We came, we saw… we didn’t conquer but we did ok…

The first Mercenary trip to Atlantic City did not produce any WSOP final tables. But Mike cashed in the $1125 event, and Jack (yours truly) crushed the cash games for thousands, so things worked out. The Maker methodology proved itself strong once again, holding up against a tough Main Event table full of seasoned pros and fueling a solid run into day 2.

We’ll definitely be back to Atlantic City… though next time we’ll stay at the Borgata. Harrah’s AC is on the shabby side , but the Borgata is gorgeous. The Borgata poker room is also stunning – the largest, busiest and most well appointed we’ve seen.

The math of large field tournament trips is intriguing:

*We estimate a roughly 20 percent chance of cashing in any large field tournament event. The first 10% represents a baseline draw against randomness (as 10% of the field is paid on average)… another 5% represents the presence of dead money (players so awful they have nil chance of cashing as a collective group)… and the final 5% represents the net skill gap between us and the average competitor in the field.*

*With two Mercenaries entering an event, the odds of at least one cash rise to 36 percent. Playing at least two events per series, the odds of at least one cash – 36 percent twice – rise to 59 percent.*

*On top of this, add a cash game edge that is much, much larger than just 5 percent (for a whole host of reasons, from capitalization to skill differential to reduced N factor), and the odds of a net profitable outing further jump by a significant percentage, perhaps to 80 percent.*

*Last but not least, the ever present optionality of a potential six or even seven figure cash (if the prize pool is large enough)… and the fact we are able to do normal research and trading work at the tables. (The WSOP doesn’t care about mini laptops.)*

In the second *Market Wizards* installment, Blair Hull talked about the mathematical advantage of multiple blackjack experts playing off the same bankroll. The same idea applies here in respect to ‘team’ capitalization and the enhanced odds of making a majority of all trips profitable. In that light, a third or even a fourth ‘Team Mercenary’ member, trained up to the same skill level, would make the numbers even more compelling.

In that regard, there have been inquiries as to whether we will sell the Maker methodology. The short answer is not likely (or at least, not until we’ve pulled a few million out first).

For one thing, the methodology itself is still in experimental phase, undergoing incremental development at the margins; for another, the application of Maker is more akin to learning a martial art than following a set of computerized rules. There are strategies and analysis techniques that, similar to a memorized martial arts *kata*, have to be physically practiced until they can be fluidly executed in real time – favoring a learning process laden with heavy interaction and feedback.

We will keep writing about poker in the context of trading, though… and of course, the deep and rich connection to trading is what completes the circle. Many of the things that work in poker also work in trading, and many of the exploitable weaknesses at the table apply in markets.

Take, for example, the concept of Absolute Money Pressure, or AMP. Many poker players, by dint of poor capitalization, are overly sensitive to the absolute dollar size of a bet, when they should instead be focused on EV (expected value) percentages in relation to implied odds, hand ranges, and the size of the pot.

As a result of this, the thinly capitalized player has a permanent weakness: A smart opponent can (and should) apply ‘max amperage’, raising the maximum amount possible that still allows for positive EV in relation to the situation at hand.

In plain English, this means the player who understands the Absolute Money Pressure (amperage) concept – and can apply it with mathematical consistency – has a weapon he can wield like Thor’s Hammer against undercapitalized opponents.

Seem far removed from markets? Not in the world of global macro… and particularly forex, where large bets, placed at strategic pressure points, are reminiscent of poker play.

Consider, for example, this anecdote via Colm O’ Shea in *Hedge Fund Market Wizards*:

As you may know, I worked for George Soros before starting my own fund. My favorite George Soros story concerns an interview with chancellor Norman Lamont, who stated that the Bank of England had £10 billion in reserve to defend the pound against speculators. George apparently was reading an account of this interview in the next morning’s paper and thought to himself, “£10 billion. What a remarkable coincidence — that’s exactly the size of the position I was thinking of taking.”

Our next event stop will be the Beau Rivage in Biloxi, Mississippi, January 3rd through 9th. If you’d like to meet up in that window, shoot us an email…