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Poker and the stock market

I was out of town this weekend in Southern NJ, Atlantic City to be exact. After finishing my business at the convention center, I traveled back to the newest casino, Borgata, where I was staying at night. I don’t consider myself a player and I never liked losing money at tables. When I bet, my favorite games were always craps and blackjack. Until recently, I had never played at a poker table in a casino environment, but I enjoy the game of poker and only played in the yard and in the basement with old friends. Many people consider the game of poker pure luck, but this is not an accurate observation. Many factors are parallel to the game of poker and the investment game on the stock market. Luck can play a role, but rules, quotas and money management are the biggest components of the two entities.

When investing in the stock market, it is essential to have a solid set of rules or a system that has been tested in real time, without the need for back tests or historical tests. Once the system has been tested, the investor must follow the rules to keep capital and reduce losses. The investor must also consider the chances of his shares winning or making a loss. Price targets and targets should be a big part of every investor’s system. With proper money management and calculated hope, the investor should aim to trade only in situations where the chances are in his favor. In a strong stock market, it may not be wise to start shortening many stocks; the chances of making a big profit with this strategy could be very small. Another major component that aims to invest is human psychology and / or emotion. Stocks are made up of human traits, similar to the type of people who own them. Some stocks are risky and volatile, while other stocks are conservative and predictable. The market repeats specific cycles and patterns of the chart, as people repeat their actions and character tendencies.

Now back to the poker table; when I sat down and started playing, my first goal was to get acquainted with the character traits of the players around me. With 10 players at the table, I had plenty of time to evaluate the people I was playing with, without risking a lot of money. After several rounds of play, I was aware that the gentleman on my right would only bet on strange hands and fold every other hand. He was very nervous and nervous and folded his books hard when he was upset. The gentleman on the left would also play hands with high odds, but I saw him call bets with some risky hands with lower odds. A gentleman over the table was the bluffer and always had a smile on his face with a pair of dark glasses. I challenged this man several times and paid to see his books because I felt he had nothing. Several times I was right and I still beat him with an average hand. I could go on, but understand what I’m trying to say: all poker players and investors bring their emotions to the table.

I will not go into the exact rules of the game of poker, but I can tell you that only two players are required to bet on the round, while the other eight can see their first two cards without risking a penny. My chosen game is Texas Hold’em, the current madness in the whole country and which excites me when I’m in the middle. The two players forced to bet represent the big and small blinds. If you are the dealer or more players at the table, you can see the first two cards for free without a bet. If your hand is weak, you can fold and keep your stake.

Here it becomes interesting; if I have a decent hand, I can decide to call the bigger blind and see the next three cards on the flop, which is still a low risk investment. If the flop doesn’t give me the cards I need, I can immediately reduce my losses by folding and wait for the next game. The same is true for investments; I can reduce a loss and wait for the next opportunity without risking the farm if I realize an immediate loss. If the cards are good and my chances of winning the hand are high, I can call the bet or increase the bet. A fourth and fifth card (turn and river) are placed on the table after the flop and betting continues with each round. Again, I can decide if I want to call, get up, or cut my losses short. The connection I am trying to make with investing in the stock market and the game of poker is directly about reducing losses (conserving capital and managing money) and my chances of winning the game (in the stock market, this could be called hope). ).

In my opinion, the best game to play at the casino is $ 1- $ 2 unlimited style. This means that the blinds are kept to a minimum and will only cost you a few dollars to see the flop in many cases. The “limitless” aspect allows your growth potential to be unlimited, which leads to investment. If you reduce losses and earn the winner, the positive investment potential can also be unlimited, especially when using options (but that’s for another discussion). Last night, I was able to see the first two free books, eight out of ten hands, and I could fold them if they weren’t good. If they were good, I put money on the table according to my idea. In the real world, the world of equity investing, you should always put money into the best ideas. The next win or loss will tell you if you are right. Again, for the eleventh time in this article, the most important part of both games is reducing losses and moving without mixing emotions into decisions.

All investors and poker players bring emotions to the table, some people control them better, while others use better systems and understand the chances at a higher level. The bottom line is that you understand the situation around you and use a sound system to increase your chances. Never bet on a hand that has a low chance of winning and never win a loss that could multiply overnight. Reduce your losses and get out of the game and wait for the next opportunity, because they are always around the corner.

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