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Is Trading like Gambling?
- Thread starter scalpmaster
- Start date
Quote from IV_Trader:
So accepting a 6/5 payout on black and red is a bad deal ? It is not an arbitrage , you can lose a few ( many ) games in the row .
I don't understand your comment, but if you're referring to Russian roulette, you can only lose once and it has nothing to do with arbitrage.
Quote from Rocko1:
You should take a class in statistics.
Gambling is generally when you have an expectancy of lower than 0, but you keep buying them lottery tickets because you don't understand the math behind it...
Actually, I consider the expectation of a lottery bet to be positive.
Here is why:
I consider $1.00 as meaningless or zero (0). I consider $10,000,000 as meaningful and at face value. If the odds of winning are 1 in 10,000,000 then the expectation for that lottery is as follows :
10,000,000 :1 * $0 = 0 expected loss
1:10,000,000 * $10,000,000 = 1.00 expected win
total expectation $1.0
I would frequently bet $1.00 to win a meaningful sum since I consider the value adjusted expectation to be positive.
Quote from ^^^^^^:
Actually, I consider the expectation of a lottery bet to be positive.
Here is why:
I consider $1.00 to be meaningless or zero (0). I consider $10,000,000 as meaningful and at face value. If the odds of winning are 1 in 10,000,000 then the expectation for that lottery is as follows :
10,000,000 :1 * $0 = 0 expected loss
1:10,000,000 * $10,000,000 = 1.00 expected win
total expectation $1.0
I would frequently bet $1.00 to win a meaningful sum since I consider the value adjusted expectation to be positive.
In the dim recesses of my mind I remember an article written by Milton Friedman and Jimmie Savage trying to explain choices involving risk by comparing the utility of insurance vs. purchasing a lottery ticket. I remember NO details but I seem to recall that under their analysis that purchasing a lottery ticket can be rational.
Quote from Bernoulli:
I don't understand your comment, but if you're referring to Russian roulette, you can only lose once and it has nothing to do with arbitrage.
what Russian roulette ? I asked you if you think 6/5 payoff on even odds ( risk arbs) is a good deal , even if it's not an arbitrage per se.
Is it ?
Quote from Bernoulli:
In the dim recesses of my mind I remember an article written by Milton Friedman and Jimmie Savage trying to explain choices involving risk by comparing the utility of insurance vs. purchasing a lottery ticket. I remember NO details but I seem to recall that under their analysis that purchasing a lottery ticket can be rational.
I believe my example explains all small losing retail trading along with low wager Vegas gambling. Although strictly speaking ( without adjustment for value to the individual) it is a negative expectation foray, after value adjustment for the worth of the possible outcomes versus worth of the possible loss they become rational and positive expectation activities.
And as you mention, with the exception of government mandated insurance, the general propensity of consumers to take negative expectation bets on insured outcomes is explained thereby as well.
Quote from vlst:
Or as our feerless leader dubya says...
Fool me once, shame on â shame on you. Fool me â you can't get fooled again.
You mean like this...
http://soapbox.msn.com/video.aspx?vid=cf42e3dd-4702-431d-bfe7-217d7842d6ba
http://soapbox.msn.com/video.aspx?vid=90a90ff5-2837-4609-8f5f-ed6f0128b553
http://www.evtv1.com/player.aspx?itemnum=1451
http://comedy.aol.com/viralvideos
Quote from nexial_1002002:
If you're not a quantitative automaton, do not trade intraday, invest passively and enjoy your 10% avg annual returns like the rest of the public.
I think it is possible to day trade successfully and be profitable. Just my opinion.
www.eminimaster.com
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trading is not gambling if your trades are +EV
Actually I think both are very much like each other.
You need a strategy to win.
You need to stick with your strategy and not play your hunches.
Money management is key. You can't overbet your bankroll.
I watched a guy the other day playing blackjack who chose not to split his aces. (Basic strategy says you should split) I asked him why and his answer was that he didn't want to risk $600.00. I replied so how much are you down. He said $1200. So if you played your cards right you could have one back 1/2 of your losses on one hand.
People get scared or greedy in both and deviate from a winning strategy.
You need a strategy to win.
You need to stick with your strategy and not play your hunches.
Money management is key. You can't overbet your bankroll.
I watched a guy the other day playing blackjack who chose not to split his aces. (Basic strategy says you should split) I asked him why and his answer was that he didn't want to risk $600.00. I replied so how much are you down. He said $1200. So if you played your cards right you could have one back 1/2 of your losses on one hand.
People get scared or greedy in both and deviate from a winning strategy.
ofcourse it depends upon the methods..
how do u use and invest your money.....
how do u use and invest your money.....