Thanks for the intro to Figgie. It makes sense that it’s a better game to teach trading concepts given it was designed specifically to teach trading interns, has its own trading platform with bid-ask pricing, and all the other good reasons you mention above.
I would take issue with the first part (“poker is a bad game for teaching epistemics”), especially relative to the universe of well-known games out there. To address your criticisms:
In poker, most decisions don’t give you feedback about whether you were right for the right reasons.
This strikes me as more feature than bug. Just as it can be “to your advantage to hide how you’re playing certain combinations of cards from your tablemates”, so too is it typical for firms to try to disguise their motives and trading strategies from rivals. Poker (and trading) is about making optimal decisions with incomplete information. Learning to do this without immediate feedback is itself a valuable skill. Relying on results from a single hand/trade is too noisy and often the best you can do is guess/deduce the likelihood your play was +EV—the most valuable feedback comes from your long-term results.
If your poker playing partners aren’t sufficiently skilled, you’ll learn bad lessons.
A big part of the game is understanding your relative skill and assessing your adversaries (“If you can’t spot the sucker in your first half hour at the table, you are the sucker”). Once someone becomes proficient at poker, arguably the most lucrative skill becomes identifying unsophisticated players/markets and exploiting them. Clearly transferable to trading, though maybe not to being a decent human being.
My favorite poker concept applicable to trading and other areas of life is: What level are they on?, Where levels are sequentially: “What do I have?”, “What do they have?”, “What do they think I have?”, “What do they think I think they have?” and so on.
I see this as applicable in speculative markets. For instance, when the last Bitcoin halving date was approaching, funny investment theses could abound: “(1) BTC Halving --> less supply --> BUY”, “(2) Halving already priced in --> Level 1 thinkers will dump holdings when they don’t get anticipated halving bounce --> SELL”, “(3) Level 2 is right that BTC has already appreciated due to anticipated halving, but they don’t realize that demand from new BTC ETF inflows are going to vastly outstrip newly constrained supply and we’ll get a squeeze --> BUY”, etc. Here some Level always risks learning a bad lesson (being right for the wrong reasons). The true skill is being able to deduce whether you can, over a larger sample, correctly assess the state/thinking of the market.
It takes a long time to get reasonably good at poker
Good is a relative term here. Basic competence and understanding of key concepts that have transferability to trading can be achieved over much shorter timelines than those poker boards suggested. They are more referring to holding your own against professionals (or bots if playing online) for real money.
Poker players spend most of the time at the table not making decisions.
Probably depends on what you’re trading, but in my experience traders technically spent most of the time at their desks not making trades. Whether waiting to act or waiting for the next hand, there is value in gathering information and observing how your opponents are playing.
A few poker situations turn the emotional stakes way up, past the level that’s helpful.
This is another feature (not bug) to me. Even just setting up a toy game with play money or nickel stakes, poker has an amazing ability to put people “on tilt” where emotions distract from pursuit of optimal play or cause them to take outsized risks to chase losses. This can teach valuable lessons to junior traders learning to manage real assets. The best traders and poker professionals possess the skill, whether innate or learned, of tuning out the noise and not letting losing streaks get to their head.
I totally agree that poker (and I’ll restrict to no-limit holdem especially) far surpasses nearly any other game at the broader cluster of goals. And I agree that there is a lot of value in the total of all the lessons you learn by fully mining out poker for insights.
My issue is really one of relative advantage / disadvantage, and of the ratio of grinding to insight across different parts of the learning curve. Together with some amount of, I think it’s significantly more efficient to learn certain components separately and then to put them together than to approach them as one combined package. When I taught new traders, I thought it helpful to expose them to the emotional feeling of risk tolerance separately from the intuitive sense of adverse selection, separately from level-N efficiency / level-N+1 marginal, and separately from the skills of quantitative research. Then we’d work on putting the concepts together into increasingly complete exercises, building up to the scale of deploying research-derived algorithmic trading strategies to miniaturized stock markets (and then to real markets, though at some point that left my purview...).
I don’t mean that it was a strict waterfall model—it’s sometimes extremely helpful to jump ahead temporarily to understand how things come together before going back to focus more on the fundamental components—but as a matter of pedagogical design I feel reasonably confident that jumping straight into an environment with all of the concepts active is suboptimal, especially if having one under-developed makes it actively harder for you to learn another at the same time.
So yes, I think if you have nearly all of the right skills except for an impatience and a bias towards action, then playing in-person poker and practicing folding 80% of your hands can be just the prescription the doctor ordered. Or if you’re trying to calibrate over-updating versus under-updating on limited information. Or if you’re at a reasonable level at most of the things and are trying to stay sharp. But if you’re early on the learning curve of four different things, then I want to claim it’s not optimal to throw yourself at a game that wraps all of them up in interconnected ways, especially if they’ll be harder to disentangle if you don’t have a solid place to stand—so to speak—in the first place.
(Separately from my sibling comment,) I think agree that the richest source of insight from poker is to be had in evaluating other players’ off-equilibrium behavior and determining how to respond with off-equilibrium behavior of your own.
I think that it is easy to dramatically over-estimate how much of this the typical student(*) will actually do in their first several-hundred hours of playing the game. At a minimum, I think (I think common?) idea that the idea that GTO post-flop play is an intermediate-level technique and exploitative play is an advanced-level technique is correctly ordered if you’re trying to reduce your $ losses at a strong social table, but backwards if you’re trying to use the game as mental weightlifting. And the fact that it took me a decade after starting to casually learn the game to understand the preceding sentence is, at a minimum, a critique of how pedagogy-through-poker is nearly always done in practice.
(*) and I mean the term “student” broadly, to include professionals-in-training and adult learners looking to re-train
In fact, it wasn’t until my conversation with Max that I appreciated that I had spent far too much time working on playing more GTO—which I am still very far from—and that I should probably have started trying to understand and exploit my opponents’ play while I was still definitely bleeding money to my own exploitability. This is the largest thing that I’ve updated on since writing the post, and the thing I’d most want to cover in a part-2 follow-up.
Thanks for the intro to Figgie. It makes sense that it’s a better game to teach trading concepts given it was designed specifically to teach trading interns, has its own trading platform with bid-ask pricing, and all the other good reasons you mention above.
I would take issue with the first part (“poker is a bad game for teaching epistemics”), especially relative to the universe of well-known games out there. To address your criticisms:
This strikes me as more feature than bug. Just as it can be “to your advantage to hide how you’re playing certain combinations of cards from your tablemates”, so too is it typical for firms to try to disguise their motives and trading strategies from rivals. Poker (and trading) is about making optimal decisions with incomplete information. Learning to do this without immediate feedback is itself a valuable skill. Relying on results from a single hand/trade is too noisy and often the best you can do is guess/deduce the likelihood your play was +EV—the most valuable feedback comes from your long-term results.
A big part of the game is understanding your relative skill and assessing your adversaries (“If you can’t spot the sucker in your first half hour at the table, you are the sucker”). Once someone becomes proficient at poker, arguably the most lucrative skill becomes identifying unsophisticated players/markets and exploiting them. Clearly transferable to trading, though maybe not to being a decent human being.
My favorite poker concept applicable to trading and other areas of life is: What level are they on?, Where levels are sequentially: “What do I have?”, “What do they have?”, “What do they think I have?”, “What do they think I think they have?” and so on.
I see this as applicable in speculative markets. For instance, when the last Bitcoin halving date was approaching, funny investment theses could abound: “(1) BTC Halving --> less supply --> BUY”, “(2) Halving already priced in --> Level 1 thinkers will dump holdings when they don’t get anticipated halving bounce --> SELL”, “(3) Level 2 is right that BTC has already appreciated due to anticipated halving, but they don’t realize that demand from new BTC ETF inflows are going to vastly outstrip newly constrained supply and we’ll get a squeeze --> BUY”, etc. Here some Level always risks learning a bad lesson (being right for the wrong reasons). The true skill is being able to deduce whether you can, over a larger sample, correctly assess the state/thinking of the market.
Good is a relative term here. Basic competence and understanding of key concepts that have transferability to trading can be achieved over much shorter timelines than those poker boards suggested. They are more referring to holding your own against professionals (or bots if playing online) for real money.
Probably depends on what you’re trading, but in my experience traders technically spent most of the time at their desks not making trades. Whether waiting to act or waiting for the next hand, there is value in gathering information and observing how your opponents are playing.
This is another feature (not bug) to me. Even just setting up a toy game with play money or nickel stakes, poker has an amazing ability to put people “on tilt” where emotions distract from pursuit of optimal play or cause them to take outsized risks to chase losses. This can teach valuable lessons to junior traders learning to manage real assets. The best traders and poker professionals possess the skill, whether innate or learned, of tuning out the noise and not letting losing streaks get to their head.
I totally agree that poker (and I’ll restrict to no-limit holdem especially) far surpasses nearly any other game at the broader cluster of goals. And I agree that there is a lot of value in the total of all the lessons you learn by fully mining out poker for insights.
My issue is really one of relative advantage / disadvantage, and of the ratio of grinding to insight across different parts of the learning curve. Together with some amount of, I think it’s significantly more efficient to learn certain components separately and then to put them together than to approach them as one combined package. When I taught new traders, I thought it helpful to expose them to the emotional feeling of risk tolerance separately from the intuitive sense of adverse selection, separately from level-N efficiency / level-N+1 marginal, and separately from the skills of quantitative research. Then we’d work on putting the concepts together into increasingly complete exercises, building up to the scale of deploying research-derived algorithmic trading strategies to miniaturized stock markets (and then to real markets, though at some point that left my purview...).
I don’t mean that it was a strict waterfall model—it’s sometimes extremely helpful to jump ahead temporarily to understand how things come together before going back to focus more on the fundamental components—but as a matter of pedagogical design I feel reasonably confident that jumping straight into an environment with all of the concepts active is suboptimal, especially if having one under-developed makes it actively harder for you to learn another at the same time.
So yes, I think if you have nearly all of the right skills except for an impatience and a bias towards action, then playing in-person poker and practicing folding 80% of your hands can be just the prescription the doctor ordered. Or if you’re trying to calibrate over-updating versus under-updating on limited information. Or if you’re at a reasonable level at most of the things and are trying to stay sharp. But if you’re early on the learning curve of four different things, then I want to claim it’s not optimal to throw yourself at a game that wraps all of them up in interconnected ways, especially if they’ll be harder to disentangle if you don’t have a solid place to stand—so to speak—in the first place.
(Separately from my sibling comment,) I think agree that the richest source of insight from poker is to be had in evaluating other players’ off-equilibrium behavior and determining how to respond with off-equilibrium behavior of your own.
I think that it is easy to dramatically over-estimate how much of this the typical student(*) will actually do in their first several-hundred hours of playing the game. At a minimum, I think (I think common?) idea that the idea that GTO post-flop play is an intermediate-level technique and exploitative play is an advanced-level technique is correctly ordered if you’re trying to reduce your $ losses at a strong social table, but backwards if you’re trying to use the game as mental weightlifting. And the fact that it took me a decade after starting to casually learn the game to understand the preceding sentence is, at a minimum, a critique of how pedagogy-through-poker is nearly always done in practice.
(*) and I mean the term “student” broadly, to include professionals-in-training and adult learners looking to re-train
In fact, it wasn’t until my conversation with Max that I appreciated that I had spent far too much time working on playing more GTO—which I am still very far from—and that I should probably have started trying to understand and exploit my opponents’ play while I was still definitely bleeding money to my own exploitability. This is the largest thing that I’ve updated on since writing the post, and the thing I’d most want to cover in a part-2 follow-up.