There are a lot of similarities between poker and forex trading. Both are based on probability, require good money management skills, and warrant individuals to expertly manage their risk. In addition, both poker and forex trading come with high rewards if successful.
With that said, we believe that traders can learn a lot from poker players, as a lot of the skills translate well into forex trading. The forex market is the most actively traded market in the world, with an average daily trading volume of $5 trillion. Because of how high the stakes are when it comes to forex, traders should do all they can to enhance their internal control and skillset. In this post, we list down some of the valuable lessons that forex traders can learn from poker players.
It’s important to widen one’s knowledge
Those who don’t know much about gambling consider poker to be a game of pure chance. However, this statement could not be further from the truth. In order to level up in poker, players need to master their knowledge of the game by seeking advice from other poker players and experts. The same can also be applied to forex trading. Amateur traders who fail to understand the forex market and are too stubborn to do their due diligence are bound to make decisions that could cost them. So, traders should learn how to elevate their trading skills and widen their knowledge by seeking information and guidance from the right sources.
Knowing when to hold and fold
The most obvious lesson that forex traders can learn from poker players is knowing when to hold and fold. In poker, players size up how well their hand is going to perform. If it seems like a bust they will fold. But if there’s hope that they might win the pot, a poker player will likely hold their hand until the final round of betting. For forex traders, understanding the concept of holding and folding is highly valuable as this may mean the difference between experiencing major losses and reaping significant gains. To know exactly when to release a trading position, forex traders should thoroughly analyze the market — just like how poker players weigh their hands against the cards dealt on the table.
Be in full control over one’s emotions
Poker requires players to keep their emotions grounded and to themselves. Not being in control of their emotions and physically showing excitement or apprehension is synonymous with revealing their hand to their opponents. For this reason, they should try their best to keep a straight face — or as everyone knows it, a “poker face”. Forex traders should also try to not be driven by their emotions and make logical decisions. Doing so allows them to avoid making trades that they may regret down the road. In addition, emotionally sound traders are more confident with themselves and their trading methods. This is especially important in forex trading, as there will often be times when traders will need to act swiftly and decisively in order to save a losing position.
In a lot of ways, poker and forex trading mirror each other. For this reason, there’s a lot of lessons that forex traders can learn from poker players, and vice versa. To learn more about forex trading, be sure to read our article on the different reasons why one should start trading forex.