Fooled By Randomness

sikes

I recently read a great book on the back of a recommendation somewhere on 2+2. It’s called Fooled By Randomness – The Hidden Role of Chance in the Markets and in Life by Nassim Nicholas Taleb. It also opened my eyes to everyone’s situation and how the chance and the degrees of it affect our different walks. I would encourage every poker player to read it. Though I think poker is never mentioned, so many concepts are relevant.
I believe we have all fallen for some of these ideas before, and I’m sure many still are and this is just my take on a couple of the concepts.

Back-Fit Logic

How often do we play a hand and then look back through it in poker tracker or another tool. We might then discuss it with someone and post it on boards. It’s very easy to come up with a reason after a hand as to why you played it in a certain way, and make it with sound logic. I was definitely someone who did this. Now I make sure when going over hands I am certain as to why I played a hand in a certain way. I will always remember the reasoning behind a big hand and then work out the calculations etc after. It's a difficult trait to acquire because being honest with yourself is all that is required in poker, and for me, I find lying to myself easier than to any other person.

Survivorship Bias

In trading he talks about hearing about the successes. But for all the successes they are multiple more failures. The fact that someone is successful does not mean they are a good trader. Out of the sample set some of those will have to be successes, even if they are just lucky idiots, those idiots being fools of randomness.

The same can be said for poker. We only know about successful poker players, we rarely hear the stories of the hundreds of thousands unsuccessful ones. But it goes in stages, after the first “term” whatever that might be, we see from a starting set of X players we might have Y “winners” for that term. For the next term we have the remaining Y players of whom a smaller amount will be successful for the next term.

I suppose there is no way to demonstrate what I am saying, though I think that if you at the turnover of posters on the 2+2 forums you get an idea of what is going on. Two major reasons players leave poker are 1) they are fooled by randomness in those games and go broke or 2) because of the last point, good players leaving due to burn-out. (This is more an assumption based on the post counts of many of the posters on the forums) I realise this is kind of written all over the place, I hope you get the point though.

Burn – Out from analysing Randomness

At the end of a session we might look back to see if we won or lost money. This is pretty irrelevant thing to look at. We should look at the big hands and make sure what we were doing was correct. I can only be disappointed if I played poorly. By allowing negative variance and randomness enter our emotions, basically tilt, we are doing harm to our bodies.

... people who look too closely at randomness burn out and their emotions are drained by the series of pangs they experience. Regardless of what people claim, a negative pang is not offset by a positive one (some psychologists estimate the negative effect for an average loss to be up to 2.5 the magnitude of a positive one); it will lead to an emotional deficit.

In a game that is getting tougher and tougher to beat, I believe edges in the future will be controlled more by our mental state, ensuring we are always playing our A game, because our A- game will be losers.

There is so much more in this book and I’m not a great writer, but you should all consider reading this.

Goodluck2me

good post. will think more about it and post my thoughts later. very thought-provoking.

Bandana boy

Gp

luckylucky

yeah very good post, can't really add anything more.

Solksjaer

Sikes,
Where did you buy this book? I'd be very interested in reading it. I am not a fan of over analysing play at all and I fully agree with the negative vibes this can leave with you with. I do disagree with this part though " Regardless of what people claim, a negative pang is not offset by a positive one (some psychologists estimate the negative effect for an average loss to be up to 2.5 the magnitude of a positive one); it will lead to an emotional deficit "
I think this is surely dependant on personality type . I have had some small victories at this game and I think the positive 'pang' far outreaches any negative ones. For me when I receive a loss I rant a little internally (sometimes externally) and I'm completely over it quite soon, in fact the memory does not stay for too long, but the victories stay for quite some time. As with everything balance is the key to health and that includes mental health. If you play poker or gamble a large % of your time you will become emotionally attached to it and it will effect other areas of your life if you don't balance it out with other activities, eg music, sport. I read once where it stated compulsive gamblers get more of a hit from losing a close one than they do from actually winning. This appears to pander to some self destructive trait they possess. This is a very interesting subject that intereests me more than poker so I'll definitely read that book....cheers for the tip.

sikes

Think I got it on amazon.

When talking about the burn-out he is talking about analysing random events, like short term poker results. There is too much noise in the data to draw any significant information from. In the case of traders, its trying to find a trend in stocks and perhaps the events in the middle east. Just becuase a trend is found does not mean the two are linked in anyway. So if we are letting our short term results affect our emotional state, i.e. we have an expectation of 10BB/100 hands, when we don't manage it on a given session and focus on the failure, it has more of a negative effect on us than when we have a >10BB/100 session and its positive effect, so we are best just to ignore the short term results, or at least pay very little attention to it.