Lessons from Poker for Crypto Traders
By Tommy Shel₿y - 17-Oct-2023
Some of the most successful crypto traders are also skilled poker players, and vice versa.
This is no accident.
Some key aspects of winning strategies for poker can greatly improve the average trader’s approach to the often chaotic and ruthless market that is crypto. Starting with a bit of my personal background in both crypto and poker, this article explores the similarities between trading crypto and playing poker. It also explains some important lessons from poker for crypto with the hope that readers can incorporate these insights into their own trading.
My Journey from Poker to Crypto
It may be helpful to start with a bit of background on myself in trading and poker.
I found interest in the game of poker when I was 18 years old. I started playing small buy-in home cash games and the occasional local casino cash games too. Stakes were not big, but the excitement I felt to be able to compete for money in a game that most people believed was decided by luck was mind blowing to me.
If I had any chance of transforming this hobby into my primary source of income, I knew I had to apply a professional framework in order to master this game. I started studying cash game and tournament poker "MTT" courses (mainly through Raise Your Edge poker courses). I also became friends with other local casino grinders, and we shared insights and strategy. My focus was to learn as much as I could from people with experience.
I started with a very small bankroll, and now that I’m looking back on my poker years, I honestly was very lucky just to not go broke early on.
Eventually, I discovered crypto, and that was that – I was hooked again.
Why Poker Players Love Crypto
For some readers it may not be obvious, but poker and trading are two very similar activities. Both settings involve risk, competition and a lot of stress. Also, they require a high level of skill. But ultimately, performing to the best of anyone’s capacity requires only competing when someone is in a state of comfort.
How does someone get comfortable? In crypto, this means trading the right size relative to an account balance. And the same is true in poker – playing the right stakes relative to a bankroll.
Getting the right amount of sleep before starting a session and staying away (from the table or the market) when a trader is not in a good mental state are also essential to achieving necessary comfort.
Plenty of people think that studying strategy will instantly make them a profitable poker player or crypto trader. But real success only comes from decisive decision making in a game or real trade. Whoever has the most focus and confidence has a very big edge over the rest of the field. The importance of this cannot be overstated. Winners have to put themselves in a state where they can consistently apply all the game theory they’ve prepared themselves with, and their mindset must be to always look for the next opportunity.
So, in short, here’s a simplified explanation of mindsets that explains why poker and crypto attract many of the same people. There are two variables in both settings: what someone does and what someone wants to do. Bringing these two things as close together as possible is always the goal. Adjusting expectations to bring them closer to reality or doing more in real life to meet expectations are the only two options.
Approaching the market with this mindset every day is how to win.
Lessons from Poker for Crypto Traders
The first and most important step to start becoming a profitable trader and poker player is being able to review trades and games with a clear mind. Anyone should be able to pinpoint their own strengths and weaknesses, then adapt their approach accordingly.
Just focusing on strengths and then letting intuition run the show is not the answer. Instead, recognizing weaknesses through analyzing past trades is essential to develop the skill of foreseeing a potential situation where the market will try to expose or prey on a personal weakness. This introspective knowledge is essential. Not only will it put a trader two or three steps ahead of the market in these situations, but it will also provide a shield to protect them from themselves.
A lot of people go through this process to end up in a comfortable state where they are confident and make money. That’s good, but most of them forget the process and quit the work ethic that brought them to this state of “success” in the first place.
Avoiding this pitfall will be the top challenge anyone faces throughout their trading career.
Not blowing up is also one of the most important priorities for every poker player and crypto trader. From poker and crypto, I quickly learned that someone can be the most talented poker player or trader in the world, but the only way to make sure they have the opportunity to develop, improve and make money from their talents is from knowing to manage risk (a.k.a., “bankroll management” in poker terms).
A lot of profitable players and traders don't give themselves enough leeway to survive through difficult times – called “variance” – and it’s easy to assume a lot of these traders and players would still be around if it wasn't for these reasons. Wanting to make big money, fast is probably the biggest reason so many skilled individuals quit or get rinsed in both industries – crypto and poker.
Commit to being a survivor, not a cautionary tale.
Understanding the difference between process and outcome is essential.
When someone is trading and they are thinking about winning or losing, they aren’t in the right frame of mind. Winning or losing are outcomes, and these outcomes are not something a trader can control. The objective is not to win, but instead to do everything possible to set themself up for a win. That distinction is key.
To explain it more concretely, this means a trader is undermining their own abilities every time they deviate from their plan. Taking attention away from the process and focusing on “winning” instead essentially means they have weakened themselves. Their mind is not focused anymore on doing what needs to be done. It’s focused on doing what it takes to "win".
But anyone who is even minimally intelligent will notice the trick their mind is playing. This hypothetical trader was already doing what it takes to win (i.e., sticking to their plan) before their mind and emotions took over. Instead of following their system from a calm, serene state of mind, their emotions are in control. Now they make decisions in a confused and even rattled state of mind, and it’s a signal that the mind is scared or unable to do what it knows it’s supposed to do.
A skilled crypto trader cannot sit down at a table and win poker games any more than a skilled poker player can create a trading account and immediately beat the market. But the ideas explained in this article show that both professions require skill, focus and mental clarity. Hopefully the similarities from poker reinforce the importance of these ideas for traders who read this blog. Without these skills, it is unlikely a trader will survive in crypto anymore than they would survive in the world of poker.