Pocket Apes: How my poker skills have helped me navigate the calamitous landscape of crypto investing
Lessons in the cards
I haven’t played a hand in months; too busy researching crypto. But I miss it a little, and I’m grateful I spent all that time playing and studying. I learned some priceless lessons that will forever help me way beyond the felt.
- You can do everything exactly right and still lose sometimes. In poker, this is programmed into the entire poker economy. Good players wouldn’t have any opponents if bad players didn’t show up and get lucky once in a while.
- Don’t play games you can’t afford to lose 20 times in a row. Or 100 times, depending on the circumstances. Gauging your risk of going broke while you attempt to withstand the variance of poker or, say, high-volatility assets means you can survive long enough to see the upside.
- Start where you’re at. Learning to adjust your risk or position size as your bankroll expands and contracts is essential to long-term survival. Developing the self-control to move down in stakes after a particularly brutal downswing is a skill that’s helped me stay sane and cozy in the crypto world.
- Scared money don’t make money. The optimal poker strategy is usually to apply pressure and play aggressively. If you’re not adequately bankrolled to be making appropriately courageous and daring plays, then you’re not playing optimally, and you’re decreasing your chances of capturing the highest upside. Also, your opponents will quickly detect this fear and exploit it.
- Sometimes, just ‘surviving a little longer’ can be more valuable than chasing action. This is a big one. To win a poker tournament, you have to get every last chip. There are instances where you and your average-sized chip stack can benefit significantly from just surviving while the big stacks are busy battling. This also applies to the more PvP trading environments that often become a game of chicken between retail investors and whales.
- If you have most of the chips in play, you can bully the whole table. Being able to recognize when you’re in this fortunate position and take full advantage is a standard poker strategy that has obvious parallels in the crypto world. If you control the majority of the supply of a token, you basically get to decide how high the market price can go.
- Winning never feels as good as losing feels bad. Humans have this weird glitch: whenever we take a risk to ‘win’ something, we feel like we deserved to win the whole time, so when it happens, we’re just not that surprised.
- Players who study efficiently, study the most, and effectively apply what they’ve learned will crush everyone else. No explanation is needed here; this lesson has many parallels in other aspects of our lives.
The Family Business
I grew up in one of those big cities with Casinos as their main tourist attraction. I left as soon as I could; the culture mainly seemed dingy and scammy and wasn’t my scene—lots of smoke-stained walls and leisure suits. But I learned to play many card games as a kid, and learning poker turned out to be a rather useful education. It taught me a lot about strategy, human psychology, and risk management, which is valuable in my current life as a crypto researcher and investor.
Poker is usually grouped with all the other verifiably rigged table games at an average casino. Still, fundamentally, it’s a PvP game of math and strategy that can be a genuinely fun and challenging game to play with friends. I always found or started a weekly poker game anywhere I happened to live. It was always casual, always low stakes. Just high enough to incentivize everyone to take the game seriously. The game forces us to make decisions that have real economic consequences based on incomplete information. During an average poker hand, you can often progressively narrow down what your opponent is most likely to have, but only down to a range of possible hands. You’ll rarely be 100% certain what your opponent has, and if they’re a good, thinking player, they will sometimes be bluffing. It’s also Ruthless. All manner of psychological warfare is fair game at the poker table. A good opponent playing a well-balanced, winning strategy will have you triple-guessing and forcing you to make tough decisions on almost every hand. You can go back to being best friends as soon as you both turn up your cards. As you learn the intricacies of the game, your thoughts change from “what hand do I think he has?” to thoughts like “what hands does he think I would play this way?” or “he might think the range of hands I’m opening from my late position is weaker than my actual range.” These thoughts include other variables as well, like the size of your current stack versus your opponents.
One day I got bored of playing versus the same couple of good players every week at those home games. A small handful of us were always the last few in the game. I realized this game was beatable.
In addition to these fundamental poker strategies, there’s a whole other exciting world specific to tournaments and their different formats. This is where my tale gets more interesting.
The Bright Idea
Looking back, I was terrible. So was everyone else at the game. But the best of us had an observable edge. When I discovered I could be playing several simultaneous games online, I became much more intrigued and further investigated. I spent part of a winter studying the game and attempting to prove that I could grind up a bankroll playing fake-money poker apps. It worked a little too easily, and a couple of months later, I was a multi-millionaire on several play-money poker apps.
Time To Step It Up
It was essential to prove to myself that I was winning and that my win rate was improving over time. You learn to check your self-delusion when you grow up in ‘the land of broken millionaires.’ I committed. I got all the cool tracking software with their fancy heads-up displays and proceeded to punt a couple of hundred bucks onto the best poker platforms available to me.
The obvious goal was to grind my way up from the micro-stakes to play limits high enough that beating them would provide a livelihood. It took about six months of intense studying and surviving huge, relentless, frustrating swings to start breaking above even, but it started working. It also started to become tedious. Cash games become awfully dull after about a quarter-million hands. . .in my opinion. I started studying and playing different tournament formats to spice up my “workdays.”
Here is where I eventually found a real edge. Tournaments add an additional layer of strategic complexity to an already challenging game. The subtle differences in approaching the game depending on what format you’re playing became my favorite thing to study, and I gradually became a full-time tournament player.
I started winning some tournaments. Sorry, this isn’t an exciting rags-to-riches story, but keep in mind I’m still in the ‘proving phase’ at this point where my average tournament buy-in was a couple of bucks. I would enter dozens of $2 tournaments every day, hoping to spike one for a couple hundred. It worked well enough that I was now lifetime profitable and sustaining a slow and steady move to the upside.
More Than Math
This was the basic recipe for success: Play games you know you can beat. Extract as much value as possible when you know you’re ahead, and lose as little as possible as soon as you realize you’re behind in a hand (but first check the math about how likely a big bluff will succeed before you muck your hand). Keep studying to keep up with the constantly evolving game, and keep your emotions and mental state under control. If you can’t manage this last part, don’t play. If you do, you’ll most certainly become part of that 90% of the global player pool that are all lifetime donatoooors to the poker economy.
All the game theory and memorization in the world isn’t enough to beat this game. Many of the most promising poker-savants have failed to work their way up the ranks because they lacked one or both of the self-control and bankroll management skills required to survive long term. A valuable part of my poker education was learning to manage my success. Most rising stars burn out or come crashing down.
Remaining emotionally unaffected by money that’s won or lost and having the discipline to stay within the confines of your current bankroll takes practice. In poker, the desire to stray from good, winning strategies is called “Tilt,” and it comes in a few common forms:
- You’ve been losing all day, so you start playing more reckless and aggressive to try to fight your way back to even.
- At your current stakes, you lose ten buy-ins and decide to play 10x higher limits to get your buy-ins back (this kills most new players).
- Your opponents have been verbally abusing you for hours because you’ve been playing really bad, so you try to bully them with even worse plays to ‘teach them a lesson’ (those opponents are jerks, and they shouldn’t be scaring away the easy money, and in this instance, you’d be wise to focus on playing a less exploitable strategy).
Mastering your emotions and adhering to very strict and conservative bankroll strategies has proven vitally important in poker and managing my investment portfolio. Poker allowed me to build my first pile of risk capital. At this point, I still had basically zero financial literacy and had never bothered to consider how I would manage various baskets of other investments. Learning to manage my modest poker bankroll prepared me for 2020. I recognized early that my native currency would be devalued quite quickly at the current rate fresh bills were being printed. I took most of my poker bankroll plus a small pile of that new government money, about 10% of my net worth at the time, and started punting it all into blue chips, DeFi, and leading infrastructure tech. That 10% became about 60% so far, including this last 65% plunge.
All of my investment decisions start by assessing risk profiles and determining what level of exposure I can easily survive. Using these self-imposed bankroll management rules to balance stablecoin reserves and high- and low-risk assets guarantees that no matter how this market behaves, my chances of going broke will stay very close to zero.
Thanks for all the chips
Over several years I slowly worked my way up to higher stakes by sticking to solid strategies, managing my mental state, and abiding by very strict personal bankroll management rules. I was consistently beating mid-stakes, but I hit a plateau just below the limits that would make me enough money to quit my real job. I would always grind up 15 or 20 buy-ins to play the next level, take a shot, get rekt and humbled, then move back down and grind it up again. So far, this is the top for me. I’m too busy now to commit the further effort required to compete versus the sick savages at the higher stakes. But I kept it all. Part of the down payment on my house, most of the presents under the Christmas tree for the last 4 or 5 years, and even the computer I’m using to write this were all gifts from my opponents at the tables. Poker introduced me to crypto. When I finally won long enough to start paying myself, Bitcoin and Ethereum were the most convenient off-ramps. I stopped playing regularly because of my growing interest in crypto due to the pandemic and government stimulus in 2020.
Poker will remain as one of my favorite games. The poker community has earned my respect. Over several years I’ve witnessed that most in the community are just positive and helpful people playing carefully constructed strategies versus each other while they have a lot of fun making crazy plays and psyching each other out. Money is just how you keep score. Shout out to all the Twitch pros and regulars that keep the game challenging and fun. Thanks for the introduction to crypto, and thanks for all the chips!
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