Picking good stocks is only step one to become a solidly worthwhile trader. And for most traders, exit technique is the hardest part. Many individuals say that to trade advantageously you need to develop the right mind-set. Sadly, such winning mind-set can only ever be developed through experience. But there is a short cut to get through the learning curve without throwing thousands of bucks during the process. This short cut is playing POKER.
Yes you heard me right. Apparently, playing poker has lots of similarities with making an investment in stocks. Firstly, they both handle money, uncertainties, and an avid judgment of potential risk and reward. In this article I am going to explain the likenesses and differences between securities dealing and poker. But before going on, make sure you know the rules of Texas Hold'em and fluent with the terminologies.
Think of stock picking as attempting to find good hands to play. In Texas Hold'em, you can glance at the two hole cards and choose whether you can play the hand or not. Similarly, you can analyze the stock before entering a position. Fortunately for you traders, nobody will raise pre-flop, so you just pay the commission. Don't forget to exit the position you also need to pay the commission, which implies that the price of entering a position is two times the commission. Good poker players only play good hands, so you must do in depth researches before entering a position. One good thing about trading is that you do not have to wait for good stocks like poker players wait for good hands, you'll be able to find good stocks on stock picking sites or using screeners to find them yourself.
After you call the blinds in poker, you see the flops and two more cards. Think of these cards as the performance of your stock after you enter the position. In poker, the flop can make a good hand, a medium hand, or a bad hand (by helping your opponents). In trading, you can observe the possibilities of the stock as well , and you should impassively judge the drawback and upside potential of the stock. In poker, there are times that you've a good hand, and your competitor have a better hand, and you know that you are beat. These are the times where your mind-set matters the most. An experienced poker player will fold his hand without regard for the amount of money he has put into the pot. As a trader, on occasions that you suspect the upside potential fails to effectuate, you must sell the stock with no regard for how much you have lost. From a different perspective, when a good poker player knows he's got the winning hand, despite the likelihood of losing at the brook, he would bet assertively, without fearing the tiny losing possibility. In trading, this translates to if the stock goes up and manifests higher upside potential, you shouldn't fear that you're going to lose your fresh prize. So the winning mindset is to ride when the stock is going up, and sell when the stock is losing its heat. This discipline is simply related than done. So frequently I've heard folks lost all their cash because they cling to losing positions (due to hope) and sell winning positions too early (due to fear).
By playing poker, you would get the chance to control your feelings, learning not to wish when you are beat, and not to fear when you're expedient to win. You want to lose little and win massive, not the opposite.
Now go practice. This mindset only develops with experience.
Yes you heard me right. Apparently, playing poker has lots of similarities with making an investment in stocks. Firstly, they both handle money, uncertainties, and an avid judgment of potential risk and reward. In this article I am going to explain the likenesses and differences between securities dealing and poker. But before going on, make sure you know the rules of Texas Hold'em and fluent with the terminologies.
Think of stock picking as attempting to find good hands to play. In Texas Hold'em, you can glance at the two hole cards and choose whether you can play the hand or not. Similarly, you can analyze the stock before entering a position. Fortunately for you traders, nobody will raise pre-flop, so you just pay the commission. Don't forget to exit the position you also need to pay the commission, which implies that the price of entering a position is two times the commission. Good poker players only play good hands, so you must do in depth researches before entering a position. One good thing about trading is that you do not have to wait for good stocks like poker players wait for good hands, you'll be able to find good stocks on stock picking sites or using screeners to find them yourself.
After you call the blinds in poker, you see the flops and two more cards. Think of these cards as the performance of your stock after you enter the position. In poker, the flop can make a good hand, a medium hand, or a bad hand (by helping your opponents). In trading, you can observe the possibilities of the stock as well , and you should impassively judge the drawback and upside potential of the stock. In poker, there are times that you've a good hand, and your competitor have a better hand, and you know that you are beat. These are the times where your mind-set matters the most. An experienced poker player will fold his hand without regard for the amount of money he has put into the pot. As a trader, on occasions that you suspect the upside potential fails to effectuate, you must sell the stock with no regard for how much you have lost. From a different perspective, when a good poker player knows he's got the winning hand, despite the likelihood of losing at the brook, he would bet assertively, without fearing the tiny losing possibility. In trading, this translates to if the stock goes up and manifests higher upside potential, you shouldn't fear that you're going to lose your fresh prize. So the winning mindset is to ride when the stock is going up, and sell when the stock is losing its heat. This discipline is simply related than done. So frequently I've heard folks lost all their cash because they cling to losing positions (due to hope) and sell winning positions too early (due to fear).
By playing poker, you would get the chance to control your feelings, learning not to wish when you are beat, and not to fear when you're expedient to win. You want to lose little and win massive, not the opposite.
Now go practice. This mindset only develops with experience.
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