Forex Trading vs Poker: Surprising Similarities
It’s all about controlling your emotions.
It’s about managing risk.
It’s about turning a profit.
Can you guess what I’m talking about based on the description: Forex trading or professional poker playing?
Actually, it’s an apt description of both professions.
Poker players and Forex traders need to share the same key elements in order to succeed.
So what qualities must a poker player and a Forex trader share to make them successful in each career? In this article we are going to cover the common grounds between the successes in two professions and discover why an accomplished Poker player would make a good Forex Trader, and vice versa.
They Both Know That Managing Stress is Crucial
If “fear is the mind killer” then stress is most definitely the career killer – whether said career be in card games or foreign exchange.
With stress comes panic, and with panic comes poor decision-making.
And when large amounts of money are on the line, making a bad decision fueled by negative emotions is the last thing you want to do. One forex mistake could cost you all your chips, or all your trading capital!
It’s about conditioning yourself to have that level of self-control.
Poker players need to know when to fold ‘em and Forex traders need to know how to apply positive money management techniques to their trading, something that is heavily discussed in the Price Action Protocol Trading Course.
Traders and players each need to do so in a manner that’s calm, cool, and collected. Their emotions need to be in check at all times, neglecting to do so will lead to certain failure.
Never risk losing it all just to break even. Don’t charge in guns a-blazin’.
True professionals never, ever, let emotions trump strategy, they know how to remain cool, calm and collected.
They Have the Ability to Cope with Losses
Ever hear the phrase “You can’t win them all”?
With solid strategies in place, your chances of losing diminish; however, unlikely losses will always crop up. Especially if you’re new to the “game.”
How you handle yourself during these dark moments could easily make or break you.
In poker, there’s always the possibility you’ll lose, even if you’ve been dealt the best hand in the game. The same is true of Forex trading.
However, if your first instinct is to ramp up your aggression and start trading/playing harder than ever – then neither poker nor foreign exchange is your game. You’re best off hitting the slot machines down at the casino, and we all know how that will eventually turn out.
All too often, losing poker players will increase the stakes after a loss in an act of desperation to win their money back. Even as the losses continue to stack up, they fool themselves into thinking they’ll somehow “break even.”
Newbie or similarly undisciplined Forex traders often make similar mistakes: Frantically making whatever trades they can to try and win back losses from a previous trade, because they haven’t learned to accept losses.
It’s so common for traders to double their risk in an attempt to make up for their losses and regain the original profit they felt entitled to in the previous trade that it has a name: Revenge trading.
Every business experiences losses—there’s no business on earth that yields 100% profits.
Forex trading is a business. You’re the business owner. If you don’t treat it as such, the bad days will ruin you. If a shop owner neglected his store and just expected customers to pour in and purchase goods, then the business is going to fail.
It’s no different when a Forex trader thinks they will magically succeed when they start trading without some sort of trading plan or money management model. These traders are kidding themselves and wash out very quickly.
The pros check their ego at the door and move on with grace.
Poker playing and especially Forex trading is a journey. You’ll be challenged in ways you never before imagined. Learning to control your emotions and recognize the right patterns isn’t something that will come to you overnight.
But, with practice, those “bad days” happen less and less, when Forex traders build up their screen time with Price Action trading they eventually learn the still to read the charts without any aid from external indicators or having to rely or anyone else’s input.
They Practice Good Risk Management Techniques
While it’s theoretically possible to “get rich quick” as a poker player or forex trader, it isn’t likely, at all. (And if it does occur, you can bet that they handed their instant wealth right back to the market thanks to overconfidence and lack of trading experience). Sometimes people need a Forex reality check with the expectations they have of the markets.
The pros know it’s all about controlling your risks to maximize your rewards.
Just as professional gamblers are careful with the hands they’re dealt and the wages they’re willing to bet; Forex traders must be equally careful when assessing market signals and chart patterns.
Planning ahead with Risk/Reward
Good traders know how to use risk management and positive money management skills – always aiming to obtain more while risking less. Similarly, when poker players gamble a predefined amount, they don’t need to win every hand they play because the hands they do win make up for their losses plus that little extra.
This is what risk reward management is all about. It’s vital to aim for a positive return on investment each time a call is made in Poker, or a trading decision in the Forex market. By aiming for more than what is initially risked, players or traders can take more losses but still be a winner in the end.
Profitable Poker plays and Forex traders understand the importance of getting return on their investments and structure their money management plans to reinforce positive risk/reward each time they make a decision in their profession.
This is why we have included a very powerful money management system in the Price Action Protocol. It’s possible for us to lose up to 3/4 of our trades and still make money. No matter what trading system you’re using, you will benefit from our money management models.
Cards VS. Candlesticks: The Final Verdict
Professional poker and foreign exchange trading may have a lot in common, but which career is better overall?
You can probably guess our answer based on what this site is all about. But, we can back up our bias.
Well to be fair to poker, it is a fun social event where Forex trading can be sometimes a lonely and isolated career. But we do favor Forex trading as the more professional career.
The advantages of Forex trading are clear. Think about it…
- There isn’t always a poker match readily available, but the Forex market is open for trading 24 hours a day 5 days a week.
- Poker matches can be lengthy, whereas our “set it and forget it” Forex trading system only requires 15 minutes of your attention per day.
- Forex trading can be done from the comfort of your own home. And unlike the poker matches you host at home, there’s no clean-up work to do afterward.
- Forex trading is more private. You don’t have to be embarrassed in front of your peers if you perform badly.
- No one can cheat the Forex markets—they’re massive! However, on rare occasions, you may come across dishonest poker players; or worse, dishonest dealers.
Want to learn more about becoming a professional Forex trader.
We trade the markets using Price Action. This means we only need to use a plain price chart to be able to spot highly profitable low risk trading setups that can offer extremely good return on investment.
If you’re completely new to Forex and want to know more about price action trading on a basic level then you can check out our Forex beginners Course.
If you already know the ins & outs of the market but are searching for a price action trading system that does not require the use of indicators. Or, if you’re looking for a powerful, positive money management model that you can really apply to any trading system to enhance its performance. If that sounds like you, then you might be interested in checking out our extremely popular Price Action War Room information page.
In conclusion, poker players who make the switch to Forex trading often do incredibly well! They’ve already got the basic skills in place. Just look at our article on why James Bond – the king of Casino Royale! – would make a world-class Forex trader. 😉
Cheers to your future trading success.