Date: 16 Dec 1997 23:03:01 -0700
From: Jim Geary
Newsgroups: rec.gambling.poker
Subject: Re: 10-20 Questions
On 17 Dec 1997, GWattman wrote:
I notice that in all play there exists a sign wave pattern to wins and
losses. I have been successful managing these swings and stopping above
break-even to have mostly wining sessions. Having little experience at
10-20, what swing would be considered normal? I got out at -$200 both
times because I didn't want it to go to -500. I noticed that a one hand
variance could mean $100 to $200 so being down "one hand" doesnĘt seem to
be too much. Maybe I am just not used to the larger denomination swings.
Comments?
I think if you look at any pattern of random numbers from the right angle you'll see something. I always get a kick out of FNN guys saying things like "as you can see, we have the beginnings of a classic head and shoulders pattern, so expect the stock.." while I'm screaming at the TV "shouldn't that already be factored into the price of the stock??!!"
I know I've seen this question here before regarding how much money to bring to a 10-20 game. $200 aint it. If you're better than the game you shouldn't have to go deeper than 15 buyins for an eight-hour session more than once or twice a year. If you have a negative expectancy, well, than you need more money probably.
Best,
JG
Which drew the following two great responses:
Date: 17 Dec 1997 12:27:39 GMT
From: MGCourtney
Newsgroups: rec.gambling.poker
Subject: Re: 10-20 Questions y BARGE lobby
Jim Geary wrote:
I always get a kick out of FNN guys saying things like "as you can see, we have the beginnings of a classic head and shoulders pattern, so expect the stock.." while I'm screaming at the TV "shouldn't that already be factored into the price of the stock??!!"
This is way off topic, but none-the-less:
A couple years ago, a scientific study of "head and shoulder patterns" was done by, your not gonna believe this, the Federal Reserve. In a nutshell, they first mathematically defined the pattern, and then computer tested it over, I believe, a two decade period. Their results showed that a statistically significant positive expectation of profit existed in following the standard rules for this pattern.
The study was reported in "Futures" magazine.
There are plenty of winning traders who trade off nothing more than the price patterns of various financial instruments. There was a front page article about one such firm in the Wall Street Journal just this week. And in the futures arena, this type of trading is more the norm than not. I'm surprised that more stock funds have not gotten into this kind of stuff.
Back to poker:
If you plot your bankroll every hand from hand to hand, you will see that there really is a kind of "wave pattern", in that you lose small amounts for many hands, and then the "wave" kicks up when you win one....then the wave starts down again, as you lose small amounts for many hands, then the wave kicks "up" again when you win again, and so forth. (I'm starting to get a little seasick here .....).
Best of Luck Always,
- Mark.
AND:
Date: Wed, 17 Dec 97 13:43:08 -0700
From: Robert Copps
Newsgroups: rec.gambling.poker
Subject: Technical analysis and poker
In article (Pine.BSI.3.96.971216225421.11483A-100000@usr06.primenet.com), jaygee@primenet.com (Jim Geary) writes:
I think if you look at any pattern of random numbers from the right angle you'll see something. I always get a kick out of FNN guys saying things like "as you can see, we have the beginnings of a classic head and shoulders pattern, so expect the stock.." while I'm screaming at the TV "shouldn't that already be factored into the price of the stock??!!"
Jim Geary
So glad you brought this up. I had to excise a couple of paragraphs on this topic from my last submission to Dave Scharf's magazine, and I was very fond of them.
There are couple of points that have to be made about graphical analysis of financial instruments. (This is relevent to poker, but it is also a topic that I think many here might be interested in, so I'll explore it a little deeper than I ordinarily would).
-- When a free-trading fungible commodity turns up after declining -- or _vice-versa_, there is a limited number of chart patterns that it can follow. These include, the saucer, the double, bottom, the reverse head and shoulders, three steeples and a dome, etc. Since the completion of the pattern indicates the direction of price movement, the chances are greater than random that the next significant move will be in the same direction. This information is not always profitable, since the traders in the pits and on line are very sharp to take advantage of any clear trend. It is fascinating that, while augmenting it by their actions, they also reduce the demand for it, so that in the end, when the most skeptical participant has finally given in to the trend, it reverses.
-- However, people who do not follow charts, as well as those who do, enter a trade when they see an established trend. For instance a bond trader in the pit might take a contract on any reversal, hoping to scalp a point or two, but a big money manager probably won't act until the trend is well enough established that he can convince his boss that he's not doing something foolish. Thus the graph is a diagram of the psycology of demand.
-- Technical analysis can help identify those momentum points that will draw in actors with differing time horizons. (These could more precisely be called "arbitrage points", since it is at various places that quantitative shifts in the values of different commodities will lead to a qualitative change and cause those with capital to arbitrage their risk by shifting some of their assets from one instrument to another.) This is the beauty of tools like "Moving Average Convergence-Divergence", which you can tune to different markets to suss out when the different players are about to act.
The poker part:
-- Some time ago, for fun, I graphed my bankroll over however many years I had in that particular spreadsheet. The result looked very much like the graph of a bull market in stocks. And the patterns of losses, i.e., slumps, had certain common characteristics. I immediately suspected I could predict when a slump would end. In fact, it crossed my mind that I could identify what I was doing wrong from the chart patterns.
For instance, it was obvious when I changed limits, or played a new game (like Omaha 8: I hate that chart pattern!). These were sharp declines over a few sessions followed by a steady recovery. Other patterns, with multiple bottoms indicated where I was playing poorly and couldn't get my game (um, brain, or, maybe, I hate to admit it, my gonads) back in gear, and where I was vulnerable to the sharp company I was keeping.
Just as free markets are characterized by what George Soros calls "reflexivity", so to do the sins of the poker players come back to haunt them. The games are affected by their play, and the games in turn affect their play. The reflex points in my graph, for the most part were not where the cards were running bad, but clear indications of where I was playing bad. I knew this historically -- that every time I had a bad drawdown, the fault was mine -- but it was interesting, and gratifying, to see how steadily the graph rose the rest of the time.
I believe that modern portfolio theory, which is based on the random walk hypothesis (the fancy term for the point of view that Jim is expressing) is quite useless in practice, though it has enormous political value when dealing with nervous supervisors, and wives. Smarter players make more money in financial markets. In the same way, it is of no value for a poker player to ascribe their losses to the occasional random vicissitudes of the cards, nor even Fortuna, bless her little (very) heart. But if you accept that your losses are based on errors of your own, there is something you can do about them. There must be. Well, so far there has been.
--Bob
THANKS GUYS! -- JG
Last Modified 2/9/00