The truth is, however, that the same skills that make a world-class poker player successful are directly translatable to being a successful investor. Poker, it turns out, is much more a game of skill and strategy than it is of luck. Consider the fact that in the World Series of Poker, there have been only a handful of players – about five or six, out of pools of thousands – that have dominated the competition in the past few decades.
This is not accomplished by luck. This is accomplished through skill, sound strategy, and mental toughness; the same characteristics, in other words, that make for a good and profitable investor.
But before you take your retirement fund down to the nearest casino, here are the exact skills that poker players use that can help you become a better investor:
– Keeping Your Emotions in Check: it doesn’t do you any good to put your money on anything – whether it’s a card game or the stock market – when your emotions are running high. Poker players have mastered the art of keeping their cool, even when thousands, potentially millions, of dollars are piled in front of them. The same kind of cool is a requisite skills when investing your money on Wall Street. Allowing your emotions to run your investing game is a losing proposition every time.
– Don’t Ever Bet the Farm. A good poker player never bets more than he can stand to lose. The same basic limit should be applied to your investments. Apply this quick test: if you were to lose everything you had invested in the market tomorrow, would it drastically change your lifestyle? If so, pull back.
– Look At the Odds. Don’t ever go blindly along with the herd when it comes to investing. World-class poker players always believe they have the best hand at the table before committing to a bet. You should have the same feeling when you invest in a certain stock.
– Know Your Limits. Just like betting in a card game, you can always sit out a round of investing in the markets; no one can force you to stay at the poker table any more than they can force you to keep your money in the market. If you have a disciplined strategy to investing, you’ll know when it’s time for you to cash in and walk away.
Maybe the biggest lesson of all, however, is you should know the game first before diving in. World-class poker players study the game. They study the odds. They study their opponents.
You should do the same thing when investing: study the market, research the companies, and make