COACHING

FX

Sport, Trading and Poker

Where High Performance Meet

Winning at professional sport Profitable financial trading Successful poker... What is the connection?

The answer is that there are many different connections between the three which I have been able to see first hand in my work as a former sports psychology consultant who has for the last six years specialised in working with financial traders and more recently added poker players to the roster as well. In this article I would like to share with you a few insights into some of the psychological and performance factors that successful people in all three areas share and to provide you with some of the coaching techniques and strategies that I utilise with my own clients to help you to raise your own trading game. High Performance Is Multi-Dimensional At the highest levels performance in sports, trading and poker are not simply about skill, there are other factors that determine success. In sports we can look at performance across four areas or pillars: skills/technical physical/fitness tactical/strategic mental/psychological

I utilise a similar framework in trading where the categories are skills/knowledge, strategy, risk management and psychology (see Trader Performance Profile below) and I also apply this to poker with risk management becoming staking.
Trading Performance Profile
Skills/Knowledge
10

Psychology 10

0 10

Strategy

10

Risk Management

Diagram : Trader Performance Profile

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The best athletes, traders and poker players are all willing to take risk, to step out of the comfort zone

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RAISE YOUR GAME

Complete the Trading Performance Profile by rating your current abilities out of a maximum of 10 on the diagram, where a 10 would be your best possible. Once you have marked your score on each of the four scales join the points together to create a diagram that gives a visual representation of your overall scores (see below). Look at your relative areas of strength and areas for development, 1. Build on your strengths. 2. Address the key areas for development. Take action. Implement new ideas, read, ask people, get some training, mentoring, coaching.

In the b o o k Th in k L ike A Winner author Yehuda Sh inar ta l k s ab o ut creating the conditions and opportunities for success, what I o f ten ref er to a s stacking the o dd s in your f avo ur . When yo u turn up to p lay in sp or ts or p o ker or trade the markets e ven b efore you start there are thing s that you can do or not do that wil l either in crea se yo ur chan c es of suc c ess or de crea se them . On e o f the mo st b a s ic and f undamenta l performance processes that I tr y an d instil with in my cl ients is to ensure that the y warm-up or prep are. In trad ing th is means the research and analysis you do, planning an d strate g y de vel opment, l o o king at p oss ib le scenarios that may occur and how you will react to them ( What If S c enario p lann ing ) , and a ls o ensuring that yo u are menta l l y an d p hys ica l ly ready, in a p o sitive state.
RAISE YOUR GAME

Trading Performance Profile

Skills/Knowledge
10

What can you do before trading that stacks the odds in your favour? How can you prepare most effectively to trade the markets?
Psychology 10
0 10

Strategy

Have you considered the What Ifs?

Per f ormance Is State D ep endent

10

Risk Management

Diagram : Example Trader Performance Profile Showing Relative Strengths/Areas For Improvement

Its the la st f e w se c on ds o f the g ame and the basketball player has the ball on the free throw line to make the winning shot. What influences whether he sc ores or m isses ? Its a f a st mo ving market an d the financia l trader ha s a f e w se c on ds to ma ke a d e cis ion a s to whether to place his trade or not, and if he does, to exe cute it corre ctly. What influences whether the trader exe cutes wel l or not, may b e e ven f at f ing ers ?

Create The C ond itions and Opp or tun it y For Succe ss Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win. Sun Tzu (From The Art of War)

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Its a key hand in poker and the player has to decide whether to play or fold. What influences what th e p lay er d o e s ? In a ll the above cases the one common denominator is their mindset. In a ll thre e it is important to have the re quire d skills, abilities and knowledg e to perform to a hig h level, howe ver at the moment of exe cution the most important factor is what is g oing on interna lly and how this ma kes them fe el. Our fe eling s, our state, underpin our performances. When a professiona l g olfer misses a short putt to win a big tournament or a tennis player double faults on match point it is not because of a lack of a skill or abilit y it is be cause their state has chang e d and their performance is inhibited. When traders dont pull the trig g er, pull the trig g er too of ten, trade too big , cut profits, run or chase losses it is not be cause the y do not know what to do, but be cause the y are unable to do so be cause their state has chang e d, and their abilit y to act in rationa l and log ica l ways is compromise d throug h a process known as cortica l inhibition where blood flow to the fronta l lobes smart brain - is reduced and the emotional brain takes over. Discipline trading is as much a function of emotiona l mana g ement as any thing else. O ur emo tions have a b ig imp act on how we think and this means that being able to make the b est de cision un der pressure can b e d ifficu lt. The b est p o ker p layers an d traders are ab le to ma ke their de cisions b a se d on l o g ica l , strate g ic thought, with minimal interference from their emo tions . B eing ab l e to l earn to ke ep c o o l and coherent under pressure is a ke y skill to ac qu ire. In the world of high performance sport the need to help players to reg ulate their emotions is widely recognised as being critical to success and many teams/nations are now beg inning to utilise biofeedback and neurofeedback training alongside traditiona l sports psycholog y inter ventions to assist with this. This is a process that I am currently utilising myself with my own clients, enabling them to develop the ability to establish performance enhancing states on demand and to build resilience to cortica l inhibition and what is sometimes terme d as emotiona l hijacking .
RAISE YOUR GAME

One very simple way to begin to manage your emotions is to begin to create an awareness of how you are feeling and the impact on your trading throughout the day. On a 1-10 scale where 10 is your Ideal Trading State (how you feel when you are trading at your best) and 1 is the other end of that scale, regularly check in and gain awareness of how you are feeling.

Diagram : Our Performance Is Underpinned By Our State

Good questions to ask yourself to increase your awareness are: Where would I rate myself right now 1-10? What is it I am feeling that lets me give myself that score? What am I doing to feel this way? What is the potential impact of this on my trading? What, if anything, do I want to change?

Poke r i s m ath , i ntuiti on, ne r ves and analytic al th inki ng. The mome nt that e mo ti on e nte rs the equ ati on i s u su ally the e x act mome nt whe n the tra d e r a n d the p oke r pl ay e r star t to l os e mone y. Pe ter K arro l l , C EO of I A M Cor p.

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Conf idence Is Ke y W h en e ver I work wi th sp or ts p e op le, traders or p o ker p lay er s and we are d i scussing menta l or emotional states it is an absolute g iven that the word confidence will appear. Confidence is probably the key ingredient cited by my clients a s b eing cri tica l to p er form ing we l l . In sport, confidence ena b l e s y o u to p lay your b e st an d put your se lf into g am e winn ing si tuations - you are wi l l ing to step -up. In p o ker, wh en you have g ood cards, confidence allows you to back your se lf an d e ven to g o Al l In wh ere re qu ire d . In trading , confidence enables you to back your own ju d g em ent , to ta ke g o o d trade s, but a l so importantly confidence enables you to have the d i s c ip l in e to b e se le c ti ve in y our trade s, to wa it for opp or tun itie s . Intere sting l y on e of th e ke y outc om es o f b eing c o n f i d e n t i s a g r e a t e r w i l l i n g n e s s t o t a ke r i s k .

FX

Learn to attach confidence to how well you have traded and not just to how much money you have made

The b est ath l etes, traders an d p o ker p layers are a l l wil l ing to ta ke risk , to step out of the c omf or t zon e. Th is risk ta king is not re ckless , it is ca l cu late d an d intel l ig ent. Embracing ris k is a key factor visible not just in top traders and p o ker p layers but in suc c essf u l p e op le across all spectrums of life. Psycholog ically however most people prefer c omf or t and s afet y to risk . Pe op le who lack confidence are l ess wil l ing to ta ke risk , the y are more pron e to staying c omf or tab le and safe, and as a result rarel y p erform to their p o tentia l . D e cisions Ma king Know W hen To Hold Em , Know W hen To Fol d Em There is a larg e element of randomness in poker - yo u do n o t g et to cho o se the card s that you are dea lt and variance is hig h. It is possible
RAISE YOUR GAME

RAISE YOUR GAME

Here are 5 steps that you can take to develop and build confidence: Develop your trading skills and knowledge competence is the key underpinning to confidence Be prepared the feeling of being ready and prepared plays a big part in creating confidence Learn to attach confidence to how well you have traded and not just to how much money you have made. A tough one for traders, but for those who make the transformation it is a powerful and positive one. Become aware of the self-talk you use your thoughts when negative can be very destructive to your feelings of confidence; aim for a more positive and optimistic explanatory style Build on your strengths and successes.

In his book Success Principles Jack Canfield introduces the following formula: E+R=O Events + Reactions = Outcome. We cannot control the events that happen to us, but we can control our reaction to those events and therefore we can influence the outcome. It is important to recognise that sometimes we have to let go of ideal outcomes as the events we are encountering will not allow for them, and so the goal when faced with any given event is go for the Best Possible Outcome. Having the mental flexibility to be able to react in more positive and performance enhancing ways is a skill shared by top performers, after all our experience of any event we encounter is purely in relation to our own perception of that event.

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Susquehanna has held in-house poker tournaments to recruit traders and monitor decision-making skills
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to have r uns o f b ad cards and l i ke wise r uns of g ood cards and all you can do at anytime is p lay th em a s b e st a s y ou can . L i ke wi se in sp or t and in tra d ing we cannot a lway s determ in e what e vents an d opp or tun i ti es c om e o ur way, we cannot predict the cards as such, so the real skill, and the key to success is how you respond to th os e e vents wh en th e y o c c ur. Fo c uss ing on th e de ci si ons made, and n o t the results of them, is one of the fundamentals of en han c ing tra d ing p erformanc e . Th e ke y to su c c e ss in any p erformanc e arena i s an ab il it y to be able to focus on the process the how of p er forman c e and to b e ab le to sep arate o ut the process and the outcome when you come to e va luating y o ur p erformanc e . You can p lay wel l in sp or t an d l o s e and y ou can p lay b ad l y an d win. Likewise in poker and trading where the d e c i s ions y o u ma ke do not a lway s have an e qua l re a c ti on on th e resu lt or g uarante e su c c ess .
POKER AS A TOOL FOR TRAINING TRADERS Susquehanna International Group (A US trading group) has been using poker to teach its new traders since it was founded in 1987, said Pat McCauley, who heads the privately held firms trader-development program. Susquehanna has held in-house poker tournaments to recruit traders and monitor decision-making skills. The trainees learn to use information they see in the marketplace to infer what motivates others, helping them make better prices. Its the same way poker pro Phil Ivey, considered among the games greats, makes bets based on what he sees among his opponents, McCauley said. What professional poker players are really good at is taking this information thats relatively subjective, quantifying it and making it objective, and thats what trading is about, McCauley said. Source: Bloomberg News: Harvard Poker Pro Says Texas Hold Em Can Teach Traders to Fold

Ask yo urself n o t just How much m one y have I made or l o st ? but How wel l have I trad e d ? The imp ac t of the coaching ha s bee n that I a m more at ea se an d conf id e nt . I am making bette r trading d ec isions. This ha s l ead to a l ea p in P&L as the result of consistent good trading is positive P&L ove r time. Trader, F X For wards, D eutsche Ban k R esil ience L earn To Hand l e L osses L ike A W inner Ver y f e w p e op l e in sp or t win a l l the time ; g o o d traders can b e wrong at l ea st ha lf of the time ; in p o ker the varian c e is so g reat that ver y fe w pe ople at the top le vel win consistently. On top of this, athletes may also face not getting picked, or g etting injure d , traders may f ac e extend e d periods of drawdown and poker players likewise can o f ten have l ong p erio ds without a g o o d finish especially in tournament play. What this means is that dea l ing with l o sses an d s etb ack s is a key part of the g ame and this requires a person to be resilient, to be able to bounce back, and idea l l y a s qu ickl y a s is p o ssib l e.
RAISE YOUR GAME

I see trading resilience existing on three levels, and ideally you want all three to be strong. Take some time to check your resilience and address any areas possible to raise your threshold. 1. Financial Resilience How much capital you have available. 2. Physical Resilience How much physical energy you have available. 3. Psychological Resilience Your ability to mentally and emotionally deal with losses and setbacks.

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Dea ling with losses and setbacks is a ke y part of the g ame and this re quires a person to be resilient
No on e l i ke s to lose, our e g o c er ta in ly do esnt like it, and so learning to accept this and be able to move on, is a key skill, but not necessarily an e a s y on e . C onclusi on Suc c e ss in sp or ts, p o ker and t r a d i n g a r e v e r y rarely accidental and random, it is instead a f unction of de veloping the required skills, k n o w l e d g e a n d i m p o r t a n t l y m i n d s e t . In any hig h performance arena there will be some commonalities among st the hig hest performers as is e vident across our thre e areas here and as the similarities of the arenas close
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t o g e t h e r a s w i t h p o ke r a n d t r a d i n g w h e r e ma ki n g d e c i s i o n s un d e r r i s k a n d un c er ta i nt y a r e ke y t h e n t h e c r o s s o v e r b e c o m e s e v e n m o r e s i g n i f i c a nt . Sp o r t s p s y c h o l o g y ha s b e en u s e d t o h e l p t r a d e r s a n d p o ke r p l a y e r s . Po ke r psycholog y has be en use d to help traders. Traders have use d their skil l s an d ab il ities to b e c o m e s u c c e s s f u l a t p o ke r. W h a t e v e r y o u r g a m e y o u c a n r a i s e i t b y f o c u ssing on an d de vel op ing yo ur appro ach to performance and the mental and emotional c omp on ent o f it. Stev e Wa rd