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A new era has begun, when it comes to trading firms scouting for new talent to add to their team of professional Wall Street traders. Giving up the old conventional ways of looking for new Wall Street recruits, firms are now switching the focus on poker skills rather than business experience or connections. This new phenomenon of trade companies hunting down poker pros does not come as a surprise to many. With most firms now acknowledging that a poker player lacks in-the-field experiences, they easily make up for it in their quick decision-making and their number-crunching abilities.
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So does a poker player really make a good Wall Street trader?
To answer this question, we must first look at what a trader is required to do when trading at Wall Street. A person, who is classified as a good trader is someone who has the ability to be profitable out of buying and selling stocks or commodities at the right time. Although this might sound easy, in actual fact it is not. Many traders take years to perfect their skills in selling and buying and no amount of knowledge will ever truly tell you what tomorrow will bring. They spend hours at end, watching the computer screen all day long, always ready to place an order when an opportunity comes. It is a fast-paced environment, where quick decision-making is a must and the difference between a profit or a loss could sometimes just be a couple of seconds. They have a hunger to increase their profits and are not scared to take a punt and most of all, they can always pick themselves up quickly after a bad day.
Considering we now have an overall view of what a stock trader is required to do and what kind of environment they are working in, we must now look at a good poker player, to understand why there is so much interest in them at Wall Street. Any good or professional poker player that is able to make a career or living out of poker possesses the following attributes and skills: They have the ability to constantly work through probabilities in order to determine when another player is betting more or less than makes sense, given the cards on the table. They are able to have a successful bankroll management plan and have the focus and drive to improve it. They are able to make good judgements on the amount of money they are willing to risk for the return it will bring. The environment they are in is usually multiple screens and multiple poker tables, just like the traders on Wall Street. Poker players can focus on what they’re holding not only at one table but sometimes even exceeding 10-20 tables at a time with slip-second decisions. It is also important that most of the pro poker players have the ability to bounce back after big losses.
After looking at both a good Wall Street trader and good poker player we can see why so many companies are now considering poker players as their best bet. The crossover skills of being able to have good understanding of probability and algorithms, combined with great judgments, concentration skills, quick decision-making and the ability to come back after big losses would make them a valued team member to any trading company.
Recently published in the Los Angeles Times was an article [4] that looked at the connections between a profitable stock broker and a profitable poker player. In the article the reporter Chris Fargis used the Wall Street firms, Toro Trading and Susquehanna International Group as an example.
At the Toro Trading firm, Chris Fargis interviewed Danon Robinson, a Toro partner and found that he had never been to any business school or even taken a finance class. Danon had made a living out of playing poker for 6 years.
"If someone's been successful at poker then there's a good chance they could be successful in this business," said Danon Robinson. "If you have no interest, that's almost a red flag…it's almost the equivalent of not reading the Wall Street Journal."
At the Philadelphia-based trading firm, Susquehanna International Group, Chris found that they have made poker an essential part of their employee training program. All the new hired employees are required to read the “textbooks” The Theory of Poker [5] and Hold 'Em Poker [6]. On top of this, poker training doesn’t just stop at the books, with all employees also being required to spend at least one day a week playing poker.
"We are trying to teach people how to be good decision-makers under uncertainty," said Pat McCauley, who runs the training program. "It's not the stereotypical stuff with bluffing - it's real science."
In my opinion, a good poker player could easily make a good stock trader, but I would also believe that a poker player will still need to acquire a deep couple of months or even years of experience on the markets before he can become a real professional trader. It is not a matter of whether a good poker player could make a good trader, I think it is rather whether they want to do it. Considering that a talented poker player is able to pull around a 6-figure wage per year, works his own hours, doesn’t have a boss that puts the pressure on him to hit his targets, doesn’t have to battle traffic each day to get to work. This makes you ask the question: Why would they make the change?