|
Home::Stock Market
Learn Stock Trading From Playing Poker
Author : Zheng Fang
Picking good stocks is only the first step to become a consistently profitable trader. Those of you that track the performances of stock picks I post on http://www.cisiova.com/analysis.asp know that it is impossible to determine if a stock is good without a good exiting strategy. And for most traders, exit strategy is the hardest part. Many people say that to trade profitably you need to develop the right mentality. Unfortunately, such winning mentality can only be developed through experience. However, there is a short cut to get through the learning curve without throwing thousands of dollars in the process. This short cut is playing POKER.
Yes you heard me right. Apparently, playing poker has a lot of similarities with investing in stocks. First of all, they both deal with money, uncertainties, and a keen judgment of potential risk and reward. In this article I will explain the similarities and differences between stock trading and poker. But before proceeding, make sure you know the rules of Texas Holdem and fluent with the terminologies.
Think of stock picking as looking for good hands to play. In Texas Holdem, you can look at the two hole cards and decide whether you can play the hand or not. Similarly, you can analyze the stock before entering a position. Fortunately for you traders, no one will raise pre-flop, so you just pay the commission. Remember to exit the position you also need to pay the commission, which implies that the cost of entering a position is two times the commission. Good poker players only play good hands, so you should do thorough 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 can find good stocks on stock picking websites or using screeners to find them yourself.
Once you call the blinds in poker, you get to 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 potential of the stock as well, and you should objectively judge the downside and upside potential of the stock. In poker, there are times that you have a good hand, and your opponent have a better hand, and you know you are beat. These are the times where your mentality matters the most. An experienced poker player will fold his hand regardless of the amount of money he has put into the pot. As a trader, at times that you think the upside potential fails to actualize, you should sell the stock regardless of how much you have lost. On the other hand, when a good poker player knows he has the winning hand, despite the possibility of losing at the river, he would bet aggressively, without fearing the small losing possibility. In trading, this translates to if the stock goes up and manifests higher upside potential, you should not fear that you will lose your recent winnings. Therefore the winning mentality is to ride when the stock is going up, and sell when the stock is losing its heat. This discipline is easily said than done. So many times I have heard people lost all their money because they hold on to losing positions (due to hope) and sell winning positions too early (due to fear).
By playing poker, you would get the chance to master your emotions, learning not to hope when you are beat, and not to fear when you are favorable to win. You want to lose small and win big, not the opposite.
Now go practice. This mentality only develops with experience.
Article Source: http://www.articledashboard.com
Zheng Fang is the creator of Advance Stock Pattern Scanner of www.cisiova.com and you can find more of his articles at: www.cisiova.com/blogs/optimalportfolio/
Spam emails More free articles Related articles
|
More related feeds |
Is This Black Monday? | Index Swing Trading
A List of Inverse Mutual Funds and Inverse ETF's That Seek to Profit When the Market Goes Down | Index Swing Trading · A List of Inverse Mutual Funds and Inverse ETF's That Seek to Profit When the Market Goes Down | Index Swing Trading ...Forex and Stock Trading - Are You Trading To Your Strengths ...
Forex and Stock Trading - Are You Trading To Your Strengths? Posted on November 20, 2008 Filed Under |. by Brian McAboy In your trading, are you playing to your strengths, or are you simply being an “opportunity seeker”? ... Bought SOLF @ 5.54 | Index Swing Trading
Normally I’d expect SOLF to close @ the highs of the day based on a paintbar pattern I have, chart included in a minute, and if it doesn’t close on the highs it typically will trade higher the next few days. ... Stopped Out Of TBSI, Bought MTL | Index Swing Trading
I’m interested in SOLF and JASO today playing catch up and that they are China related. I mentioned earlier this week that China (FXI) has a possible shot at some upside from here based on the charts of course. ... Horseplayers Association of North America: HANA2.0 - Embrace Change
Companies like EBay, Amazon, and E-Trade figured it out and have boomed as a result. Anybody can buy or sell 1000 shares of stock for just eight bucks - at home before picking up the kids at daycare. We buy stuff on EBay for pennies on ... Affiliate AdWizard: Create Google Adsens | Singapore Property ...
Global worries rock stock market. Dec. 1 - Wall Street joined a sell-off in equities around the world amid fresh data showing the economic situation was not getting better. 1896291 Visitors. “The further the spiritual evolution of ... Buying and Selling the DOW
If you look at the 1 min chart of the Dow Jones below.. you can see that the market in the yellow box wasn’t doing too much.. however, I was trading in this region, selling and buying when I should have been doing anything. ... Spread Betting, Trading Shares For A Living!, Day Trading ...
Online Poker News and Rakebacks November 11, 2008 online poker education Poker sites Block Balance of US States Online poker quarters Poker Host and Eurolinx had already established that residents of certain states from the USA would ... A Very Profitable Day | Index Swing Trading
I’m up 4.2% on the intraday trade and held in full. Many stocks on my undervalued list went apeshit today. There is a multi pronged chart turn going on between the US dollar, Emerging markets, and commodities right here. ... learn stock trading from playing poker
unfortunately, such winning mentality can only be developed through experience. however, there is a short cut to get through the learning curve without throwing thousands of dollars in the process. this short cut is playing poker. ...
|
|
|
