To become a trader who always makes money, picking good stocks is only the first step. Those of you who follow how the stocks I recommend on http://www.cisiova.com/analysis.asp do know that you can't tell if a stock is good without a good way to get out of it. And for most traders, the hardest part is figuring out how to get out. Many people say that you need to have the right mindset to trade well. Sadly, this kind of winning mindset can only be gained through experience. But there is a quick way to get past the learning curve without spending thousands of dollars. Playing POKER is this short cut.
Yes, you did hear me. It seems that there are a lot of similarities between playing poker and investing in stocks. First of all, they both have to do with money, uncertainty, and making a good decision about the risks and rewards of a situation. In this article, I'll talk about how stock trading and poker are alike and how they are different. But before you go any further, make sure you know how to play Texas Holdem and are familiar with the terms.
Think of picking stocks as trying to find good hands to play. In Texas Holdem, you can look at the two cards you have in your hand to decide if you want to play the hand or not. In the same way, you can look at the stock before you buy it. You traders are lucky that no one will raise before the flop, so you only have to pay the commission. Remember that you also have to pay the commission to get out of the position. This means that the cost of getting into a position is twice the commission. Good poker players only play good hands, so before you enter a position, you should do a lot of research. One good thing about trading is that you don't have to wait for good stocks like poker players wait for good hands. Instead, you can use stock picking websites or screeners to find good stocks yourself.
In poker, you get to see the flops and two more cards once you call the blinds. Think of these cards as how your stock has done after you've bought it. In poker, the flop can make a hand good, average, or bad (by helping your opponents). In trading, you can also look at the stock's potential, and you should be able to judge the stock's upside and downside potential in a fair way. In poker, there are times when you have a good hand but your opponent has a better hand, and you know you are beat. When you think about it, these are the times that matter the most. No matter how much money he has put into the pot, a skilled poker player will fold his hand. If you are a trader, you should sell a stock even if you have already lost money on it if you don't think it will go up. On the other hand, a good poker player would bet aggressively when he knows he has the best hand, even if he could lose at the river. He wouldn't worry about the small chance of losing. In trading, this means that you shouldn't worry that you'll lose your recent gains if the stock goes up and shows more upside potential. So, the right way to think is to ride the stock when it's going up and sell when it's losing steam. This is easy to say but hard to do. So many times I've heard that people lost all their money because they held on to losing positions (out of hope) and sold winning positions too soon (due to fear).
You could learn to control your emotions by playing poker. You could learn not to hope when you lose and not to be afraid when you are likely to win. You want to lose a little and win a lot, not the other way around.
Now go practise. This way of thinking only comes with time.
