Do You Think Trading is Gambling?
- Thread starter nysestocks
- Start date
http://elitetrader.com/vb/showthread.php?s=&threadid=133436&highlight=gambling
stick around here long enough and you'll get to see the same issues recycled and re-debated over and over. Gnome, I see you're still trying to stick to your rigid view, but on your "TRADING IS NOT NECESSARILY GAMBLING post," I caught you wavering.
stick around here long enough and you'll get to see the same issues recycled and re-debated over and over. Gnome, I see you're still trying to stick to your rigid view, but on your "TRADING IS NOT NECESSARILY GAMBLING post," I caught you wavering.
nysestocks
Guest
There have been many good replies, and some not so good, but that is normal.
To deny the fact, which I don't like repeating, for obvious reasons, is to deny the reality of life!
Whilst many traders can associate probabilities with trading, but not with gambling, many fail to see that the outcome of the probabilities are dependant on available capital, trading skills and emotional make-up.
To neglect any of these key components is to shoot oneself in the foot.
Anything that strengthens the ability of the trader to understand and improve on the required qualities that enable the components to expand and grow is a worthwhile exercise.
To deny the fact, is to deny oneself the opportunity.
To deny oneself an opportunity is, well, foolish.
It is very simple when you apply common sense!
You place a bet, your money is at risk, you gamble.
No one can change the colour of the Sun, but the Sun can change the colour of a person!
To deny the fact, which I don't like repeating, for obvious reasons, is to deny the reality of life!
Whilst many traders can associate probabilities with trading, but not with gambling, many fail to see that the outcome of the probabilities are dependant on available capital, trading skills and emotional make-up.
To neglect any of these key components is to shoot oneself in the foot.
Anything that strengthens the ability of the trader to understand and improve on the required qualities that enable the components to expand and grow is a worthwhile exercise.
To deny the fact, is to deny oneself the opportunity.
To deny oneself an opportunity is, well, foolish.
It is very simple when you apply common sense!
You place a bet, your money is at risk, you gamble.
No one can change the colour of the Sun, but the Sun can change the colour of a person!
nysestocks
Guest
This post caught my attention.
Many traders fail to see the importance of using leverage correctly, when speaking about trading and gambling.
The reference to SPY bet below is very good, and the proper use of leverage, with control, as mentioned below also, is what professional traders do (aka professional gamblers).
Options, of course, are brilliant instruments for leverage, but many fail to see how simple an options trade really is, and like the myriad of TA indicators that are used on charts, many option traders look for the perfect balancing act, in an unbalanced environment!
With an Option you can place a bet like in the casino, in that you will not lose any more than you bet, but, as many traders here know, you can also place other bets against your original bet to adjust the risk - so you have a flexible betting game that only the real professional casino gamblers are able to master.
That said, you must deal with the fact that, on average, 75% to 80% of traded options expire worthless, so this tells you that the probabilities are on the side of the option seller, but again, as many good traders here know, selling options can be the most risky type of trading you can imagine, especially if you don't know how to read the market, and even if you do, you will still get caught now and again, no matter how good you are!
Take my bet of $5.5K as an example.
If I have won, the punter on the other side will have lost between $250K and $300K!
But, the other punter also had a 75% to 80% chance of succeeding, which only left me with a 15% to 20% chance of success!
Am I am gambler, sure I am, and I love it, as I know there is massive potential for beating the casino owner at his own game, once I acknowledge a few key concepts, that are really, after all, just plain old common sense!
Beware if you said NO!
http://www.responsiblegambling.org/staffsearch/library_news_results_details.cfm?intID=10408
Many traders fail to see the importance of using leverage correctly, when speaking about trading and gambling.
The reference to SPY bet below is very good, and the proper use of leverage, with control, as mentioned below also, is what professional traders do (aka professional gamblers).
Options, of course, are brilliant instruments for leverage, but many fail to see how simple an options trade really is, and like the myriad of TA indicators that are used on charts, many option traders look for the perfect balancing act, in an unbalanced environment!
With an Option you can place a bet like in the casino, in that you will not lose any more than you bet, but, as many traders here know, you can also place other bets against your original bet to adjust the risk - so you have a flexible betting game that only the real professional casino gamblers are able to master.
That said, you must deal with the fact that, on average, 75% to 80% of traded options expire worthless, so this tells you that the probabilities are on the side of the option seller, but again, as many good traders here know, selling options can be the most risky type of trading you can imagine, especially if you don't know how to read the market, and even if you do, you will still get caught now and again, no matter how good you are!
Take my bet of $5.5K as an example.
If I have won, the punter on the other side will have lost between $250K and $300K!
But, the other punter also had a 75% to 80% chance of succeeding, which only left me with a 15% to 20% chance of success!
Am I am gambler, sure I am, and I love it, as I know there is massive potential for beating the casino owner at his own game, once I acknowledge a few key concepts, that are really, after all, just plain old common sense!
Beware if you said NO!
http://www.responsiblegambling.org/staffsearch/library_news_results_details.cfm?intID=10408
nysestocks
Guest
To be fair, and not to look like I am trying to force my "opinion" down other peoples' throats, here is the other side, but I will admit, I have not read it all as of yet, but I will, and all I will say, is, watch out for the obvious!
http://www.hsgac.senate.gov/091699_eta_testimony.pdf
http://www.hsgac.senate.gov/091699_eta_testimony.pdf
nysestocks
Guest
Yes, of course you may ask, for it is only by asking that one learns anything, and every person has valuable information in their head, whether they know it or not, although some seem to think otherwise, for reasons that are beyond me!
It was options on index futures.
Stock options are prone to manipulation very easily, and again, I am no expert, but it can be easily seen from the bid/ask on the various strikes, along with the open interest, that manipulation is very easy for one with large funds.
Index futures, on the other hand, when you have large ranges in the daily bars, followed by narrow ranges, can be traded at a very good discount to what they were previously trading at. The "professional" option traders will call this the volatility effect.
For those who are new to options, volatility changes are nothing more than a few WRB's and NRB's on a chart, plain and simple!
The advantage of full time trading is that you can monitor and set alerts on many markets to "announce" when an opportunity has popped up its head!
If you were an octopus, and applied common sense to your trading, then the sky might well be the limit, as for every common sense trader in the game, there are 1000's of traders that throw away their money, on every market you can think of, and all because of the rubbish put out there, intentionally btw, by the so called "experts".
Habit 1 â Accept What Is Real
There are no experts in the trading game - full stop.
"Since itâs the title of this blog, I should probably define what survivor bias is. Wikipedia has a succinct definition:
Survivorship bias (or âSurvivor biasâ) is a statistical artifact in applications outside of finance, where studies on the remaining population are fallaciously compared with the historic average despite the survivors having unusual properties.
A simple example helps - an old scam is to pick some large number of people from the phone book (e.g. 10,000) and send them football predictions. For 50% of the people you mail them telling them that some team will win the big game that week and for the other half you say they will lose. 50% of the âpredictionsâ will have been correct so you discard the incorrect predicitons and repeat this operation for say 6 weeks at which point there will be (10,000 / 2^6) ~ 156 people who got accurate results. At this point, you hit these people up for some large sum of money and dissappear. The point is that by discarding evidence of all of the losers you create a track record that you can predict things when in fact, it is only occurring by random chance.
There is a lot of evidence of this occurring in the mutual fund industry (poorly performing funds are closed) and finance in general. Itâs very common in human nature to attribute success to âskillâ and failure to âbad luckâ. In physics and statistics, itâs common to calculate the statistical significance of a result - how large of an effect would you expect to occur purely from random chance (the null hypothesis) versus from the hypothesis you are studying. In life it can be a little harder to see how big the roulette table is. "
http://survivorbias.com/page/2/
luck or skill, one of my trades last year returned several thousand percent, I was lucky to be right, but the skill was taking the trade and being a man about the potential loss. That's what binary trading aka gambling is all about. I would rather be Boone Pickens than LTCM. As far as the govt goes, here are a bunch of people that allowed the OTC market to get up to 60 trillion notional and stick us with the bill when these geniuses can't cover their bets, but they are are concerned that joe retail may lose $10,000k in the evil stock market, give me a fu*^in break!
Talk about taxation without representation, time for another tea party if you ask me!
Survivorship bias (or âSurvivor biasâ) is a statistical artifact in applications outside of finance, where studies on the remaining population are fallaciously compared with the historic average despite the survivors having unusual properties.
A simple example helps - an old scam is to pick some large number of people from the phone book (e.g. 10,000) and send them football predictions. For 50% of the people you mail them telling them that some team will win the big game that week and for the other half you say they will lose. 50% of the âpredictionsâ will have been correct so you discard the incorrect predicitons and repeat this operation for say 6 weeks at which point there will be (10,000 / 2^6) ~ 156 people who got accurate results. At this point, you hit these people up for some large sum of money and dissappear. The point is that by discarding evidence of all of the losers you create a track record that you can predict things when in fact, it is only occurring by random chance.
There is a lot of evidence of this occurring in the mutual fund industry (poorly performing funds are closed) and finance in general. Itâs very common in human nature to attribute success to âskillâ and failure to âbad luckâ. In physics and statistics, itâs common to calculate the statistical significance of a result - how large of an effect would you expect to occur purely from random chance (the null hypothesis) versus from the hypothesis you are studying. In life it can be a little harder to see how big the roulette table is. "
http://survivorbias.com/page/2/
luck or skill, one of my trades last year returned several thousand percent, I was lucky to be right, but the skill was taking the trade and being a man about the potential loss. That's what binary trading aka gambling is all about. I would rather be Boone Pickens than LTCM. As far as the govt goes, here are a bunch of people that allowed the OTC market to get up to 60 trillion notional and stick us with the bill when these geniuses can't cover their bets, but they are are concerned that joe retail may lose $10,000k in the evil stock market, give me a fu*^in break!
Talk about taxation without representation, time for another tea party if you ask me!
Trading is a business. To my mind, it is the best business in the world - for a great many reasons! It has a very high profit potential against a very low overhead. Risk can be tremendously reduced by taking only high probability trades. In fact, futures trading is a relatively low-risk business when approached with the right attitude and the right planning.
There are no employee problems other than myself. No unions to contend with, no negotiations, no strikes. No employee benefit plans other than what I give to myself. No employees stealing from me. No collective bargaining, and no stockholders.
There are no merchandising costs, no damaged goods, no vandalism, no service calls, no repairs to make, and no guarantees to honor.
âI donât have to advertise, and I have no marketing headaches. There is almost always a buyer if I want to sell, and almost always a seller if I want to buy. No purchasing and procurement problems, and no salesmen making mistakes.
âThere are no manufacturing problems, no production schedules to meet, no shipping, no receiving, no product liability, and no insurance policies to carry.
âI donât have storage problems either. No warehouse, no spoilage, no items to discontinue or mark down. No bills of lading, no freight or freight damage, no trucks to load or to unload.
âIâm free of invoicing, accounts payable, payroll, inventories, accounts receivable, billing, dunning, bad checks, and bad debts.
âNow I ask myself, âSelf, where else can you find a business like this?â The answer is an overwhelming âNowhereâ! Itâs the most perfect business in the world!!â
There are no employee problems other than myself. No unions to contend with, no negotiations, no strikes. No employee benefit plans other than what I give to myself. No employees stealing from me. No collective bargaining, and no stockholders.
There are no merchandising costs, no damaged goods, no vandalism, no service calls, no repairs to make, and no guarantees to honor.
âI donât have to advertise, and I have no marketing headaches. There is almost always a buyer if I want to sell, and almost always a seller if I want to buy. No purchasing and procurement problems, and no salesmen making mistakes.
âThere are no manufacturing problems, no production schedules to meet, no shipping, no receiving, no product liability, and no insurance policies to carry.
âI donât have storage problems either. No warehouse, no spoilage, no items to discontinue or mark down. No bills of lading, no freight or freight damage, no trucks to load or to unload.
âIâm free of invoicing, accounts payable, payroll, inventories, accounts receivable, billing, dunning, bad checks, and bad debts.
âNow I ask myself, âSelf, where else can you find a business like this?â The answer is an overwhelming âNowhereâ! Itâs the most perfect business in the world!!â
nysestocks
Guest
I agree 100%, but only to the extent that the individual allows it to be so.
The reflection in the mirror is enemy No.1!
Then you have the spin doctors, the so called "professionals", the "novelists", the gifted, the enlightened, the top 100, the IQ masters, and the rest!
At the bottom, you have good old Joe Bloggs, who no doubt has his own blog btw, and Joe is like a sponge out of water, just waiting to soak up all the "words of wisdom" that is abundant.
Well, I like to use Habit 1 as a reminder, every time I look at a chart!
http://bulk.resource.org/gpo.gov/hearings/106s/61159.pdf
The reflection in the mirror is enemy No.1!
Then you have the spin doctors, the so called "professionals", the "novelists", the gifted, the enlightened, the top 100, the IQ masters, and the rest!
At the bottom, you have good old Joe Bloggs, who no doubt has his own blog btw, and Joe is like a sponge out of water, just waiting to soak up all the "words of wisdom" that is abundant.
Well, I like to use Habit 1 as a reminder, every time I look at a chart!
http://bulk.resource.org/gpo.gov/hearings/106s/61159.pdf