Saturday, December 17, 2005

Speculation Rules and Following Intuition

How can you tell when that gut feeling is worth following?

I stated earlier that investing and poker have a great deal in common, this poker illustration will help show the parallels.

You just sat down at a limit table, put out a bet and you are immediately raised. You intuition says the raiser may be bluffing, but what action do you take?

The primary rule of intuition: To follow a gut feeling you must know it's source.

If you have never played with the raiser before, are new to this poker game, and don't know any other players, that gut feeling is probably your lunch talking.

If you know this poker game is full of aggressive players, you know a couple of the players at the table, and you've played many hands with the raiser before, maybe you should honor the gut feeling and re-raise.

Track your gut feelings, your responses, and the results in your journal. You may find you win a big pot a third of the time you follow that hunch, and lose a few bets the other two thirds. Your hunches may be overall winners; against people you know, in surroundings that are familiar.

There are hundreds of things surrounding you right now, but you only notice a few of them at a time. Your sub-conscious notes everything, but only calls attention to those things that you have acted on in the past as important. Intuition can be a summation of many sub-conscious data points that trigger an alarm loud enough for your conscious mind to pick up the sound.

Realizing that you can decipher the source of your intuition may make it worth acting on.

Track it and check your results.

This is true at the poker table, and also is one of many informal speculation rules.

To follow your intuition you have to know the source of that gut feeling
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