Doc's note: This week, I'm in Las Vegas for the Stansberry Research Conference & Alliance Meeting. That means it's a great time to share this classic essay from my colleague and Ten Stock Trader editor Greg Diamond, which we last published in March 2025...
If you approach investing like gambling, you're doing it wrong. In this issue, Greg shares two insights from a professional gambler that can help you avoid the pitfalls of the poker table and manage your risk.
My college roommate is one of the best poker players on Earth.
It started with $5 "hands" on Thursday nights on the East Carolina University campus. And when poker became popular enough to be broadcast on ESPN more than 20 years ago, we were hooked.
I enjoyed the game. But my friend Steve O'Dwyer took things to an entirely different level...
He bought and read every poker book he could get his hands on. He was obsessed with each facet of the game.
In fact, after we graduated and most of our friends got traditional jobs, Steve booked a one-way flight to Las Vegas.
We thought he was crazy.
After some initial ups and downs, Steve proved to be quite the poker player. His career poker earnings now surpass $45 million.
That's quite an accomplishment... especially from his start as a broke college kid playing $5 hands.
I'm happy for Steve. He put in the work, cast aside doubt, and lived his dream. Not many people can say that.
I tell this story because poker and gambling are often closely associated with trading. But I always provide the same insight to those who make the comparison...
If you're reckless, trade with no strategy or discipline, and don't manage risk, then yes, trading is very similar to gambling.
But professional traders always employ smart strategies and risk-management tactics. They also exercise patience when needed to make sure they don't cross over into the gambling mentality.
Interestingly, though, poker does provide some relevant lessons for traders.
Today, I'll share two important insights from my friend Steve to help us better understand good trading strategies...
The Poker Rules Every Trader Should Follow
Years after Steve and I graduated from college, I visited him in Las Vegas. By this time, he had won a few poker tournaments and was climbing the earnings list.
Naturally, we hit the poker tables after I arrived.
But I also picked his brain about a few key mistakes that many poker players make... And interestingly, everything he described aligned quite well with professional trading.
On that trip, Steve provided two valuable tips...
First, too many players play way too many hands.
Steve admitted that poker is a grind. Many lose patience with the effort it takes. They only want the excitement of winning.
But the odds suggest that "good hands" don't come around often, so you should only play when the odds are in your favor.
The same is true in trading.
I can't tell you how many e-mails I've received lamenting the trades we could have made. But overtrading can be detrimental to overall trading success.
This mentality, and the type of investment behavior it cultivates, explains why a lot of traders fail.
Yes, there's always another trade coming your way... just like there's always another poker hand to be played. But if the odds (or, as I say in trading, the "probabilities") are not aligned with your strategy, you won't benefit.
And if that's the case, you shouldn't execute the trade.
Some folks who send me e-mails believe they don't have enough open trades at a given time.
But the name of my trading service says it all... In Ten Stock Trader, I don't like having more than 10 open positions at once.
If you bet on too many hands in poker, you're likely to lose. The same thing applies to trading options... If you buy too many options, your capital can quickly evaporate.
The bottom line is, you shouldn't overplay. Follow your trading strategy and manage your risk.
Patience will lead to success.
The second tip Steve shared with me during the Las Vegas trip is one of the more popular insights among poker players...
You have to know when to "hold" them.
That means if you have a winning hand, hold the cards and bet accordingly. You should do the same thing in trading...
For example, back in March 2023, I forecast a bottom in many stocks and sectors.
After that, we accumulated shares of triple-leveraged exchange-traded funds and stocks with long-term upside. We held them for as long as we could.
However, when market conditions changed a few months later, we exited most of our core positions to lock in gains.
When stocks are grinding higher, it can be frustrating for bears, but good for bulls. That's where Steve's second tip pays off. You want to wait for a pullback to pull the trigger... then let your winners ride.
Longtime Ten Stock Trader subscribers are familiar with these trading strategies...
I always provide position-size recommendations and stop-loss levels. I also constantly update subscribers on my game plan in relation to our technical strategy.
I don't trade just to trade... That would be gambling.
And right now, my research has identified an opportunity that's just too big to ignore.
Get ready to apply these important insights from one of the best poker players in the world to your game plan... It will help you prepare and profit over the next few months.
Good trading,
Greg Diamond, CMT
Editor's note: Greg's ability to predict the markets is tough to beat. He has already helped our readers double their money 40 times... often in less than 18 days. And today, he's joining forces with our firm's resident crypto expert for a shocking prediction about bitcoin. They anticipate a major move that could help you see double, triple, or even quadruple gains for this asset class.
