Susquehanna, Poker, and Trading
Why one of the world's top quant firms makes new hires play 100 hours of poker
Poker vs trading, I knew the old school props used to specifically hire poker players, but I didn’t realise some of the top firms still do.
And so I found an interview with Todd Simkin.
He ran the trader development programme at Susquehanna for decades. One of the biggest quant trading firms in the world.
Now, these guys are so into poker that they make every new hire play 100+ hours of poker before they touch a real trading position!
Todd says this right off the bat:
“Good decision-making under uncertainty is still the key characteristic of a strong trader.”
That’s it. That’s the job description.
And the rest of the interview is basically him explaining why poker is the cleanest way to teach that.
A few things he said that I think are worth sitting with…
ROYAL FLUSH
1. The flop is the order book.
Everyone at the table sees the same flop; in other words, everyone looking at a chart sees the same price action.
But everyone reacts differently based on their private information. The research you’ve done, the order flow you’ve seen or even the bias you walked in with.
Two traders looking at the exact same chart can take opposite trades. Neither is necessarily wrong; they just have different information.
2. You’re never against random cards.
This is clever…
“You’re never against random cards. People are choosing to put on a trade. And given that they’re choosing to put on a trade, how do you update your probability set?”
Every trade has a counterparty, even if you technically traded via a CFD/Spreadbet. Someone would have sold you that long in the market. Someone bought your short.
And they did it because they thought they had the edge.
So who’s right? You or them?
3. Attack the idea. Not the person.
This is how SIG trains.
When a trader pitches a view, the senior traders rip into the idea. Not the trader.
“What might you be getting wrong?” is the opening question. Not “are you right.”
That’s a subtle but important reframe, right?
Now, most retail traders don’t have anyone to do this with, so you’re gonna have to do it yourself.
Before you click the button, ask what would have to be true for this trade to fail. If you can’t answer that, you probably don’t have a real trade…
Alright, so what’s the takeaway here?
The guy who’s spent his career building one of the best trading teams on the planet says the job is decision-making under uncertainty.
The traders he trains aren’t trying to be right; they’re trying to put their capital behind decisions where the probabilities are in their favour and accept that they’ll still lose plenty of them. (This is what Mark Douglas preached.)
That’s the whole game.
Worth asking yourself before your next trade…
Are you trying to be right?
Or are you trying to make a good decision with incomplete information?
And that worked for a while, but the moves were relatively small, so what do you need to do to accommodate small moves?
Bigger size of course…
And like any black swan event, it all looks fine until it doesn’t…
This trade looked like a little cash machine, until one day…