Hi everybody. JD here with your Rational Trader market analysis.
Today I want to share a quick story — and a reminder — that came to me over the weekend while playing a little poker.
Yes, poker. Stick with me.
Poker Table Lessons
I’ve been a Texas Hold’em fan ever since the “Moneymaker Boom” of the early 2000s. This weekend, for the first time in five years, I entered a live tournament. There were 600 entries total. It was a grind, but I made it to Day Two… and “into the money” as they say.
During the game, I couldn’t help but notice how often my poker instincts aligned with my trading philosophy. Because rational trading and poker have a lot in common — particularly the importance of knowing when to fold.
Yesterday’s Trade: A Hand That Didn’t Work Out
Yesterday, I took a position in the QQQ — looking to exploit a pricing inefficiency I’d identified. The market was moving sideways, but I saw potential.
By the afternoon, though, it started to drift lower. I closed the position for a 24 basis point loss — not catastrophic, but disappointing.
Here’s how I think of it: I was “in the hand,” saw the flop, waited for the next card… and didn’t get the draw I needed. So I folded. I cut the loss and got out of the trade.
Today’s Trade: A Quick Win (and a Good Fold)
This morning, I entered a similar position — again in the QQQ. This time, the “flop” worked in my favor. Within an hour of the open, I’d banked a 50 basis point gain.
And then I folded again — I closed the trade and walked away.
Could I have stayed in and squeezed out more? Possibly. But by the end of the day, the market had collapsed. If I’d stuck around, I’d have taken a loss. So while I might’ve left a little on the table, I avoided a bad beat.
Know When to Fold
That’s really the point here.
In both poker and trading, you’re playing probabilities. You make your best read, place your bet… and then have the discipline to exit when the odds turn against you.
Sometimes, a good fold is more profitable than a lucky hold.
By the way, I’ll be on CS Live this coming Friday at 11am Eastern. Save this link and join me then as we talk about the Four Pillars of Rational Trading… the way I read the markets… and more.
Talk soon,
JD
The Rational Trader
P.S. Have you seen the secretive “Big Money” order that Jack Carter spotted?
