Estimated read time: 4 minutes
Publication date: 14th Feb 2022 10:43 GMT+1
Investing and playing poker may seem like two very different things. Investing is analyzing the market and playing poker is essentially gambling on chance.
The fact is, they have a lot of things in common, and this article will prove it. Besides being a fun game, poker can teach you a lot of helpful tricks and methods –– especially if you are an investor. It isn't purely a game of chance there are elements of skill involved and a strong leaning towards reading people and situations to turn them to your advantage. That fits perfectly with investing, and it's not the only facet that poker shares with our industry.
Here are five investment methods you can learn from playing poker:
1. Develop Your Strategy
The best poker players have their own personal strategy they play by. They don’t just loosely play every hand and keep betting. They are selective of the hands they play, they know which types of hands to fold on, and when to go all out and bet big time. They’ve developed their strategy over time and from experience.
Great investors must also have their own strategy when investing. If it is a bull market and fast-rising, or a bear market and plummeting, they should stick to their strategy and know which stocks to buy, sell, or hold on to. The importance of having a strategy is crucial in both poker and investing because it will help you avoid making serious mistakes when situations are risky and volatile.
2. Discerning Between Services
Poker players gain experience vetting different apps and websites to figure out where it’s safe and beneficial to play. Once they find the platform of their choice, they can practice, meet other players and enjoy the game. The same skills come into play when investors have to choose platforms to buy and sell assets on, particularly given how many new-age brokers are popping up of late. Both poker players and investors need secure and reliable platforms to perform their best work on.
3. Make Mathematical Assessments
While many amateur players make bets based on the feeling they have in the moment, expert gamblers know how to apply mathematical assessments to the game. In poker, this largely boils down to calculating the implied odds, which determine the likelihood of a player winning enough chips upon hitting a hand to make a given play profitable over the long term. Likewise, investors have to make calculations, not just about the immediate short-term, but with consideration of total impact over time. This includes the long-term value of the investment and long-term risks as well. Both astute investors and expert poker players use math as part of their integral game skills.
4. Play Without Emotions
There can be a lot of money involved and the pressure to win could be high. When poker players get angry, or frustrated, their judgement becomes clouded and they tend to make irrational decisions. This is where playing poker without emotions is crucial because every hand needs to be mathematically assessed to see if it is an opportunity to win based on logic, and not panic. The same goes for investors as a decision to buy more shares, or sell, must be based on logical analysis, instead of an irrational market panic. Both poker players and investors will have a great advantage if they possess emotional control.
5. Study Other People
All poker players can learn something new by watching the experts play. Studying other players will give insights into their personal strategies and how they react when the stakes are high. Players can compare what they would do if they were in the same situation and test to see how their thinking matches up with experienced players. Likewise, investors can learn from the best investors. By studying other investors, it could reveal new perspectives they have which could explain the reasons behind their investment decisions. A new perspective for both poker players and investors could prove useful on the next deal.
Playing poker is not just for fun as it can teach you skills that you can apply beyond the poker table. As we have shown, poker has a lot of parallels with investing. By honing your poker skills, you are also bound to hone your skills in investing and it will naturally help you make better investment decisions.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
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