maybe you catch him while you hold the best hand, but then he sucks out on you. Again. And Again. Or perhaps at some point because you know he's a donk, you start reraising him with weaker hands than you normally would. This is fine except he never folds and you miss the flop. At some point, between the bad beats, the inability to play your own game, and the frustration with not being able to take advantage of someone's irrational play, you can easily go on tilt.
That's exactly how the market feels to me right now. It's not that there isn't money to be made out there, but it's like the description above where I'm not getting dealt the right cards to take advantage. There are also the bad beats, for example where I'm correct on the trend or the eventual move, but just as I establish a heavy position, some order comes in the opposite direction that just can't wait to fill and pushes it past my risk. I have to get out, and then once that donk order runs out, it goes back so quickly I can barely reestablish. There was even a trade today where I made money, but at the same time still felt so disgusted by the move, even though it was in my favor.
Recognizing the tilt is at least a step in the right direction. I hate being away from the market but I know that I need to step away and take a breather. The fact that I go in every day and feel frustrated by the movements can't be good for my results. Hopefully it'll get better after the long weekend.
You continue to sit at the table because, after all, the guy is a donk and is frequently risking a lot while behind. The problem is though, that if you don't get dealt the right cards to take advantage, it can be a very frustrating experience. The irrational play of a donk can make it hard for you to play your game and make your usual moves. Maybe you catch him while you hold the best hand, but then he sucks out on you. Again. And Again. Or perhaps at some point because you know he's a donk, you start reraising him with weaker hands than you normally would. This is fine except he never folds and you miss the flop. At some point, between the bad beats, the inability to play your own game, and the frustration with not being able to take advantage of someone's irrational play, you can easily go on tilt.
That's exactly how the market feels to me right now. It's not that there isn't money to be made out there, but it's like the description above where I'm not getting dealt the right cards to take advantage. There are also the bad beats, for example where I'm correct on the trend or the eventual move, but just as I establish a heavy position, some order comes in the opposite direction that just can't wait to fill and pushes it past my risk. I have to get out, and then once that donk order runs out, it goes back so quickly I can barely reestablish. There was even a trade today where I made money, but at the same time still felt so disgusted by the move, even though it was in my favor.
Recognizing the tilt is at least a step in the right direction. I hate being away from the market but I know that I need to step away and take a breather. The fact that I go in every day and feel frustrated by the movements can't be good for my results. Hopefully it'll get better after the long weekend.
Sunday, May 17, 2009
Added Labels To Posts
I've added labels to some old posts and will try to remember to add labels (and include the label in parentheses in the post title) to new posts. I've not completely categorized every post, but it's a start and maybe some day when I'm really bored or want to look back at all the writing I've done I'll do a more thorough job. For now, the labels include bridge, food, gambling, horseracing, sport, stock/trading, and tv.
Charles Barkley is still awesome (sport, entertainment, tv)
I was rooting for the Celtics so game 7 was disappointing, but since I cleared out some of the stuff on my DVR, I decided to stay tuned and watch the post game show. It's been a while since I've watched an entire Inside the NBA show, but this was pretty awesome. About a few minutes in, Chris Webber interrupts Barkley, saying that he wants to reiterate something, at which point Barkley challenges Webber to spell "reiterate". Webber starts with "r-e-i", changes his mind to "r-i-e", then gives up all together. Hilarious. Remember, Webber actually spent 2 years at Michigan.
Another gem was when Kenny Smith set up a joke by asking Barkley, "Why don't you give a woman a watch?" To which Charles replied, "Cause there's a clock on the stove!" Webber hadn't heard this one before and was laughing uncontrollably at this point.
While he's very entertaining, Barkley is also a terrific basketball analyst. He made a great case for Orlando being hard for Cleveland to match up against, as well as a case for Denver having played the most consistently good basketball so far in the West. From all my years watching horseracing, I definitely know that it's important for an analyst not to be afraid to pick an underdog. I also like how he said he was pissed that the Lakers have amassed so much talent and yet are half-assing it.
The best part I thought came at the end when they showed the clip http://www.youtube.com/watch?v=qUuhyzFSa7k&e where Barkley and his ugly-ass swing hits a gallery spectator in the back of the head.
Barkley is still awesome and entertaining.
Another gem was when Kenny Smith set up a joke by asking Barkley, "Why don't you give a woman a watch?" To which Charles replied, "Cause there's a clock on the stove!" Webber hadn't heard this one before and was laughing uncontrollably at this point.
While he's very entertaining, Barkley is also a terrific basketball analyst. He made a great case for Orlando being hard for Cleveland to match up against, as well as a case for Denver having played the most consistently good basketball so far in the West. From all my years watching horseracing, I definitely know that it's important for an analyst not to be afraid to pick an underdog. I also like how he said he was pissed that the Lakers have amassed so much talent and yet are half-assing it.
The best part I thought came at the end when they showed the clip http://www.youtube.com/watch?v=qUuhyzFSa7k&e where Barkley and his ugly-ass swing hits a gallery spectator in the back of the head.
Barkley is still awesome and entertaining.
Saturday, May 16, 2009
Another Poker/Trading Analogy (trading, gambling)
Many people have written or talked about the similarities between poker and trading as professions. Mostly these discussions focus on the characteristics of the players and the traits of the successful and unsuccessful participants. Usually things like how being fearless, having good discipline, good money management, a quick mind, and the ability to be decisive are common to both good poker players and good traders. Instead, I'm going to point out what I think are similarities between the different games of poker and the different trading strategies that are their equivalent.
I am one of those who believe that poker is not a card game, but a betting game. There is no play of the cards (suits, rankings) and the role of the cards is simply to determine the winner of the betting, while at the same time providing different states of probability along the way. Because of this, the different ways that people are allowed to bet are more important than many people realize. Similarly, there are many markets with varying degrees of liquidity and risk. Many traders also have different time horizons and risk/reward goals for their trades. What follows is my view of the trading equivalent of three of the most popular poker games and why it matters to know the difference.
Limit Holdem
In limit, the amount per bet is fixed and the number of raises is capped. This means that relative to each bet, the resulting pot you can win is smaller than at other games. This also means that the odds and implied odds for calling a bet while behind cannot be dictated by the player who is ahead. In the end, most successful limit holdem players are continually trying to grind out small edges and small pots. The trading equivalent of the successful players who play this game are the market makers, spread makers, arbitrageurs, and rebate players. These are the guys who try to take advantage of small edges and make them over and over again, knowing that they are not aiming to take all of someone's money on one hand.
Pot-Limit Omaha
In pot-limit, a player may bet or raise up to the amount that is already in the pot. This means that pots can become big by being progressively built. This style of betting is perfect for Omaha, where there are many different routes to end up with the best hand on the river. That means players will build pots whether they are already there (eg. top set) or plan to get there (eg. flush draw, wrap straight draw). Also, no matter how much you've committed to the pot, it is important to give it up when the wrong card hits (eg. you have top set and the river connects both a flush and a straight, chances are you're beat). I feel that the trading equivalent of pot-limit players are trend followers. Trend traders add into their position along the trend, hoping to ride it for a big payoff at the end. Similarly, these traders have to get out when the trend line breaks no matter how committed they've been in riding the trend.
No-Limit Holdem
The most popular of the poker games involves the ability to win big pots and make big bluffs. My feeling is that the equivalent type of trader usually consists of one or two individual traders rather than a well-oiled hedge fund machine, and these traders usually trade in the biggest or thinnest markets, usually currency, commodities, or energy markets. These aren't guys who get leveraged to make a tiny spread. They get leveraged for a big payout. These are usually the traders and poker players who tell you they only need to have about a 50% win rate because their winners are much bigger than their losers. The most memorable of these traders usually involve the biggest bets. Soros and Druckenmiller come to mind, and among the most recent, Brian Hunter. He was the trader that brought down Amaranth. From what I read, he knew the market was going against his spread trade but he thought he had enough resources behind him (2bil+leverage) to squeeze the market the other way. Sometimes you go all-in on a bluff and get called. Also note that while he made a big bet and lost, he wasn't a rogue trader like Kerviel or Leeson.
It is important to identify these differences in betting style/strategy because not everyone can excel at all of them. One other thing in common between poker players and traders is ego. While most players think they can do just as well in all the different forms and strategies, that is usually not the case. While nobody will really argue against Phil Hellmuth's skills at NL Holdem tournaments, when he sits down against the best cash limit holdem players in the world, he's practically giving away money. Similarly, you can frequently spot a trader who thinks he's better at making spreads but whose buy points usually lead to 3% moves that he never takes advantage of. It is important to really know what kind of trading you excel at, just as it is important to play the game of poker that you're best at.
Also, no matter the size and scope of your operation, the basic style is the same. The difference between a daytrader trying to ride a half hour trend and a PM riding an 8 month trend is like the difference between playing 1/2 and 10/20. A trader who makes a market in one stock every day and a quant who runs a market making program in 15 stocks is the difference between a guy playing 1 table and one of those internet pros 15-tabling the poker games.
Finally, let's not forget the Bernie Madoffs. There is the equivalent of a ponzi scheme in poker. I don't know the correct term, but here's an example. A guy sells 50% of whatever he'll win to someone for the entry fee. This is a pretty normal type of staking arrangement in poker. However, the same guy can now go to someone else and make the same deal. Now he's sold 100% of himself, but taken in twice the buyin. All he has to do now is put up a good show, not cash, and he's got himself a risk-free equivalent of one buyin.
I am one of those who believe that poker is not a card game, but a betting game. There is no play of the cards (suits, rankings) and the role of the cards is simply to determine the winner of the betting, while at the same time providing different states of probability along the way. Because of this, the different ways that people are allowed to bet are more important than many people realize. Similarly, there are many markets with varying degrees of liquidity and risk. Many traders also have different time horizons and risk/reward goals for their trades. What follows is my view of the trading equivalent of three of the most popular poker games and why it matters to know the difference.
Limit Holdem
In limit, the amount per bet is fixed and the number of raises is capped. This means that relative to each bet, the resulting pot you can win is smaller than at other games. This also means that the odds and implied odds for calling a bet while behind cannot be dictated by the player who is ahead. In the end, most successful limit holdem players are continually trying to grind out small edges and small pots. The trading equivalent of the successful players who play this game are the market makers, spread makers, arbitrageurs, and rebate players. These are the guys who try to take advantage of small edges and make them over and over again, knowing that they are not aiming to take all of someone's money on one hand.
Pot-Limit Omaha
In pot-limit, a player may bet or raise up to the amount that is already in the pot. This means that pots can become big by being progressively built. This style of betting is perfect for Omaha, where there are many different routes to end up with the best hand on the river. That means players will build pots whether they are already there (eg. top set) or plan to get there (eg. flush draw, wrap straight draw). Also, no matter how much you've committed to the pot, it is important to give it up when the wrong card hits (eg. you have top set and the river connects both a flush and a straight, chances are you're beat). I feel that the trading equivalent of pot-limit players are trend followers. Trend traders add into their position along the trend, hoping to ride it for a big payoff at the end. Similarly, these traders have to get out when the trend line breaks no matter how committed they've been in riding the trend.
No-Limit Holdem
The most popular of the poker games involves the ability to win big pots and make big bluffs. My feeling is that the equivalent type of trader usually consists of one or two individual traders rather than a well-oiled hedge fund machine, and these traders usually trade in the biggest or thinnest markets, usually currency, commodities, or energy markets. These aren't guys who get leveraged to make a tiny spread. They get leveraged for a big payout. These are usually the traders and poker players who tell you they only need to have about a 50% win rate because their winners are much bigger than their losers. The most memorable of these traders usually involve the biggest bets. Soros and Druckenmiller come to mind, and among the most recent, Brian Hunter. He was the trader that brought down Amaranth. From what I read, he knew the market was going against his spread trade but he thought he had enough resources behind him (2bil+leverage) to squeeze the market the other way. Sometimes you go all-in on a bluff and get called. Also note that while he made a big bet and lost, he wasn't a rogue trader like Kerviel or Leeson.
It is important to identify these differences in betting style/strategy because not everyone can excel at all of them. One other thing in common between poker players and traders is ego. While most players think they can do just as well in all the different forms and strategies, that is usually not the case. While nobody will really argue against Phil Hellmuth's skills at NL Holdem tournaments, when he sits down against the best cash limit holdem players in the world, he's practically giving away money. Similarly, you can frequently spot a trader who thinks he's better at making spreads but whose buy points usually lead to 3% moves that he never takes advantage of. It is important to really know what kind of trading you excel at, just as it is important to play the game of poker that you're best at.
Also, no matter the size and scope of your operation, the basic style is the same. The difference between a daytrader trying to ride a half hour trend and a PM riding an 8 month trend is like the difference between playing 1/2 and 10/20. A trader who makes a market in one stock every day and a quant who runs a market making program in 15 stocks is the difference between a guy playing 1 table and one of those internet pros 15-tabling the poker games.
Finally, let's not forget the Bernie Madoffs. There is the equivalent of a ponzi scheme in poker. I don't know the correct term, but here's an example. A guy sells 50% of whatever he'll win to someone for the entry fee. This is a pretty normal type of staking arrangement in poker. However, the same guy can now go to someone else and make the same deal. Now he's sold 100% of himself, but taken in twice the buyin. All he has to do now is put up a good show, not cash, and he's got himself a risk-free equivalent of one buyin.
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