You Have to Know When to 'Hold' Them

Editor's note: The key to successful trading isn't constant action... It's discipline. Markets tempt investors to overtrade, chase excitement, and abandon strategy. But as Ten Stock Trader Editor Greg Diamond explains, lasting success comes with patience. In this issue, Greg explains a few lessons he learned around poker tables that can help investors avoid gambling with their portfolios...

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...

His career earnings in the card game surpass $45 million.

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. Going from a broke college kid playing $5 hands to a multimillionaire is a big accomplishment.

I'm happy for my friend. 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.

My "favorite" e-mails come from folks who believe they don't have enough open trades at a given time.

The name of my trading service says it all... The "Ten" in Ten Stock Trader means 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 shows we're very close to a major inflection point in 2026... with a potential market top coming soon.

So be 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: In the past, Greg issued warnings ahead of the 2020 crash, the 2022 tech collapse, and the 2023 bank crisis. Now, he says market volatility is just beginning... and could soon lead to the next major market peak. On March 10, he'll reveal the exact week he expects stocks to top – and how he plans to protect gains and capitalize on the moves ahead.