Forex Trading: Legit Plan B for US Online Poker Players?

5 August 2011, Created By:
Forex Trading: Legit Plan B for US Online Poker Players?

The jury’s still out on what happens next for online poker players in the United States.

Some, like Phil Galfond, have already left for Canada to keep playing. Some have started the transition to live poker.

Most are still in limbo though. And despite a more optimistic outlook for legislation lately, there’s still no definite timeline for online poker’s mass return to the US.

The hard fact is thousands of people who made their living playing online poker are out of work.

Considering the lifestyle online poker offered – financial independence, massive earning potential, international travel, a tight community of friends and fellow diehards – it’s a double or triple blow for most.

With big gaps in their resumes, specialized skills in a misunderstood field and a less-than-booming job market, it’ll also fairly unlikely most players will find work right away. Especially work that offers a comparable level of autonomy and income.

With that in mind, we went looking for Plan Bs.

Given the natural and well-documented connection between poker and trading, we consulted an expert in the field to see what the crossover potential is.

By Tom Cleveland

For those online poker players that have devoted countless hours to improving their game, maximizing their edge and grinding out a living in online poker over the last 6-8 years, right about now you might be wondering if all those hours invested have been a waste of time.

The upside is your analytical skills are finely honed, you can manage key probabilities to gauge expected value and you’re not risk averse or afraid to follow your instincts.

But is that skill set easily transferable to another discipline - especially one where you can make comparable money?

Andrew Frankenberger
Andrew Frankenberger: One of several crossover successes from trading.

Same Same But Different

The correlations between playing poker and trading currency pairs in the Forex market are fairly consistent. 

Forex trading is high risk and does require specialized training, but the factors for success – knowledge, experience and emotional control – are the same required at any poker table.

A few other similarities are also worth mentioning:

The Table Game

You won’t be focusing on one specific game like Texas Hold’em or Pot-Limit Omaha, but you'll instead choose between currency pairs.

The major currency pairs are all linked to the U.S. dollar, and each has an individual style and personality to adapt to in order to gain a psychological advantage. 

The Euro and the Yen are steady and most heavily traded, but the Pound Sterling can be erratic and more volatile, requiring a deft touch to warrant your time.

The Players 

You're competing against other traders, large hedge funds and major global banks - all with more capital and experience - so you have to pick your spots carefully and latch onto predictable trends when they appear. 

There is a psychology to trading, and the “tells” appear in the form of recognizable patterns of pricing behavior.

You must learn these various patterns to anticipate the moves of other traders.

The Deck  

The Forex market is the largest and most liquid market in the world with over $4 trillion in daily volume. 

No one is big enough to stack the deck, so to speak, but events on the global stage can influence the market to move in expected ways.

Luck does factor in at the Forex table, but there are many ways that you can make your own luck happen.

Success is all about risk/reward calculations and money management principles.

As in poker you will have losses, but you must cut your losers early and let your winners run.

You won't achieve this end through following a Martingale strategy, for example, but you do limit your bets until an obvious trend can provide a larger than normal payoff.

Practice Regimen  

As with online poker, you must invest the hours on practice systems to gain the confidence and the consistency with your trading plan for the “real game” down the line. 

Most Forex brokers offer free demo systems where you can wager virtual cash with real-time quotes to fine tune your individual trading plan and develop familiarity with the market and your choice of currency pair or pairs.

If you’re serious about getting started in Forex trading, take advantage of these offers.

The Edge

Technical analysis (“TA”) will be your primary tool, supplemented by pattern recognition, to assess whether you hold on to or drop your currencies.

Eugene Katchalov
Eugene Katchalov: Knows his markets.

Most academics believe the market is totally random, but traders rely on techinical analysis to provide an edge when it comes to picking market entry and exit points. 

Markets are driven by fundamental economic data, but traders must interpret that data and make decisions about where the market will move. 

The inability of the entire trading community to agree causes volatility, which produces predictable trends and opportunities for gain.

The simple fact is that the analytical skills, ability to assess probabilities at hand quickly and the intuitive recognition of repeating patterns is the essence of both online poker and Forex trading. 

The First Steps

If your interest's been piqued, here are a few steps to take to make a deeper personal assessment whether Forex might be right for you:

Preparation: Immerse yourself on the topic of Forex and read everything you can find on the Internet or in your local bookstore.

The objective here is to become familiar enough with terms and strategies before you take a tutorial or formal class on currency trading.

Knowledge: Enroll in a formal class. Many are offered online. Forex brokers often hold free clinics in major cities.

Your instruction will typically cover the necessary topics of fundamental and technical analysis, Forex brokers and order management, trading systems and strategies, risk and money management and other rules of the road.

As with poker there are no shortcuts, but finding a mentor to guide your efforts is highly recommended.

Experience: A free demo system is your avenue for gaining experience before you put any real capital on the line.

Successful traders claim to have invested months of “practice” trading before ever venturing out into the real market. 

Your actual market experience may vary due to time lags in order execution and other factors, but begin with small positions and work your way up before “turning on the green light”.

Emotional Control: Currency trading is about managing the numbers in a business-like fashion, devoid of any emotional considerations.

You must follow your heavily practiced, step-by-step trading plan to block your mind from undermining your logical decision-making process.

Sound familiar?

Brandon Adams
Emotional control is key in both trading and poker.

Similar Risk, Similar Reward

Make no mistake, Forex trading has a high-risk profile.

There is a high failure rate among beginners because they become impatient or lack the experience necessary to survive and thrive.

Successful trading is not about gambling or luck. It’s about playing the odds, cutting your losers, and letting your winners play out based on a disciplined approach to the market.

If you need a break from poker, or you’re being forced to take one, it may be worth looking at Forex as a substitute.

Author Bio:

Tom Cleveland has over 30 years of experience in executive management, corporate governance and business development. Tom served as CFO for various Visa International entities from 1980 until his retirement in 1999 and was instrumental in expanding the global reach of the Visa system. Tom’s writing on business issues has appeared in the NY Daily News and BusinessInsider among others.

Editor's Note: We know. It’s not a solution for everybody. And there are a lot of spammy Forex systems and sites out there. Proceed with caution. We’re just throwing the idea out there.

Us, we’re holding out for online poker.



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