Poker fundamentals, also called poker concepts, are extremely useful strategies vital not only in poker but also in the development of the thought process required for trading and investment decision making. Today, the poker culture runs very steeply in several financial institutions, especially the wealthy ones that have a deep interest in the game.
Top Poker Fundamentals for Making Informed Trading and Investment Decisions
There are too many poker concepts that assist in improving trading and investment decisions. Selective few are given below.
- Risk vs. Reward
Business tycoon Warren Buffet has two essential business thumb rules:
- Rule 1: Never lose money
- Rule 2: Never forget Rule 1
Trading big and making significant investment decisions could reap more rewards, but it is also wise to trade small every now and then to survive and to prevent short-term bad lucks turning into the long term. Learn to control the downside loss, take affordable risks, and never indulge in reckless trading or investing that could harm the business’s financial stability.
- Weigh Money Properly
Understand the risks involved while trading or making an investment regardless of business size. What matters is how much money is at risk when the investor is right or wrong. Do not take large positions unless there is greater conviction.
- Gain Knowledge from Past Hands
Winning poker essentially involves studying past hands. Likewise, in the market, analyze past investment decisions, as well as the rationales, surrounding market, and economic conditions. Consult with experts on major business decisions made in the past. Study both success and failure stories.
- Emotional Control Over Intellect
Like poker, business is 80% mental and 20% mechanical. Traders should have the emotional stability to strike a balance between success and failure. In an active trade, set a maximum loss for a day, go flat, and welcome the realized loss. Never decide on any trade when in a weak state of mind where the investment is heavy.