As you engage people, you may approach the relationship differently based on the type of person you perceive them to be. Are they a direct Type A person? Are they an easy going Amiable person? Are they Analytical and deliberate in manner? Or perhaps, they are Expressive and animated?
These perceived social styles have a direct impact on the type of relationship you have with people, and it plays into to the types of choices and decisions you make when interacting in a business setting, social setting or whatever type of interrelationship you are engaged in. As you grow and gain experience, it is vitally important to continue to enhance the awareness in human behavior which will give you an edge in the specific relationship. The best leaders and the most successful people in the world thrive on this level. In fact, it's one of the distinct attributes that propels them to the highest levels.
What effect does behavior have on Poker? There is an old, but wise saying, “Poker is not a card game played by people, but a people game played with cards”. This is a very compelling adage because, even though everyone at your table is playing cards, how you decide to play them will directly impact the results of the session. To illustrate this point, say you are in a cash game for 8 hours in seat 3, and at the end of the 8 hours you will total a finite profit or loss, some exact dollar amount. Whether you made or lost money is irrelevant of the point.
Now, let’s say time can be rewound or reset, remove you from the game and put another person in that same seat 3, essentially, allowing him to play every hand and situation you did under the same conditions. You would see at the end of the same 8 hour session that his final profit or loss is going to differ from yours, maybe significantly. Why? Because he is not you, he will approach each situation differently based on his perceptions, his style, his thought processes. In fact, the same starting distribution of hands for seat 3 could yield you a huge profit, and he a large loss, while both getting the same identical cards! This is why the concept is very powerful; the actions of both of you are independent of each other in a dynamic environment, like the financial markets.
Poker styles can be broken down into 4 distinct categories relating to behavior and actions from your opponents; Loose-Aggressive, Loose Passive, Tight Aggressive, and Tight Passive. Of course there are varying degrees, but we are going to generalize.
A successful poker player, when he first sits down at a table, will start to formulate opinions about each of his opponents trying to decipher the style so the proper adjustments can be made when the action involves the opposing player(s). This is the onset of social strategy; this is the edge you want to acquire. The cards will not change, the hand values are finite ... the behavior is the hidden variable that affects the monetary outcome.
Observation of styles in a poker tournament setting: (note: he represents male/female)
Loose-Aggressive (LA) -- This type of player is very unpredictable, verging on manic. The LA plays a wide range of hand values and has a high propensity for volatility and large variance in results. There is a method to the madness, but the risk/reward can be tough to stomach for the faint of heart. The LA usually acquires a ton of chips quickly which can propel a deep finish, or busts out and hits the rail in the early stages.
Loose-Passive (LP) -- This type of player is a pot splasher, loves to be involved in the action and is hoping to make a big hand and acquire chips quickly. The difference between the LA, is the brakes can be applied if need be, and slow down. This type of strategy needs the cards to cooperate, particularly on the flop, because most of the time, the starting cards are not very strong, usually calling large bets, hoping to get lucky and make the winning hand.
Tight-Aggressive (TA) -- This type of player is very selective with the hands that are played and picks the spots deliberately when entering a pot. The TA plays high probability hands and focuses on positional advantage against the opponents. When this player feels like he has the best of it, he will push those positive expected edges.
Tight Passive (TP) -- This type of player is very cautious, conservative by nature, usually not the type to lead the action, even if his hand is very strong. The goal is to finish as deep as possible without risking the entire chip stack if it can be avoided. If the TP goes card dead for a significant amount of time, he will eventually succumb to the field by the accelerating blind structure.
There is no right or wrong way to implement a particular style to achieve the desired results. Each of these styles has the capability of success, each has a risk/reward expectation, but it is important to understand that decisions are made from various different approaches, particularly influenced by style and personality.
You are probably by now relating in your mind how these styles correlate with your financial trading and investing. These styles can be overlapped in how you initiate your trading positions, how much risk you endure relative to the reward, even the type of products you choose. Your trading style is unique to your individual make up and the perception to information and news you subscribe to drives your financial direction.
Let’s relate the poker styles to trading and investing:
Loose-Aggressive (LA) -- This type of trader is a pure speculator, willing to make high variance bets looking for the huge score, high risk/ high reward. An example would be a trader willing to take a leveraged unhedged position in the options market on a bio-pharma company about to announce phase 2 trials on a key drug.
Loose-Passive (LP) -- This type of trader likes the action and is continually active in the markets. The brokerage houses love this type from all the commissions generated by his activity. The LP trades on a whim, maybe executing trades on sketchy, unresearched recommendations that were on some internet rumor website.
Tight Aggressive (TA) -- This type of trader is extremely focused on goals, and is disciplined and deliberate when initiating a position. The TA always has a plan with profit exit points and has strict stop/loss levels in place. This trader always looks to minimize risk if possible, perhaps creating a majority of spread trades as the underlying strategy.
Tight Passive (TP) -- This type of investor is interested in growing the bottom line while taking minimal risk. Many of the products chosen will follow the low risk/ low-moderate reward model, such as high grade bonds or dividend yielding utilities stocks with low volatility.
The next time you initiate a position, try to categorize the type of style it most resembles. Is it LA, LP, TA, or TP? After a period of time, you will notice a pattern on the type of investor or trader you inherently are and take a look at the profit/loss results.
If you have met your goals, maybe you have embraced your style and maximized its strengths, but if you have fallen short of expectation, maybe adjusting your style is in the cards.
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