Just came across an interesting website, http://www.texasholdeminvesting.com . I’ve been playing Texas Hold’em poker for a while now via Facebook/Zynga and unlike past experiences I now really enjoy my time playing it. I’m not sure why in the past I didn’t catch the holdem bug. If I try to think about it then maybe it’s a developmental thing. In the past I was attracted to holdem, and did reasonably well but found it too similar to trading on the emotional side and therefore a bit of a drain while now that aspect disappeared and I can play it for hours.

Anyways, as the title of the post and the website indicate there are countless parallels between investing / day trading and Texas Holdem Poker. In fact the Texasholdeminvesting website came up with a book dedicated to identifying the similarities. I’ve just downloaded it (free intro), and looking through he’s got most of the topics covered, like: managing emotions, thinking in probabilities, performance analysis, and bankroll size and position sizing. I’m hard pressed to find a game with more similarities with trading than poker. Depending on your personal traits poker can be a good way to sharpen some trading related skills or just have some fun during market downtime.

H/T to Meir.

P.S. If you’re playing texas hold’em and haven’t tried Zynga I think it’s one of the nicest free fake money poker out there that I’ve come across. If you’re on my facebook list give me a buzz if you want to play a few rounds.

Tags: Buzz, Day Trading, emotions, experiences, facebook, game, market, parallels, performance, performance analysis, position sizing, probabilities, stocks trading, texas hold em poker, texas holdem poker, trading, Zynga

Lots of cool new stuff from Google these days. An eBook store (watch out Amazon), a cross platform eReader (Kindle on the sights) to go with it, new Google Nexus Two S (S? Because Samsung doesn’t like to be number two), touted as “Best phone on the market today”. Android Gingerbread with a number of usability and speed improvements. Motorola tablet (10 inches?) running Honeycomb. 3D Google maps, VOIP built-in, and all kinds of customizations for Tablets. I’ve have some hands on with the Samsung Galaxy Tab the other day (and also the iPad), Samsung has done an excellent job with the Galaxy, it was a real pleasure to use. The smaller screen and form factor were much more convenient and easy to hold and play with than the heavy iPad.

Anyways, so far I’ve got the Gingerbread keyboard flashed over to replace the Froyo stock keyboard. But this presents a problem… I like Swiftkey, Swype and the new Gingerbread keyboard, which one should I use?? Decisions.. decisions.. (if you’re an iPhone user you’re probably snickering right now ;-) ).

I’m now on Froyo 2.2.1 build FRF83 and can’t wait for the flashable ROM with the new 2.3 Gingerbread, yes I am a geek. I’m not likely to change from Nexus One to S, the changes are too small to be worth it and some things I like about the One more, like having the option to change the SD card instead of the built-in 16GB of the S.

I should probably do another post of my favourite Android apps. Since the explosion in the number of apps on Android recently there are some really awesome ones I’ve installed like replacing the stock browser with xScope (looks and behaves almost like desktop Chrome).

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There is a fascinating speech by InteractiveBrokers founder, Thomas Peterffy to the World Federation of Exchanges in Paris posted on IB’s website. It is highly recommended for a look into how the brokers and markets work today from a technical perspective, how your orders are treated and why there is a big problem brewing with transparency, trust, fairness in dealings of exchanges and brokers and ability to handle market meltdowns such as the May flash crash. He seems to take stance that the troubles we’ve been seeing with flash crashes isn’t rooted in algo trading / HFT but with fragmentation of exchanges, clearing houses and ubiquity of internalizers. Here is the gist of it, the full speech is available here in PDF.

The root of the problem, as always, is short-sighted greed on the part of the brokers. Transparent commissions are not enough for them. They want to take more from their customers but without the customers seeing exactly what it is that they are paying. This is done by what is called internalization, which is easiest to illustrate with OTC products. The banks simply take the opposite side of the customers’ orders at prices that leave the banks with undisclosed but huge profits.
How do we know that the profits are huge? Just look at the banks’ quarterly financial reports on derivatives dealings. Even the more modest estimates exceed $100 billion per year, worldwide. Customers are on the other side of those trades. Customer losses are on the other side of those bank profits. The amazing thing is that those banks are able to convince their customers that this is good for them and moving these contracts on to the exchanges would harm the customers.

It should be shocking, but it probably is not, that according to the Rule 606 reports mandated by the U.S. Securities and Exchange Commission, no major online broker, with the sole exception of Interactive Brokers, sent more than 5% of its orders to an organized exchange. More than 95% of their orders go to internalizers!
These brokers ignore the exchanges and sell the orders to internalizers, thereby avoiding exchange fees and getting a nice little payment from the internalizers in return. This payment for order flow adds up to real money after millions of orders are taken into account. The internalizers are supposedly matching the best prices prevailing at the exchanges, so that they can argue that the customers get the best prices.

But do they really? Of course not. If they did, an independent study would not have found that the one broker that actually routes the vast majority of its orders to public exchanges — and I will not name this broker again — obtains executions that are on the average 28 cents better per 100 shares in the U.S., and an absolutely stunning 2.84 Euros better per 100 shares in Europe.

The steps he proposes are mainly 3:
1. Forcing brokers to route to exchanges
2. Defragmenting the exchanges.
3. Consolidate clearing houses. Peterffy raises some good questions here about liquidity, solvency and ability of small clearing houses to handle crises.

H/T TraderGav

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Tags: clearing houses, derivatives, Exchange, fairness, hft, interactive brokers, internalization, market, online broker, securities and exchange commission, Stocks, Thomas Peterffy, transparency, U.S. Securities