Guest Post Author Bio: This post was provided by Mike Archard.
Poker is a game of both skill and chance. Players have control over some aspects of the game, like which cards they keep, but the deck is out of their control. Many individuals and companies have been drawing parallels between the skills it takes to win at poker and the skills it takes to be a good stockbroker. Some of the skills required to be a good poker player, like with stock brokering, are quick decision making, playing the odds, and having nerves of steel. Lessons learned at the poker table can apply whether a person in investing in real estate such as Edmonton Apartments or playing poker in a tournament.
Patience and timing is very important in both poker and the stock market. Poker players have to pay close attention to what is going on around them to ensure that they bet at the right time. Any cards can win a hand of poker, but some cards have a better chance of winning. Poker players don’t win the majority of their hands, but they have to be patient enough to wait for the good hands to bet big. It’s also very important not to jump into an investment too quickly without analyzing the situation carefully. Recognizing all of the economic and political factors that affect the investment before jumping in can make or break a stockbroker.
Manage Money Carefully
The amount of poker chips each player has changes rapidly. To stay in the game, players must bet carefully. It is important for both poker players and investors to always be aware of their financial state and manage their money carefully. Investors have to make sure that their eggs aren’t all in one basket and ensure they don’t overextend themselves. Decisions must be made with great care. The person with the most money (or chips) generally has the most leverage against their opponent, but also has the most to lose. Poker players, stock brokers, investors and everyone else are limited by the amount of money they have available and must make decisions based on that amount.
Make Quick, Rational Decisions Without Emotion
It is not a good business practice to make decisions based on emotions rather than logic. These decisions often result in a loss, both at the poker table and when investing in the stock market. Whether stocks are performing very well or poorly it is important to take a step back and assess the situation fully before making a decision. Sometimes putting too much money into a stock that is performing well can lead to losses.
One thing that companies look for when hiring stockbrokers is quick, rational decision making skills. These skills are often honed by good poker players. According to a May 2010 article in the LA Times, Chris Fargis applied for a stockbroker position with Toro Trading. He didn’t have a degree in finance or experience as a stockbroker, but he was making a living at online poker. The interview went well and they asked him to play poker after asking him some questions. He was offered a position within a few days because of his poker skills. Companies are looking for candidates that have nerves of steel and are quick thinking. They should also have a head for numbers. These are the skills that Fargis honed playing poker.
Learn From Mistakes
Poker and investing are both about learning from mistakes and applying what you have learned to make better decisions in the future. Making a mistake is not a major crisis and recognizing a mistake is the first step to fixing it. Betting at the poker table and investing are both gambles, and nobody wins all of the time. Personal finance is more complicated than poker and changing poorly performing investments will help investors recover from mistakes. Not making the same mistake again is what an investor should aim for.
Players make mistakes at the poker table often, but stay in the game by maintaining a clear mind to learn from those mistakes. This is one of the hallmarks of a successful investor. Aaron Brown, author of the book “The Poker Face of Wall Street” and hedge fund executive says there is a maturity and ability to take risks that is hard to get any way other than putting money on the poker table sometime in your life.
Know When to Fold
When playing poker, many players stay in the game for too long. It’s important to know when to cut losses and move on. A single player cannot win every game and must know when to fold. Investors must also know when it’s time to quit. Not every investment is going to make money, even if it looks good at first. Some investments may start out well and decline and others may never make money. It’s not a good idea to ride out a stock, hoping that it will turn around. Decisions must be made and it’s a gamble. Poker players and investors both have to deal with complex situations that are mostly out of their control. As Brian from My Next Buck says, the players that win the big bucks are the ones that know when to fold.