Remember your first trip to a casino?
I do and I remember my experience very well. It was in 2000 in a plush casino in Tunisia. From the grandeur inside it would not go amiss to the palace-like casinos in Las Vegas. The buzz being created by the various noises produced by the various tables and machines the casino had been kitted out with plus the joy and screams of the revellers inside was simply electric. In The moment I walked, I was taken away by the gambling energy and excitement of this human tsunami.
I was not so much a gambling man myself as I was and what I knew to be blackjack. I won some hands and lost some hands and I went away with my pocket of pretty bandar poker online much the same amount of money. However, what I remember most is walking around in a poker table with a couple of poker tables, especially those with a mountain-sized stack of chips. It’s just so cool and captivating. I didn’t have a clue about the rules of poker so the first thing I did when I got home was to read them.
Poker is a very interesting game where the psychology, strategy and risk management of trading to similarities. Now let’s be clear here. I am not talking about amateur poker player who has the odd flutter now and then. I am talking about a professional poker player who has made a living from it. One who has perfected his technique and what it is capable of gaining from life changing monetary gains. The odds and high probability setups of a game are likely to be around.
So how does a strategy trader mirror that of a poker player?
A private trend trader only enters trades where price has a predetermined target of going high. This high probability is called “an edge” and is determined by a number of rules that must be met by technical analysis. An edge, in gambling, is defined as a systematic advantage a player has over his opponent. By using this edge, a private trend trader aims to catch large movements over time, as much as several thousand pips, but with minimal time spent in the market.
In poker, a professional will only risk his chips when he feels that his set of cards plus those on the table have a higher probability, and thus an edge, of taking the pot then his opponents do.
How does a trend trader mirror that of a poker player?
A private trend trader understands that serious monetary gains are made by trading with a long-term basis over the edge. He understands that many trades over the course of time, he will probably have more losers than winners, leveraged by compounding, not only cover the losses but bring home the life changing money that most people set out to achieve. The total number of unbelievable 5% and called The Smart Money.
Key to this psychological approach to trading is that it removes the emotional element, namely hope, fear and greed. This is a consistent, mechanical, stress free approach that not only brings huge monetary gains but also a stress free lifestyle that comes with it. By trading the daily and weekly chart, the minimum time is spent in the markets, the maximum results are yielded and the one thing we need is the most of all – our time – and how exactly we spend. After all, who wants to spend all day staring at a screen?
A professional poker player has the same psychological approach where he chooses to only bet on the high probability cards – the edge – and the number of hands that appear. He simply doesn’t fold the cards on the folds. It is this great discipline and consistency that not only makes a great poker player stand out but also removes the emotional element when sitting at the table. Emotions will of course affect his approach and game strategy.
A professional poker player matches that of a lifestyle where he only plays a handful of tournaments a year but unlike a jet set lifestyle playing tournaments and casinos around the world. He luckily also has that “wow, that’s cool” factor that doesn’t really come with trading. A top Smart Money trader, though, can afford to trade his massive earnings from a jet set lifestyle.
Risk small WIN BIG? Possible?
This is the final element that determines if not when a trader is looking at an empty trading account and a poker player left empty-handed with all his chips taken at the smarter players’ table. This is called risk management.
Scalping is where a trader looks for a handful of pips, say 5 to 30 pips, in a matter of seconds or at best several minutes. He hedges over a short period of time in large gains looking for his risk. The market is probably based on some technicals but it is not the only market that makes the volatility of the market.