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Wall Street is hiring gamblers

Joined
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Chris Fargis thought his big job interview was over. But when the partners at Wall Street upstart Toro Trading finished with their questions, they broke out a deck of cards and a green-felt card table. Mind playing a few hands of poker?

It was a final test, and Fargis was relieved. The 30-year-old never went to business school or even took a finance class. But he knew poker. He had made a living playing the game online for six years from his Manhattan apartment, betting on up to eight hands at a time.

Within a few days, Fargis — with no Wall Street experience — was offered a position trading stock options, a job that entails making multimillion-dollar gambles. His poker skills sealed the deal.

Susquehanna International Group, a 1,500-employee trading firm based in a Philadelphia suburb, has made the card game a central part of its training program. New hires are given copies of "The Theory of Poker" and "Hold 'Em Poker" and spend one full day a week studying the game by playing it.

"We are trying to teach people how to be good decision-makers under uncertainty," said Pat McCauley, who runs the training program. "It's not the stereotypical stuff with bluffing — it's real science."

Wall Street firms put their money on poker expert - latimes.com
 
What, he didn't know any abstract measure theory? He didn't know what a sigma-algebra is? Better keep quiet about this or most of the junk MFE/MFM programs will close down.
 
Those aren't Quant positions though. Traders don't need to have such high level quantitative backgrounds.

I know a Cornell History-English double major who was making 300K when he was 23 out of university as a trader for a BB in California.

The MFE programs train in the quantitative aspect, not in the general personal judgement and decision making. That cannot be "learnt" anywhere, which is why I think the whole "poker" test, is a subtle way to understand a person's true personality in this aspect.
 
I recently just found this site and love it. I'm still pretty ignorant to a lot of the quant topics and am still taking information and learning without contributing much to this community.

One area I could contribute is poker. If anyone has any questions I'd be happy to help as best I can.

I've read a lot about poker relating to trading. And I think they share many similiar skill sets and approaches.

SIG, mentioned above, has been a big proponent of hiring poker players. There is a great interview with Jeff Yass...I think his hame is...one of SIGs founders talking about poker and trading.

Bill Chen, a published poker author, player, I believe works with SIG. So does Mathew Glantz. And I believe Matt Hawrilenko had the opportunity to work there...not sure if he accepted it.

Matt Hawrilenko is probably the best, if not, top 3 in the world at HU LHE. I think it is generally assumed that he has "solved" that game which is also why there is not much action these days in straight HU LHE, or LHE for that matter. The market is essentially efficient.

Other firms also look for and hire poker players. Not degenerates who hit a big payday in a MTT but actual people, young kids usually, who look to solve the game and form a strategy that yields an edge in a game where you can have upwards of 7 figure days.

---------- Post added at 11:53 AM ---------- Previous post was at 11:48 AM ----------

Those aren't Quant positions though. Traders don't need to have such high level quantitative backgrounds.

I know a Cornell History-English double major who was making 300K when he was 23 out of university as a trader for a BB in California.

The MFE programs train in the quantitative aspect, not in the general personal judgement and decision making. That cannot be "learnt" anywhere, which is why I think the whole "poker" test, is a subtle way to understand a person's true personality in this aspect.


Joy,

Google Brian Hastings.

He is a 22 or 23 year old still attending Cornell I believe. He is a lead instructor at Cardrunners.com. Also active on 2p2 forums which I mod.

He has the signle largest winning day of online poker. Made over $4m in one day playing another kid (Victor Blom) from sweden.

A website that tracks the results of online poker has him up slightly over $5m since the start of 2009. Tracking over 606,000 hands of poker in that time frame.
 
Those aren't Quant positions though. Traders don't need to have such high level quantitative backgrounds.

I think many (all?) of the top poker players know enough probability theory to calculate the odds of different hands, the odds of improving one's hand in different ways (e.g., if I have a pair, and change three cards, what the probability is of improving to three of a kind, to two pairs, to full house, to four of a kind). There are a handful of books just devoted to this kind of poker-based probability.

If you watch the film The Sting (which I recommended in another thread), you can see Henry Gondorf making a mental calculation after Doyle Lonigan raises him $10,000 -- he knows Lonigan started with a pair (since he traded three cards), so he's calculating the odds of him having four of a kind. Actually, he's pretending, since he switched his own cards from four threes to four jacks, but he's expected to make that sort of calculation. Only then does he match Lonigan's raise.
 
bigbadwolf,

Those are very very basic and simple calculations any high school math teacher could make. Its the foundation of decision making in poker situations. There is a tremendous amount of game theory and other analysis that goes into developing a strategy that isn't so simple and plain cut.

It's also quite interesting when you dive into building general strategy, a system if you will, that has an edge on your competition.
 
I think many (all?) of the top poker players know enough probability theory to calculate the odds of different hands, the odds of improving one's hand in different ways (e.g., if I have a pair, and change three cards, what the probability is of improving to three of a kind, to two pairs, to full house, to four of a kind). There are a handful of books just devoted to this kind of poker-based probability.

If you watch the film The Sting (which I recommended in another thread), you can see Henry Gondorf making a mental calculation after Doyle Lonigan raises him $10,000 -- he knows Lonigan started with a pair (since he traded three cards), so he's calculating the odds of him having four of a kind. Actually, he's pretending, since he switched his own cards from four threes to four jacks, but he's expected to make that sort of calculation. Only then does he match Lonigan's raise.

Yeah. I don't disagree with that. I sort of was pointing out to your measure theory and MFE program comment. MFE programs aren't programs that make you traders, although 98% of the students want to be traders coming out of the program. The MFE programs are primarily for quantitative positions trader support type of positions from what I have seen in employment stats(positions).

The new-age traders in the quant funds and so on obviously need to have a strong mathematical background, but there are still many fundamental funds that just want people with good decision making ability and not really high end quantitative skills.

If people get trader positions or grow through the company to a trader position, that is on their own ability.

---------- Post added at 12:19 PM ---------- Previous post was at 12:16 PM ----------

Joy,

Google Brian Hastings.

He is a 22 or 23 year old still attending Cornell I believe. He is a lead instructor at Cardrunners.com. Also active on 2p2 forums which I mod.

He has the signle largest winning day of online poker. Made over $4m in one day playing another kid (Victor Blom) from sweden.

A website that tracks the results of online poker has him up slightly over $5m since the start of 2009. Tracking over 606,000 hands of poker in that time frame.

Yeah. I know few poker players who never worked and just played poker to put themselves through school. There is a Caesars Casino(largest casino in Canada) where I live as you know.
 
There is a tremendous amount of game theory and other analysis that goes into developing a strategy that isn't so simple and plain cut.

It's also quite interesting when you dive into building general strategy, a system if you will, that has an edge on your competition.

I'm a chessplayer, and except for some social and online (casual) poker, I don't have much experience. But my impression of real (i.e., not online) poker is that you attempt to understand the playing style of other players (aggressive? bluffing a lot? easily intimidated?), and to make rapid decisions under stress and uncertainty that take into account not only the odds of hands but the style of the other players. Perhaps this is happening under the level of consciousness (since it's usually so fast compared to chess).

As far as I know, von Neumann was the first to come out with some results for 2-person poker. One of which was the seemingly counterintuitive result that when you bluff, do it with completely garbage hands.

---------- Post added at 11:34 AM ---------- Previous post was at 11:29 AM ----------

The new-age traders in the quant funds and so on obviously need to have a strong mathematical background, but there are still many fundamental funds that just want people with good decision making ability and not really high end quantitative skills.

The question of applicability has never really been satisfactorily resolved on this forum. For a strong programming background you won't hear a whisper of dissent from me. But the kind and level of math seems to me to be more controversial. A case can be made -- as Wilmott makes it -- for a more heuristic math rather than abstractions like measure theory.
 
I'm a chessplayer, and except for some social and online (casual) poker, I don't have much experience. But my impression of real (i.e., not online) poker is that you attempt to understand the playing style of other players (aggressive? bluffing a lot? easily intimidated?), and to make rapid decisions under stress and uncertainty that take into account not only the odds of hands but the style of the other players. Perhaps this is happening under the level of consciousness (since it's usually so fast compared to chess).

As far as I know, von Neumann was the first to come out with some results for 2-person poker. One of which was the seemingly counterintuitive result that when you bluff, do it with completely garbage hands.

If you're a chess player then I think you'd appreciate the more scientific and acedemic aspects that go into developing poker strategy. You know of IBM and Deep Blue I'll assume.

A team, I think out of Canada, built a program that can play HU LHE (heads up limit holdem) almost perfectly. HU LHE is about the simplest form of poker there is that is played nowadays where there are only two players and each bet is limited to one amount so it's a game that is easiest to quantify. It's sort of a Deep Blue for poker, but at the very simplest form of poker.

When you expand to a table of 6 or 9 players and make the game no limit where you can bet any amount you want, the game rapidly gets more complex and thus harder to "solve"...or more difficult to program a computer to play, and beat, human players.

This is still talking about holdem where each player gets two cards. I play Pot limit Omaha where each player is dealt four cards,...growing in populartiy as holdem players get more proficient and the game gets more "efficient"....which adds another layer of complexity.

You are partly right but really overlooking (I think at least) a big portion of poker theory.

First of all, online poker is "real" poker. It's not the traditional way it was played but it's poker none the less and is where most of the action nowadays is (see pokerstars with 100k people playing anytime of day).

Claiming online poker isn't real poker is akin to claiming that only pit traders are real traders (i.e., not screen traders).

Much like transition of trading has gone from pit trading to screen trading and to automated/HFT/Black box trading now...so has poker gone from live play to online play...and could eventaully get to programmed play as the game gets more "solved".

The best players in the world 50 years ago were old road gamblers that just had experience. As math teachers and more acedemic players looked at the game they basically ate the lunch of a lot of the "old guard". Today, with the advent and growth of online play, now the best players in the world are young kids that sit at home and can play 100 hands an hour...per table...and can play 12 tables at a time. They can see 1,200 hands an hour without leaving your house. For comparison, a player in a casino might see 30 hands an hour. This is what I meant by the learning curve. I have played more hands of poker...and could argue....that I have more experience than a player that has played in a casino for 50 years. I've played over a million hands of poker...he has not.

Sorry for the rant.

With that said....back to topic. The reason the online players are so much better is because they developed better fundemantals of the game. They don't prey on drunk tourists coming to a casino playing badly and spewing chips...online players have to play and win against other online players.

So they analyze there game more, create and develop tools for analyzing play (see Holdem manager and poker tracker). Develop equity calculators to run simulations of a hand vs a range of hands (see propokertools.com).

So when you say playing style, your partly right but it's not so simple as he is bluffing a lot. Its more along the lines of...he is playing 50% of his hands but only raising 10%. We can assume he is a rational player so probably playing about the best 50% (AA,KK,AK,QQ etc) of hands and folding the worse 50% (23, 24, 72, 83 etc) of hands. Of that top 50% of hands (about 85 distinct hand) he is likely raising the best 10% of those hands (AA, KK, AK, QQ) and limping in the bottom 40% (K9,Q9, JT, J9, 9T). So when this player limps in or raises preflop, you can run this likely range of hands vs your hand to try and deduce the best course of action (raise,call or fold) and go from there.

I'll stop there but that literally just scratches the surface of thought that can go into making one decision in the game. The best players in the world use to just think in terms of "he plays alot of hands so he is aggressive". Or "A player bets a lot so he must be bluffing a lot". But the information and analysis that goes into the game nowadays has gotten much more refined than that. And if you want to win at the game in the long run, you'll need to stay competitive on how you approach the game and make your decisions.
 
If you're a chess player then I think you'd appreciate the more scientific and acedemic aspects that go into developing poker strategy. You know of IBM and Deep Blue I'll assume.

Yes, there's a lot to be said here in terms of trees of analysis and the pruning of these trees based on the weighting given to various factors. But this would be digressing, though there are probably important applications to finance.

First of all, online poker is "real" poker. It's not the traditional way it was played but it's poker none the less and is where most of the action nowadays is (see pokerstars with 100k people playing anytime of day).

Claiming online poker isn't real poker is akin to claiming that only pit traders are real traders (i.e., not screen traders).

My clumsy wording. I meant one where you can see, hear, and smell the other players -- see their hesitation, their involuntary nervous tics, their clammy hands. All of this is subconsciously taken in.

Incidentally, some chess players have drifted over to poker because of richer pickings.

And unrelated to the discussion, but one of my favorite songs, by Kenny Rogers.
 
A team, I think out of Canada, built a program that can play HU LHE (heads up limit holdem) almost perfectly. HU LHE is about the simplest form of poker there is that is played nowadays where there are only two players and each bet is limited to one amount so it's a game that is easiest to quantify. It's sort of a Deep Blue for poker, but at the very simplest form of poker.

When you expand to a table of 6 or 9 players and make the game no limit where you can bet any amount you want, the game rapidly gets more complex and thus harder to "solve"...or more difficult to program a computer to play, and beat, human players.

Yup, the guy who headed that is Darse Billings, his PHD thesis and some other's of his colleagues are online.

I just picked up 'Every Hand Played' by Gus Hansen. Very excited to go through it, and understand what went through that guy's mind. I love his loose style, playing so many hands that others throw away.
 
Joelb,

Ya, I believe one of the guys who helped design the program...or at least worked with the team is Matt Hawrilenko (sp). Who also now either works for SIG or has been offered jobs and turned them down to keep playing. He seems like a class act too fwiw so it's nice to see him doing well.

You're free to do and read whatever you like but I'd caution reading and learning from Gus Hansen. And this is not a shot at him, but trying to play a style like that is very difficult to figure out when learning. There is a tremendous amount of "feel" and awareness you need to have to play that loose aggressive style well and that comes from playing tons of hands and knowing how other players respond to that sort of image.

He is also one of the biggest losing players online if that matters to you...and don't get the confused with him being a bad player. He plays the biggest games online and against the best players in the world so it's not like he is bad...he just doesn't really step down and play where he can win. Not a good quality to have but his poker reasoning, at least in game decisions and strategy are still going to be solid I'd imagine.

He is also a world class backgammon player and plays REALLY high stake games of that from what I've heard.
 
I just picked up 'Every Hand Played' by Gus Hansen. Very excited to go through it, and understand what went through that guy's mind. I love his loose style, playing so many hands that others throw away.

I'm not sure if he still is sitting out, but late last winter I remember reading on pokerjunkie.com that Hansen was quitting high stakes NLHE at least for awhile... apparently, 2009 was a really bad year for him. He was down at least well into the 6 figures, if I remember right, maybe worse.

If you like to see the pros in action, you should dvr Poker After Dark. I think it's on just about every night, and it will usually have a ring game full of pros. They'll have on Ivey, Hellmuth, and so on, quite a bit and it's always fun to see them in action.
 
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