Life is a bit of a game, it’s a bit of a gamble. Almost everything we do requires us to have the ability to work out what the best course of action is, and to go down that route as opposed to the one that might be harder, less obvious, less productive. But sometimes that ‘other route’ can be the making of us, and, in life as in trading, it sometimes pays to take a risk. Poker is another example of calculated risk taking, and this card game can teach us a lot about trading – and life in general. Let’s see how trading is like poker, and how that can help us win.
It’s All About Strategy
If you want to really know how trading is like poker, you need to consider the strategy because it all comes down to that if you want to win. If you know the risk you are taking, if you understand what it would mean to lose, if you calculate all the probabilities and work on the best possible options then it’s not so much a gamble as a serious way to earn some money. Any great poker player will tell you not to allow emotions – good or bad – get in the way of the game, because that’s when your poker face slips and you make mistakes. Keep calm and carry on trading.
Think Hard And Prepare
Preparation is the key to many aspects of life, but when it comes to playing poker there is no substitute to knowing what you’re doing and how best to beat the odds. That is one of the ways to understand how trading is like poker – preparation is key to both. Poker players know that losing is part of the game and that sometimes a loss is all part of the plan; losing shows you how the numbers work, and what to avoid. Make small losses at the beginning, and you’ll make much bigger wins later on.
Know When To Walk Away
If there is one thing that a professional poker player knows it’s when to fold and walk away from a game. There is no point in continuing just in case things turn around, no matter how big the pot becomes. It’s much more likely that the loss will just be worse the longer you leave it. And this is exactly how trading is like poker. Set your limit for a trade by using your well prepared charts, and leave it there. Don’t keep moving it ‘just in case’. It’s there for a reason. It will save you a lot of pain – and money – in the long run even if it doesn’t seem like it at the time.
Don’t Play Too Hard
Poker players look after their chips, and only use them when the chances of winning are higher than the chances of losing. Makes sense. And it’s how trading is like poker; your chips in trading are your money, and throwing money away on a trade just because you’re excited and want to keep trying is never a good idea. Ask the questions about whether it matches your chart, whether you can afford the loss, and whether you’ve really done your homework. If the answer is no to any of those questions then don’t do it. Keep your chips and fold, wait for the next game and be patient. The time will come when you can bet the house and still come away with a profit. But it won’t be every time, and it won’t be most of the time, so keep your cards close to your chest and wait your turn.
Rob Colville aka The Lazy Trader
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