Sometimes it pays to do nothing

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I was watching season 2 of Boardwalk Empire the other night (the second season is amazing, so stick with it if you think season 1 was slow!)

In the above clip, the actor playing the legendary gambler Arnold Rothstein gives some fantastic advice that can be applied to poker/trading and indeed life in general.

As I become more and more immersed in poker, I cannot help but notice the striking similarities between trading and poker. I’ve discussed these with many of my podcast guests available on this site and on iTunes

Many trading rules apply to poker and many poker rules can be applied to trading.

After all, it’s all just numbers and looking for +EV situations, it’s all just one big game…right?

In trading, as in poker, it is extremely important to preserve your capital (bankroll).

It’s kind of critical! Unless you want to grind play money poker or paper trade for the rest of your life!

Many money managers and traders agree, that sometimes, it makes sense simply not to be invested in the market.

Likewise, some poker pros will tell you, “You don’t have to play everyday” or “You don’t have to play every hand!”

In both cases they are correct, “DOING NOTHING” can sometimes be the smart play.

I’m not advocating this as an excuse to cut back on our volume or work ethic!

But sometimes, simply “doing nothing” is the correct play.

I think in essence it comes down to “Picking your spots” you are not forced to make any play in poker (even if at first glance, you think you are) you don’t have to call that marginal river bet. Likewise in trading, you don’t have to buy stock in any company just to be invested for the sake of it.

You can simply pass, it may seem that you are “doing nothing” but in fact you are managing your resources, be it finances or chips.

By hemorrhagingĀ  resources on marginal or even negative EV plays, you are left with less resources on which to capitalize when the truly great spots come along.

So sometimes, ask yourself “Is simply doing nothing the correct play here”?

Then like Arnold Rothstein, when the really good spot comes along. You have the ammunition ready to fire.


Barry “gingertoys” Chalmers

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