and Trading Mistakes Part II
Van K. Tharp, Ph.D.
A few nights ago, I had the wonderful experience of getting really upset. I can’t remember the last time I was
that upset, so I’m very grateful. It means I’m getting to the core of something deep inside.
I was initially upset by a family issue (me projecting something… it had nothing to do with the other person). Then I continued those feelings over into a poker game. Again, I consider it to have been a rare gift; I cannot remember the last time I have been that angry. I was so angry that I had to wait until the next morning to process the issue.
Thinking about it the next morning provided me with many insights into my poker behavior
the prior evening (and into my trading behavior if I would have allowed it).
I play on a site that gives players $1,000 in free play money chips every hour. And when you accumulate over a million dollars, you start to respect your play money—
it becomes pretty similar to playing with real money.
I currently have about $20 million in play money, and I can make several million each night. I can also convert $500,000 in play money to $2 in real money by finishing in the top 18 of a
daily tournament. So when I feel like playing poker, I play that tournament and also attempt to make a million in play money.
So here is what happened. First, I was upset, and I was going to sit down and play poker. I missed my normal half million tournament by about ten minutes, which added to my frustration. I then played in a 90 person tournament that cost $1—from my free winnings. I
didn’t make any mistakes,
but I still lost, which caused me to become even more upset.
Everything about poker that evening seemed to add to my anger. First, I’d missed my usual tournament start time. Then, I lost in the $1 tournament. At this point, it seemed like this was
not my night, so I decided just to make a few million in play chips. (By the way, if you haven’t realized it already, I never should play poker when I am upset.)
Then, I lost big. I lost about $2 million just by bad luck and probably some mistakes that I wasn’t aware of at all. In one hand, I had a 77 and with an AA7 flop. I had a full house. The other person had an AK. A king came up on the turn, and I lost all my chips. I was even angrier now but within my regular limits.
It was my very last hand, however, which really set me off. That
last hand cost me $3 million. I can remember enough about it now to show you my mistakes and how they were all due to being angry.
Here were some of my thoughts, before and during this particular hand. (Remember, I wasn’t thinking about being upset before this hand).
These idiots shouldn’t call my big bet with weak hands. They are just getting lucky and getting the right cards.
Poker players should play wisely.
Other poker players should respect me.
That guy is a bully. He’s crazy and a lunatic.
Those were my thoughts. Of course, I believed those things about the other players, not about myself. I was a victim of those other players as far as I was concerned, and I probably could convince you of that, but that’s not my purpose. My purpose is to tell you about my projection.
So what happened in the hand? I was the big blind and my blind was $20,000 of play money. I had a 45 of clubs. I usually don’t play that sort of hand, but I was upset.
About five people were in the hand and the person on the button (the dealer and the last to bet) raised the pot and doubled the big blind. I called as did everyone else. And there was now $200,000 in the pot. Looking back, my call wasn’t so bad. It cost me $20K to call, and I was getting 6:1 to call—10:1 after everyone called.
The flop (i.e., the first three cards) came up 2, 3, 5. Wow, I had a straight draw, and I had the top pair. I bet first, betting $200,000. No one was in better position unless they had a higher pair in their hand. I wanted to get everyone out who might get a higher pair later.
Everyone folded except the button. He had 72 of clubs (but the flop didn’t give him a flush draw). Thus, he had 22 and the remote possibility of a straight draw if the next two cards were a 4 and a 6, or three 2s if one of the remained two 2s came up. Not good odds. It’s what I call an idiot play—calling my pot bet with that hand.
There was now $600,000 in the pot. The turn card was a 7. I was feeling quite aggressive (remember I was angry). I couldn’t imagine anyone calling with a 7 in their hand, so I bet another $600,000. The 72 now had a pair of sevens and twos, and he went all in with his $5 million in chips.
I had put $840,000 in the pot. The pot now contained $6.2 million. I had about $2.2 million left. So let’s see, if I bet $2.2 million more, I had a chance at the
4 million that was in the pot. I didn’t count the extra chips he’d bet that I couldn’t match. I was angry so I called the bet. I didn’t get the straight, and I lost another $3 million having lost $5 million on the night. I was furious. “How could he call me with a 72? IDIOT‼‼‼”
By then, I was too mad to process anything about my thoughts. The next morning, however, I was able to see what I did the previous night and the results amazed me.
All of my beliefs were projections and none of them were true. Believing those beliefs and being attached to them left me angry and nowhere near a state of objectivity. I was seeing all sorts of other things in the other players. They were just on-line avatars. Who knows, I could have been playing a robot. So let’s look at those beliefs that were making me angry one by one.
First Belief: Idiots should not call my large bet with weak hand.
The reality of it: Wow, I wish they did that all the time. Sometimes, they’d get lucky. Last night, my opponent had 3 chances to catch a 7 and two chances to catch a 2 in the next two cards; the odds were originally 3.5:1 in my favor. However, he could have flopped a straight, which I didn’t consider. In addition, I called his large raise after my bet when the odds were clearly in his favor. I was the idiot. Out of the 44 cards that were left, 8 cards would have given me the straight: I
only had an 18% chance of winning. He also could have called me with a 46 on either the flop or the turn, giving him a higher straight, and I would have been drawing dead. With either no chance of winning or an 18% chance of winning, I risked $2.2 million to win $4 million. I was getting less than 2:1 odds. Who was the idiot? I was, and I was just projecting
that on him.
Second Belief: Poker players should play wisely. Well, should they? No, they should all play like that guy and overall, I’d win big. I’m the one who should play wisely. I was the idiot, but I was blaming him and mad at him. It was all a projection.
Third Belief: Other poker players should respect me. I was feeling disrespected and, therefore, angry because I was attached to that belief. Again, let’s look at the reality. Is it true that they should respect me? Absolutely not! I want them to play like idiots or think I’m an idiot (but only when I’m not). But what was the reality? I wasn’t respecting the other player, especially when he went all in with two pair and possibly a nut flush (proper use of a poker term). I was getting 2:1 odds for less than a 20% chance of winning or perhaps no chance of a winner. So again, I was projecting onto the other person and feeling strong emotions. In reality, I was the one not showing respect.
Fourth Belief: The other person was a bully. I didn’t like that at all. But look at my behavior. I bet the pot twice, with either the high pair or the second high pair and just a flush draw. Again, I was projecting—actually, I was being the bully. You might be saying that you can see it here, but what if this person had physically beaten me up? Well, if I’d been afraid of him, thinking, “He’s a bully,” then it would still be projecting because in reality he beat me up once. The bully was really my thought that he was a bully. Believing your thoughts is the primary cause of all suffering.
Fifth Belief: He was crazy and a lunatic. Wow, look who was saying that. I was playing poker when I was angry and not at all objective. I had just lost 2 million, which is more than my limit for the evening. And now I was risking everything for a 2 to 1 payoff with at best an 18% chance of winning and at worst no chance of winning. Here was more projection on my part. I was the crazy lunatic.
Is what I was thinking and feeling last night beginning to make sense to you? Wrapped up perfectly here in my poker experience is the very core of my teachings:
You are responsible for the results you get.
The psychological impact of trading (poker) is enormous.
Projection makes perception.
You can only trade your beliefs.
We make up the world we live in. As long as we do that, we might as well adopt useful beliefs and live in a manner that makes us effective traders.
Finally, if you don’t understand these ideas, you very well could be projecting some interesting beliefs of your own onto me and this article. Just notice it. It’s your right to do so, just like I’m free to project my beliefs onto my fellow poker players.
Van Tharp: Trading coach, and author, Dr. Van K. Tharp is
widely recognized for his best-selling books and his outstanding
Peak Performance Home Study program - a highly regarded classic
that is suitable for all levels of traders and investors. You can
learn more about Van Tharp at www.iitm.com.