Investors are some of the strongest-willed, decisive, and successful people on the planet.
They make decisions based on the information that’s right before their eyes — quickly reading people’s intentions, utilizing risk as a strategy, leaning on their knowledge, and showing control before choosing to go all-in at the right time.
These traits aren’t dissimilar to poker, which is what some would call a game of uncertainty. Like poker players, investors learn to embrace the precariousness of the situation, thinking of the probabilities. Doing so allows the most skilled of players to gain the biggest and most regular returns.
The similarities are clear when looking at the most successful woman in poker, Vanessa Selbst. NYtimes.com reports how she won over $11 million in live poker play earnings, before moving into hedge fund management and says her new job ‘feels a lot like poker as people collaborate to beat their opponents at a game.’
As demonstrated, there are many tangible links between the two fields. Therefore, we have compiled a list below that can be used to take your game from the poker table into investment.
Keep a check on your emotions
One of the world’s greatest and most successful poker players, Daniel Negreanu says that having emotional stability and control is key in poker. It’s has been well proven as players who have bad luck and still go on to play aggressively, often pay the costs. In the same manner, investors should avoid similar emotional decision-making. In doing so, it will ensure returns are maximized and avoid heading into a money pit.
Limit your exposure
Limiting your exposure is a key element of good trading; while you need to speculate, you shouldn’t put yourself at risk. In poker, this is true on two levels. Poker.org explains that understanding how much you have to invest in a game is so important that it is one of the main reasons professionals fail. Even during a game, playing the right amount of chips for the odds is a fundamental skill. For investors this means making sure you have diversification in your portfolio, so you don’t have to bet everything on the turn.
A professional poker player generates on average a return of one big blind, equal to the minimum bet, per hour. If there’s a return bigger than that, it often suggests that the player is involved in too many hands. Much like an investor shouldn’t buy a stake in every company they research, they should wait for the opportunities to generate a return.
Know your own strategy
Aggressive players at the table will play lots of hands and win lots of small pots. Some could say they’re like the day traders of the poker world. At the same time, others are happy to play any Ace, King or pair of high-ranking cards. These are more like those who just trade too much, not showing the patience we mentioned above. Some wait for the premium hands, those who look for the highest-yielding opportunities only. As you can see, different players have their own strategy, much like investors do too. You need to find yours and stick with it.
You will see many similarities in our article, ‘Investment – 5 Key Steps for Achievement’ to the above too. Further highlighting the links and strategies between poker and investment. It all goes to show that no matter if it’s in property or stocks, there are valuable lessons that can be learned from the poker table to help you get a better return.