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How a Poker Player’s Mindset is Essential for Financial Investing

Photo [1] by World Poker Tour / CC BY-ND 2.0 [2]
Caption: Vanessa Selbst: Living proof that poker players have the same mindset as financial traders.

There is a reason why the high-stakes financial world employs former professional poker players. It’s because they have a mutually beneficial appetite for risk. They must prepare to make sense of “noise” and patterns to employ informed decisions at the poker table. Recently, a three-time World Series of Poker winner retired from playing cards in favor of signing up to the world’s largest hedge fund, Bridgewater Associates.

Thirty-four-year-old poker sensation Vanessa Selbst is one of the most successful female poker players of all time. With almost $12 million in career earnings to her name, Selbst opted to take a different career path. Selbst already worked for one of the U.S.’ biggest consultants, McKinsey & Company, and graduated with a law degree from Yale University, so the world was her oyster after poker. However, Selbst opted to take a risk and move from one highly-charged industry to another in financial investing. Selbst battled through an intensive nine-month course on economics and Bridgewater Associates’ unique trading philosophy to secure a role as a junior analyst [3]. So, why do poker players make good financial investors? What attributes do these demographics share?

They Have to be Savvy and Know the Right Tables/Markets to Play

Savvy poker players take the time to assess the best deposit bonuses and range of cash games and tournaments offered by the leading “must-have” poker rooms [4]. Even savvier poker players will also choose poker rooms that have the weakest competition, e.g., a large volume of inexperienced, amateur players. That will give them an “edge” and a chance to dominate tables. Savvy investors also seek brokers that offer the most competitive spreads and transaction fees. More importantly, they also only invest in markets they have an “edge” in, founded upon technical or fundamental analysis.

Both Demographics Must Be Well-Acquainted with Risk

The most talented and successful poker players and financial investors know when to take big risks and still maintain a level head. The last thing you want in the trading business is to become overconfident with your decisions [5]. Poker players and financial traders must be capable of taking an unbiased view of their decision-making and the time to understand why certain risks go wrong. Both poker players and financial traders know that without risk, there is no reward.

Poker Players and Investors Must Expect Downswings and Upswings

For both poker players and financial investors, it is critical to be able to adopt a “zero-memory” attitude, as losses are inevitable when it comes to playing poker or investing in the stock market. However, it’s crucial not to let the losses cloud your future judgment. Instead, poker players and financial investors worry about their long-term profitability. Sure, they may have a losing week, or even a month, but if they are profitable throughout the course of a year, that’s all that matters. Those that struggle to maintain profitability in poker and financial trading are those that make different decisions after wins and losses. People who suffer huge losses and become increasingly stubborn take risks.

Both Demographics Must Attune to Patterns and Signals

Poker players must know the right time to strike at the table. It doesn’t matter whether it’s an opponent’s decision-making or even their “tells,” successful poker players are razor-sharp and process everything to make sense of the information they have. It’s the same with financial investors who are sometimes must pore over years of data to understand support and resistance points in the market.

The highs are quite high. Equally, the lows are quite low. That’s the way the cookie crumbles as a poker player and a financial trader.

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