Poker pros, you might be surprised to hear, can teach Forex newbies a lot about how to trade Forex. Here are tips that demonstrate why.
Use strategies, not emotions
Poker professionals don’t rely on their autonomic nervous system to make judgement. They use strategies that give them an edge when a big enough series of hands has been played out. Good traders feel naked without thoroughly understood Forex trading strategies. Like Poker pros, they don’t get emotional after a few early losses. Using these strategies doesn’t mean you’ll win every trade, but it will bring you out ahead if you stick to it over a large enough sample size.
When to hold and when to fold
With their strategies in place, the most successful poker pros know exactly when to hold’em and when to fold’em, and that happens to be the key to how to trade Forex successfully. Knowing when to exit a trade is notoriously difficult if you’re relying on intuition and adrenaline. Again, sticking to your strategy is the best policy – set your trade and forget about it. Let your strategy and the market dynamics determine the exit point, not your adrenal cortex.
Managing money risk
A major part of a poker pro’s strategy is chip stack management: refraining from betting all the chips on a weak hand or going to light on a strong hand. Similarly, good Forex traders know that a trade must be placed when a low-risk opportunity presents itself. Like a wise poker pro, they’ll know when to fold (exit) quickly on a weak trade.
All successful poker pros know that displays of emotion are their undoing. The same is true of Forex traders. Decisions informed by emotions frequently turn into losses. Decisions based on knowledge of the currency markets and familiarity with sound Forex trading strategies pay dividends.