Emploi finance electronique

Texas Hold'em poker has become a craze. Thousands of players compete in tournaments with the winner receiving a million dollars or more. Just like in the stock market, though, it's the professional players that win the game and profit from the inexperience of the amateurs. Investors can learn much from these professional card sharks.

I admit to having pre-conceived notions about poker and gambling in general. I assumed that winning was just a matter of luck and chance. It seemed to me that gamblers played the game fast and loose, making decisions by the seat of their pants. Many investors have the same pre-conceived notions about the stock market.

Yet, professional poker players don't rely on luck to win. Quite the opposite. Poker is all about probabilities and they've spent countless hours learning and memorizing them. Armed with that knowledge, they estimate what cards are held by another player, what cards are needed to win the hand and, based on the cards they currently have, their probability of winning. Professional investors do the same thing. A professional investor looks for opportunities where the odds are in his/her favor.

Great poker players are students of the game. They know the rules inside and out, and how to use those rules to their advantage. Likewise, successful investors need to have a basic understanding of how the markets work, what causes stocks to go up and down and the various strategies that can be used to find opportunities for profit.

Poker is a psychological game. The professionals have trained themselves to keep their emotions in check. They go to great lengths to keep their opponent from knowing the quality of their hand. They wear hats, jackets or sunglasses to hide these 'tells'. At the same time, they want to put psychological pressure on their opponent in hopes of getting them to make a mistake.

Investing is also a psychological game. You can't trust your emotional reactions. You can't make decisions based on fear or greed. Both will end up causing you to lose money and leave the game defeated.

Poker players know it's a numbers game. In each hand they play, they calculate their odds of winning and only proceed when the odds are in their favor. They don't expect to win every hand. They train themselves to not let a loss of one hand affect how they play the next hand. They're willing to endure short-term losses so they can win the tournament in the long run.

Successful investing is a numbers game, too. Professionals don't overreact every time the market has a few bad days and they lose money, nor do they get overconfident when they have some great days and make money. They do their research and put their money where they know the odds are in their favor. They don't blindly chase the latest fad or hot tip. They don't invest based on gut feelings.

Successful investors manage their investments. They don't just 'let'em ride'. Great poker players know when to cut their losses. They don't get suckered into throwing good money after bad. As the hand progresses and the subsequent cards aren't in their favor, they'll quickly fold, even if they have thousands of dollars in the pot. Successful investors do the same.

Successful investors also know to lock in their profits. When they see an investment increase in value significantly, they take some money off the table. They don't ride an investment up just to ride it all the way back down again. They take action to minimize their loss on the one hand, and then take action to lock in their profit on the other.

If you don't have the time or desire to learn the investing game then consider letting a professional manage your money. Don't think, though, that just because someone is a broker, has a fancy office or lots of clients that they are a successful investor. Many times they're just a successful salesperson!

When you know the rules and play the odds, stock market investments can be a great way to grow your wealth. When you don't know what you're doing, though, it can be more like a roll of the dice.