Most people will be surprised to hear the words ‘Poker’ and ‘Stock Trading’ in one sentence. While Poker concocts images of Goa, fun and night-life, Stock Trading is associated with Mumbai, seriousness and daylight. It stands to reason that the two should be polar opposite to each other. However, they have more in common than one would think, whether one plays poker online or does trading offline.
Before we delve further, we need to understand the principles of poker, the king of online card games. Poker is a game of split-second decision making. A person would have information on the basis of his observations, using his skilled memory and then taking quick decisions. Poker also requires a keen sense of when to cut losses in face of adverse situations by looking at the numbers and calculating odds. Sounds familiar? These are the same basic principals in Stock Trading as well.
Overall, there is one underlying goal in both Poker as well as Stock Trading – building capital. To do so, both these activities have 4 things in common.
What’s On The Cards
One common denominator shared by both Poker and Stock Trading is research. Before making any investment, it is important that you learn about the company on which you will be putting your money. Same goes for poker. Knowledge of a good hand is crucial before you put money in the pot. Some cards are more valuable than others, similar to some companies. Also, the amount of money you invest is on the basis of your confidence and knowledge about a particular hand/company and on your risk appetite.
Play Your Cards Close To Your Chest
A poker player, like a trader or investor, must know how to read the odds. The stock market is a volatile environment and people are cautious and always on their toes. In none of these fields, panic or rushing helps. Only a seasoned poker player will know how to turn even unfavourable odds in his favour. Just like an experienced stock trader will know when exactly to buy and sell to make the most of any situation.
Hold All The Cards
When you are holding all the cards or are in a dominating position in a game, the chance that you will win is greatly possible. In Poker, a win would be equivalent to making money as is in Stock Trading, where you build capital. It is essential for both to have a positive return on investment each time. The key to achieving these rewards is risk management. While aiming for more than what was risked, players or traders/investors can suffer calculated losses but turn out big winners in the end. Both successful Poker Players and Traders/Investors know how to maximize rewards.
Play Your Cards Right
Stepping back at the right time when your cards are not great is part of a poker game. In stock trading, when the market is down, you should hold back and act very wisely. Knowing when to fold and cut your losses is vital in both Poker and Stock Trading. In both these professions, opportunites are round the corner only if a person is a patient and a smart thinker. In investments, diversification is the key and in poker, all-in is the last call to make.