The world of investing is now something that millions of people around the world participate in. Only a few decades ago, the practice of building a portfolio of investments was mainly done by the wealthy after taking advice from financial advisors and experts in the field of stock trading. Today, with a range of freely available trading apps such as eToro and Plus 500, any adult can learn to trade and aim to secure a comfortable financial future. Many of these apps will allow people to trade in a practice environment first. They can learn the basics of trading without committing real money to their investments, learning to determine the right time to make purchases and when to sell. In some respects, online gambling has certain parallels with the world of investments. In this article, some of the transferable skills that can be taken from online gambling and applied to investments will be explored.
Spotting patterns
Firstly, it is important to understand that some forms of online gambling rely on spotting patterns. For example, certain online casino games such as poker rely on being able to spot patterns in the other player’s behavior. Certain “tells” such as changes in facial expressions or going “all in” on the river card when their body language does not suggest confidence can be extremely beneficial to spot. If you can learn to spot these patterns in behavior, you will be able to determine when a player is bluffing, improving your chances of winning the pot.
In a broadly similar way, there are patterns to spot in the world of investments. You will need to learn to scrutinize the price charts of a range of stocks and shares. Over time, you will be able to spot when a stock has reached its lowest value based on previous performance. This can be the ideal time to buy as the odds of the stock gaining value will be high. Conversely, when you see a stock that has continuously increased in value, it is wise to be cautious. Knowing when to sell such stocks is a key skill that is built on knowledge and intuition through practice.
Balancing risk
In both gambling and investing, it is important to have a well-developed ability to balance risk. In the case of gambling, an excellent example can be found when playing roulette. While the rules of the game are simple, your betting behavior can be adapted to include a range of low and high-risk strategies. If you want to limit your risk, betting on groups of numbers can be ideal. Choosing a range of numbers, betting on odds or evens, and betting on black or red are all low-risk strategies. Conversely, if you want to increase the potential for a big win, betting on single numbers will give the highest possible return. This type of strategy can also be applied to investments. For example, consider volatile investments such as cryptocurrency as high risk as their value can change considerably in a short period. More stable stocks, such as gold and “blue chip” investments, tend to perform more predictably and may offer reliable long-term performance. Creating a portfolio with both high and low-risk stocks can be a key way to balance the risks in investing while still providing the potential for healthy returns over the short, medium, and long terms.