more fish in an smaller pond
Poker today has some similarity to derivatives trading a few decades ago. Both are imperfect information systems. When there is a great disparity in the information known by the participants, a great deal of money is made. That is happening now in poker.
When I first started on exchange floors about 25 years ago, few option traders knew how to price their markets accurately. The old-timers knew how to buy on the bid, sell on the offer, they didn’t need more to make money. The newer quantitative traders knew derivatives pricing, when they arrived, they created information disorder in many markets. Some in the game knew information that others didn‘t, the others almost couldn’t imagine what they didn‘t know. It took a long time for this information gap to close, since the pricing models were always improving, but the marginal rate of pricing improvement kept dropping and an ever greater percentage of the participants gained awareness that accurate pricing info was forcing the markets into line. Eventually, almost all players caught up.
When I first started playing poker seriously about 20 years ago, few gamers knew how important math was to good poker play. The old-timers knew a lot of playable tricks, but few were solid on the math front. Today’s young turks know not only relevant math, many also know how to use perception and situational analysis in ways that were almost unheard of previously. There is information disorder in the system. Not many players know what to make of the play of some of these better informed participants, and (thanks to the much increased TV coverage) there is still huge inflows of new ignorance.
How long will it take for poker play to optimize like derivatives trading did?
Given the participant base of poker, I predict it will be a very long time, probably longer than it took the options markets. I have a good friend who quit trading to play poker, even though the trading ocean is a huge pool of wealth and poker is a considerably smaller pond.
There are many more fish in the poker pond though, we both think.
smile
When I first started on exchange floors about 25 years ago, few option traders knew how to price their markets accurately. The old-timers knew how to buy on the bid, sell on the offer, they didn’t need more to make money. The newer quantitative traders knew derivatives pricing, when they arrived, they created information disorder in many markets. Some in the game knew information that others didn‘t, the others almost couldn’t imagine what they didn‘t know. It took a long time for this information gap to close, since the pricing models were always improving, but the marginal rate of pricing improvement kept dropping and an ever greater percentage of the participants gained awareness that accurate pricing info was forcing the markets into line. Eventually, almost all players caught up.
When I first started playing poker seriously about 20 years ago, few gamers knew how important math was to good poker play. The old-timers knew a lot of playable tricks, but few were solid on the math front. Today’s young turks know not only relevant math, many also know how to use perception and situational analysis in ways that were almost unheard of previously. There is information disorder in the system. Not many players know what to make of the play of some of these better informed participants, and (thanks to the much increased TV coverage) there is still huge inflows of new ignorance.
How long will it take for poker play to optimize like derivatives trading did?
Given the participant base of poker, I predict it will be a very long time, probably longer than it took the options markets. I have a good friend who quit trading to play poker, even though the trading ocean is a huge pool of wealth and poker is a considerably smaller pond.
There are many more fish in the poker pond though, we both think.
smile