Texas Hold ‘em Trading Strategy

Pocket Aces (AA) is the best pocket in Texas Hold ‘em. That being said, if you were playing Texas Hold ‘em and got pocket aces, could you know that you were going to win since it’s the best?

No you couldn’t.

While pocket aces is the best pocket in the game, there are a lot of hands that are better than one pair. All you can know with pocket aces is that the flop is worth seeing. So you call, bet, or raise. Do anything but fold. Pay for the privilege to be in the game through the flop at least, if not all the way to the river so that you can see how things will progress.

What if you had a 2-7, the worst pocket in the game? Is there a chance you could win? Yes. The flop could be 2-7-7 and you have a full house. But statistically you should fold. You still can’t know if you will lose, but you can definitely know it’s not worth the money to call.

How I Win

My trading strategy is very similar to this which means it has one extra step in it compared to most systems.

When I see a signal, I can’t know for sure that this one trade will win. Not yet. But what I can know is that it’s worth seeing it through to the flop. So I ante up (i.e., open a position). The next thing to happen after my signal is the rest of the build-up (i.e., the flop).

In this first image, I have a signal. It’s an up trend with the price resting on a zone in a lower Sawtooth Position. This is my pocket pair. Or at least Jacks or better. So I’m going to ante up by opening a LONG position.

After the ante I look at the flop. The buildup period of this trade appears to be setting up for a countermove to the drawback. That means a very low probability of a new high. So I am going to fold.

Because I executed the buy order at the right time instead of hesitating, I was able to capture 6 pips of movement and come out with 1% gain!

And here is the result. I was absolutely correct about the flop. It did not improve my situation, and instead signaled danger, so I folded.

Here is another pocket pair. We have a down trend where the price is at the upper side of the range. So I ante up.

Can I know whether or not this trade will win? No. That’s not the point. The point is to be in and holding in case the flop brings something good. After the flop, it may be too late to get in, so I have to already be in if I want to play.

Holding short, I now wait for the flop, or the next period of movement. And after it is revealed, I can see that this is not behaving like a down trend, so I fold.

Because I bought correctly without hesitation, I managed to fold 10 pips positive, or a 2% gain. I am still bearish due to the downtrend, so I am going to sit out until I see the price set up differently, or until it reaches the next zone up (black line below).

It is hard to see in this clip, but the wick on the last bar reached the black line in the zone created by the previous peak. This is my next good pocket hand, so I ante up and call. Again, I’m not expecting a win, I’m only expecting to see the flop.

And on this one the flop improves my hand leading to a win.

The three step process is my system. All it needs is a signal (jacks or better), a way to derive additional information from the subsequent movement after the signal (the flop) and to ask myself to make a final choice to call or fold after the flop.

If it goes well, I suppose there could be a chance to raise (scale in) if the cards still look good, but in this case I am going to close my hand and cash out because of how close the price is to the bottom of the range on the next larger scale.

To do this for yourself, you’ll need to beef up your system with a way to quantifiably analyze the period of time immediately after your high probability setup. That’s what I believe is missing from most trading systems that make mine far superior. Most systems are hard to trust because they’re essentially asking you to make a full bet before you see the flop. There is no secondary decision after further development. In fact, most trading systems will discourage secondary decisions because of the fear that the decision will be emotional resulting in closing a good trade early. But if you have a way to QUANTIFIABLY ANALYZE the period after the signal, that would not be the case. Add this one piece to your plan, and then, like Texas Hold ‘em , bet in stages for a huge competitive advantage.

The reason I am a proponent of this method is that I believe the market shares the same formula as the popular card game. Like the game, the time of entry in the market (dealing the pocket) cannot offer all of the information needed to make good decisions, and by the time such information becomes available (the flop), it may be far too late to get an entry. This is a characteristic of the market that traders need to work around and shouldn’t ignore if they want to win. If “dealing the pocket” gives you a signal and the best price, and a few hours later at “the flop” you have enough information to make a higher probability bet, you should wait until “the flop” to make your bet. However, if by the time “the flop” rolls around it’s too late to get the price that was available at the start, then you have to buy at the signal and commit to seeing the flop before making a final decision to hold or fold. That’s why this 3 part strategy is so effective. Judge your near future by the pocket, and judge your long term future by the flop.