Doug Kass is a well-respected writer who apparently (I have not made an intensive study) has a good track record regarding the stock market. He recently offered some comparisons between poker and investing. Here's a sample:
"Be as Competitive as You Can Be. Go into a poker game
and into a trade with the idea of completely destroying
your opponent or scoring a major investment coup. If you
win a pot or make a successful trade, nearly always play
the next pot or make the next trade shortly thereafter —
within reason. Although the cards and trades might break
even in the long run, rushes do happen and momentum
often feeds upon itself. When you earn the right to be
aggressive, you should be aggressive. When one has a
tremendous conviction in a poker hand or trade, you have to go for
Let's ignore the fact that premium sellers cannot score a 'major investment coup,' but we can get to keep the premium with no worries. That's coup enough for me.
Logic tells me this Kass' offering is not good advice. One trade has nothing to do with another. My logical brain tells me this is all emotional nonsense. Each trade stands on it's own. Winning and losing streaks are merely the result of good/bad luck and good/bad judgment. Bah humbug.
My emotional brain sees the 'logic' of the argument. Confidence plays an important role when trading, and if you just scored a big win, you gain confidence in your ability and your methods. As long as the trader does not rush to make an unreasonable trade, this Doug Kass advice may be right on the money.
It's true that some strategies work best under certain market conditions and far less well under others. The big win may suggest that whatever it is that makes your specific strategy work well represents the current market. If true, this is the ideal time to get right back in with another trade. This may indeed be the beginning of a steady winning streak. You may want to play this aggressively, but be especially careful if you are considering increasing position size. This is not the time to get careless and take a big hit.
"I learned about your book, "Rookie's Guide to Options",
ordered it from Amazon, and spent the last few days reading it and
enjoying it. The testimonials were so positive that it was hard to
believe that your book could be that good. But it was! Despite the
fact that I have been reading about options for the last few years, I still learned a great
deal from your book. This is especially true regarding Equivalent
Positions. Your chapter was the clearest explanation that I have ever
read. I learned a great deal – and it made sense! Thank you for
making the effort to put out such a fine book." DS