Poker v/s Stock Market- How similar and how different are they?
Poker and The Stock Market; How similar are they?
When it comes to comparing poker vs stock market, many people may dismiss the comparison as a futile endeavor. Afterall how similar can a game and stocks be? Well, turns out, more similar than many of us may like to admit. This is also the reason that a lot of the top stock traders encourage their employees to play poker. It helps hone their trading skills.
However, with the rise of poker games online in India, it would probably be dangerous to claim that if you are a good poker player, you would be a good trader and vice versa. Although it can be a possibility. After all the famous hedge fund manager David Einhorn did finish in the top twenty of the World Series of Poker, coincidence? We think not.
So, let us take a dive into the similarities between the two; Poker vs Stock market.
1. Both rely on the laws of probability
When it comes to poker and the stock market, one has to admit that they both have a fair amount of probability involved in them. When investing in the market, you invest in the companies and firms thoroughly yet unforeseen events can affect your investment and expected results. This is a possibility no matter how smart of an investor you are. Even in a poker game, you study your opponent’s history and make a bet on your hand, but your plans can get derailed by twists and turns at the tables.
There is no hundred percent guarantee in either of these cases. It is all based on probability, whether you invest in the stock market or sit at a poker table, you are resigning your fate to some amount of probability. All you can do is master the art of calculating pot odds and technical analysis and then hope for the best.
2. Money Management
In stocks and poker, both you have to manage your money. In trading money management is essential and in poker bankroll management is key. Both require the same set of skills. A smart investor will look to diversify the stock options and thereby secure his or her portfolio while a poker player playing poker games online in India, will make sure not to commit his or her entire roll. This is irrespective of the probability that a stock will increase in value or a hand will be the strongest one at the table.
Basically, no matter how high a chance there is that a stock or a hand can generate revenue, managing and distributing your money and bankroll cannot be compromised in either of the two, that is, poker or the stock market.
When it comes to the psychological pattern used in poker vs stock market, we see a very similar approach. Both investors in the stock market and poker players at the tables make emotional decisions rather than completely rational ones. This puts both of these categories at a higher risk. Getting carried away by emotions, overestimating a tip or a tell are certainly not new things in the world of stocks or hands.
Both players and traders are susceptible to becoming overconfident when they make profits. Poker players often start playing more aggressively or bet too heavily with average cards. Level headedness is a quality that both these professionals need to keep in check.
4. Risk Management
In general, both of the endeavors, namely poker and the stock market demand very finely tuned risk management skills. In either of the cases, cards, or in stock trading, the goal should be firmly rooted in the positive expected value of your betting or trading actions. As a player or trader, you must understand how much you should be betting or investing. Additionally, you must budget for the week or the month.
If you make the decisions on incomplete information regarding the positive expected value, you stand to lose your money. This is true in the case of not only poker games but also the stock market.
In both poker and the stock market the skill of the trader or player rule supreme. A player or trader can handle the same situation differently and with more skill and finesse than the others, making more money at the end. They can be dealt with the same hands or stocks and can end up with drastically different results than their opponents just on the sheer basis of their skill to bluff or make timely decisions to cut off losses etc.
5. Dealing with incomplete information
Another major point to consider when comparing poker games online in India to the stock market is that both of them As a poker player you may hold a strong hand, but you still have no idea about the cards that your opponent holds. This also applies to an investor in the stock market. Despite the stock being predicted as one that will highly appreciate in value, you cannot know to a hundred percent certainty that the return on investment will be what you predict it to be. Hence both of them, poker and stock trading are based on incomplete information and have a decent amount of probability involved.
In both the cases practice, experience and research are crucial for improvement. So, whether you are a stock trader, or a poker player keep playing, keep practicing, and keep reading.
If you need more tips and tricks to help improve your poker game read Spartan’s blogs. Head on over to Spartan Poker to play real money poker games online in India. Put your analytical skills to test when it comes to poker and shine at the tables.
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