Friday, 1 February 2008

Shares Trading and the simularities with Poker

This post is provoked by a recent Bussiness Studies Class that I had. In the class the Teacher was asking us to give her different possible sources of income such as wages, sponsorship, royalties etc. and ofcourse trading the share market. I piped up and said poker/gambling as a possible source of income. The teacher immediately said that gambling could not be considered a legitimate sorce of income. Funily enough she said that was the end of the matter and didnt give a legitimate reason that it couldnt be considered a source of income. The reason she gave was "it's a recreational game played for fun".

I then proceded to point out that Shres Trading has just as much if not more risk involved than poker does. I said poker was a game of probability where players used information provided to make the best mathmatical decision possible and in the long run the players with more skill would win more money because they would be more often capitilizing on their opponets mistakes while make less mistakes of their own. Which is much like Shares Trading where the people who make more money than others are considered better traders because they are better at spotting trends and predicting what the trends will be so that they know when to buy or sell shares.

I then went on to say that Shares Trading(with my relatively limited knowledge of shres trading) is probably less of a exact science than poker. Beacuase Poker is a game of probability and the probabilities never change. In poker if you always get your money in HU with a greater than 50% chance of winning then you will over the long run be a winning player. Wher as in Share Trading there is virtually no garentee that you will profit and you are in much less control of the outcome of your investments in Shares Trading than you are in Poker.

I came online tonight and found a few good links about this topic.

Here are the links to articles i found:

Making Money On The Stockmarket: A Game of Poker
A Big Deal

No comments: