7 Things Poker Can Teach You About Risk Management
Whatever your experience with gambling and risk taking in general, the game of poker can teach you a lot about risk management. Once you turn your hand to the aspects of risk management offered through poker, you'll develop traits that can be extremely useful when applied to any area of business or investment. Let's take a closer look at 7 things poker can teach players about risk management!
7. Patience and Humility
Rome wasn't built in a day – neither was a poker pro. But it's essential to enjoy the process, so be honest where you're at right now and work out what you need to do to take your next step. If it’s no longer fun, don’t be afraid to stop. Using this powerful tip will help you manage risk, because you won't play with ego. Remember that every online poker pro was once a beginner, just like all successful people in life.
6. Mindfulness and Emotional Intelligence
If Buddhist monks played online poker, they might wipe the floor with guys like Dan Bilzerian. Why? It’s all thanks to mindfulness – the mental state in which you're able to take control of your emotions and calmly accept thoughts and feelings without having fight-or-flight reactions (like risking all your poker bank with a reckless revenge bet). This is why techniques such as gym workouts, meditation and controlled breathing are used by top professionals – and they're also awesome for your poker face. The key is to become more confident and self-assured in yourself, so that your emotional intelligence defeats the 'inner devil' that sabotages success.
5. Growing Money Strategically
The key to making money via investing is to strategically grow your money, something that successful poker players and indeed entrepreneurs use to win big in the long run. The potent secret to successfully doubling money is to realise the power of a small 'edge' in whatever market you're investing in and to utilise the power of compound interest. For example, let's say you have a bankroll of 100 and make a small gain of 1% a day, after 300 days you'd have nearly 2000. But after 600 days you'd have nearly 40,000. Poker pros know how to progressively increase their stakes as their bankroll grows, while protecting capital with money management.
4. Creating a Strategy and Developing Poker Skills
When it comes to managing risk in poker, you simply can't rely on random luck. Behind success at the table is a lot of hard work and an infrastructure of skill and strategy. This is why it's crucial to understand the rules of poker, read about strategy and master a specific genre of the game, whether that’s avoiding tilt or perfecting a loose approach. By developing these traits in poker, we can all learn the key to managing risk in life.
3. Poker Goal Setting
Goal setting is a vital cog in risk management, be it at the online poker table or day trading financial markets. If you're new to the game, you're not going to have the skill or experience to win money like a professional. You might be content with slowly eroding capital while you learn the game. As your skill and experience grow, so too can your goals. Setting realistic goals – like not overwhelming yourself with too many tables – will help you keep expectations in check and avoid making costly betting mistakes during losing sessions.
2. Protecting Poker Capital
The next trick up your sleeve should be something every good investor treats as gospel – protect thy capital at all times. While you should only be risking money you can afford to lose, poker masters do everything they can to avoid it ever happening. To protect capital in poker, it's vital to play games where the stakes are aligned with your bankroll and budget, being aware that losing sessions, days and weeks are part of the challenge. It's OK to lose sometimes – just make sure the losses don't draw down your bankroll more than 10-20%. Accepting this is the hallmark of a long-term winner.
1. Budgeting for Poker
OK, you love poker gambling and are ready to take on an online casino, or maybe your buddies on Wednesday night. The biggest mistake in the book is to rush into town with a risk-it-all mentality – like EastEnders' Mick Carter would when staking the Queen Vic against Phil Mitchell and Max Branning in a dodgy game of Poker ('You've done what Mick, have you lost your loaf'!). So, the first rule of poker is to set a strict, sensible budget – using money you can afford to lose. Every professional player or investor knows the importance of setting a budget. Even when legend Warren Buffet invests in new stock, he still sets a budget in-line with a 'disaster scenario'.