This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Parallels Between Poker and Trading

NEW YORK ( TheStreet) -- When I speak to audiences about my approach to trading, I like to use a blackjack analogy to describe my approach. When you're trading, you always have to trade with an edge. You can't get to the point where you are simply making gambles, but rather you must repeatedly put yourself in favorable risk-reward situations. While you can never predict with certainty a move in a stock or market, you can limit yourself to the best setups.

In blackjack, you are dealt a hand and you have no choice but to play it. In technical trading, you get to pick and choose your hands. How great would it be if you could go into the casino, sit at the blackjack table, get dealt 10-4, and say to the dealer, "no thanks, I'll wait to see the next hand." On the flipside, if the dealer deals you an 5-6 vs. his own 10-4, you can choose how much to put on the line and double down the odds. That's obviously not how blackjack works, because in that case the house wouldn't always win.

Texas Hold 'Em Poker, I feel, incorporates many elements of trading. Any great poker player will tell you it's more about the people than the cards. A professional poker player could sit at a table of amateurs and likely win blind (without even looking at his cards). The market is the same in some senses. It doesn't matter if you are trading an oil stock or a tech stock or a financial stock, it's all about the charts and your own approach.

My approach consists of routine, discipline, money management, and confidence. Charts and price movement represent the emotions of the herd and it is a trader's job to analyze those emotions and position themselves on the correct side. For example, when sentiment gets overly bearish like we saw at the beginning this week, a smart trader can position himself for a powerful oversold bounce like we saw on Tuesday. Even more recently today, traders were able to identify relative strength from tech, make that their focus, and got rewarded with a big, late-afternoon move.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.26 -0.77%
FB $101.50 2.00%
GOOG $684.03 0.87%
TSLA $163.06 10.00%
YHOO $27.10 1.00%


Chart of I:DJI
DOW 15,914.74 -99.64 -0.62%
S&P 500 1,851.86 -0.35 -0.02%
NASDAQ 4,283.5920 +14.8290 0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs