Most people assume that playing online poker is a frivolous activity that is actually counterintuitive to good financial practices. This isn’t necessarily the case. There are actually good lessons to be learned from playing online poker, as both investing and online poker have quite a few parallels. There are great lessons to be learned, including:
In online poker, patience is the name of the game. Players have to wait it out and pay attention to other users to make sure that they place the right bets at the right time. Financial investing is similar in this regard. It’s important not to jump head first into an investment simply because you think you may have found a good deal. Sit back and fully analyze the situation at hand before acting. Recognize all of the political and economic factors that may currently be affecting the market and determine whether or not those factors will either make a sound investment or result in failure. Often times an investment will, at first, appear viable but later fail after the initial excitement dies down.
In poker, the amount of chips a player has can increase or decrease at any given time. To stay in the game, players have to intelligently handle their finances. Investors must do the same or they risk losing all of their money on one investment. It’s important to remain responsible and aware of your available resources and manage them thoughtfully. Don’t overextend yourself. Make sure you have enough in reserves in case one of your investments fail produce the expected return. The lesson is simple: don’t put all of your eggs in one basket.
Don’t Let Emotions Get Involved
When playing online poker, it’s common for players to let their emotions cloud good judgment after a few bad hands. Once emotions are involved, you can practically guarantee that you will start making irrational decisions that will result in loss. The same rule applies for investments. Just because an investment isn’t bringing in an immediate return doesn’t mean that you should throw more money at it or prematurely withdraw. Take a step back and apply some necessary critical thinking in order to accurately assess the situation.
Learn From Mistakes
Online poker is all about learning from your mistakes and applying the lessons learned in order to make more informed decisions. The highest payouts will come only to those players who are willing to recognize their mistakes and learn from them. The same goes for finances. Just because you made a poor investment one year, or didn’t invest enough in your 401k one year, doesn’t mean that you’re in financial ruin. It simply provides you with a lesson which will allow you to apply sounder judgment and better decision making towards future investments.
Not unlike poker, investing can be an entertaining and educational experience in reading and understanding strategy. Continue to research and learn about the market to make your gamble a sure thing.