It’s a fact that all financial investments have risks. Ninety percent of people who enter into trading will end up losing their money. So what is it you’re doing wrong? These people do not have a good enough understanding of what’s going on in the situation, simply put. In a way, entering into investments is akin to playing a game of poker.

My theory is thus; the game of poker is a good simulation of the investment world, and the correct strategies in winning, or getting to the endgame, at least, is similar in both cases. I admit that this may sound a bit nontraditional, but do hear me out.

When one plays poker, you won’t get very far into the game if you just hold back and wait for the right hand to invest all your chips in. Obviously, even the best hands have an amount of risk in it, for one thing, and you may still end up losing all your chips in that single go. Also, going in with guns blazing, may end in a small yield of extra chips. It’s not worth it.

Betting like mad on every single hand is not a very brilliant move, either. Do this and you’ll probably end up being playing the fool. If you constantly expose your chips to high risk, it’ll only lead to a sudden burnout; you’ll be out of the game before anyone else, steadily losing all of your chips in a few rounds.

What then, is the right way to play poker? Anyone who plays often enough will quickly surmise that getting ahead in poker requires more than considering just your own hand and chips. You need to get a feel for the hands and chips of the other players around the table, too. Once you get a good feel for the game, you’ll know that putting in all your chips in one hand is a bad idea. The way to go is to invest little by little, spreading out your game to good, but not necessarily great, plays.

The same principle applies to trading. The game table is essentially the market, and how it affects your investments. You’ll need to avoid having all your capital placed onto one investment. Spread it out into a number of decent deals, and then if one fails, you won’t be as devastated.

Last 5 posts by Investment Education Staff

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