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Saturday, January 4, 2014

Analogy in Poker to Technical based Trading



A “tell” in poker is a change in a player's behavior or demeanor that gives a clue to what is a player's assessment of their hand. A player gains an advantage if they observe and understand the meaning of another player's tell, particularly if the tell is unconscious and reliable.

Sometimes a player may fake a tell, hoping to induce their opponents to make poor judgments in response to the false tell.

More often, people try to avoid giving out a tell, by maintaining a poker face (use sunglasses to hide their eyes) regardless of how strong or weak their hand is.

A tell may be common to a class of players or unique to a single player.

In poker some possible tells include leaning forward or back, placing chips with more or less force, fidgeting, doing chip tricks, displaying nervous tics or making any changes in one's breathing, tone of voice, facial expressions, direction of gaze or in one's actions with the cards, chips, cigarettes or drinks.

The professionals have rules of contrary behavior as do technical market traders.

An underlying rule is: weak means strong, strong means weak.

Thus, players who hold weak poker hands attempt to convince the other players at the table that they are strong: staring down an opponent, throwing chips down forcefully into the pot in an effort to discourage others from calling.

Alternatively, players who hold strong hands tend to try to disguise their hand as being weak. They attempt to fly under the radar by being a passive player at the table - not making direct eye contact, softly tossing the chips in, being friendly and talkative. They are deliberately trying not to come across as intimidating, to entice a call.

Developing a good trading system comes from being a good observer of human actions as they unfold in the market place. Looking for the signs, the set ups that foretell of certain action that can be taken advantage of.

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