Psychology: Professional Trader, or professional gambler?
- Thread starter OPTIONAL777
- Start date
The use of the term "positive expectation" in the trading arena is very misleading and dangerously close to jumping over the line to pure folly. As traders we are not only placing bets on an uncertain outcome, but we are betting in a non-static arena that is forever dynamic. All edges are fleeting; therefore trading is the purest form of gambling one can engage in...
You can grind out the same 'edge' for five straight years only to wake up one morning to find it gone and any trader who will tell you differently simply has not been in the game long enough...
You can read all the Tharp and Douglas books you want, get all warm and fuzzy about your 'edges' and 'positive expectancy', create grandiose illusions about how you have some sort of 'casino style' edge over the competition, but in the end it is all still gambling. The only edge we have is our self...
This game is gambling to the th degree...
PEACE and good-trading,
Commisso
You can grind out the same 'edge' for five straight years only to wake up one morning to find it gone and any trader who will tell you differently simply has not been in the game long enough...
You can read all the Tharp and Douglas books you want, get all warm and fuzzy about your 'edges' and 'positive expectancy', create grandiose illusions about how you have some sort of 'casino style' edge over the competition, but in the end it is all still gambling. The only edge we have is our self...
This game is gambling to the th degree...
PEACE and good-trading,
Commisso
If I believed I was just gambling, then I would have to believe
my success was due to luck. And I don't believe that. I don't
believe that when I have a profitable trade, it's the equivalent
of landing on red or getting 3 cherries in a row.
And I think the term "Professional Gambler" is a misnomer.
You have your professional card players, backgammon players,
bridge players...etc. But, these fellows are not gamblers in
my opinion. For these fellows, it's a business.
my success was due to luck. And I don't believe that. I don't
believe that when I have a profitable trade, it's the equivalent
of landing on red or getting 3 cherries in a row.
And I think the term "Professional Gambler" is a misnomer.
You have your professional card players, backgammon players,
bridge players...etc. But, these fellows are not gamblers in
my opinion. For these fellows, it's a business.
Before I take any trade, I know exactly what my risk / reward is. If the ratio is not in my favor, I do not take the trade. The major caveat with this rule of mine, is that when a trading range tightens so does my risk reward ratio. I have taught three professional gamblers over the years, and here's what they had in common:
1) They primary game was blackjack. (The risk reward was much greater than any other game)
2) The followed strict rules, and whenever they deviated from them, they lost. They can't change the odds, but they respect them. When the odds slide in their favor, they wager heavy. When the odds go against them, they lighten up.
3) Their family and friends criticize their occupation, they're GAMLBLERS.
4) They believe that the gambler, is the person who shows up and believes that they will win with chance. That's where PROFESSIONAL GAMBLERS AND TRADERS capitalize. Who ever said trading is a zero-sum game.
By the way all three guys started between '95 and '99 and they're all still here, doing very well.
Definition
To bet on an uncertain outcome, as of a contest.
To play a game of chance for stakes.
To take a risk in the hope of gaining an advantage or a benefit.
To engage in reckless or hazardous behavior.
How did these people consistently make money over and over and over again? How is it that we, as consistent traders make a living in the market, and pay our bills, consistently? Is it chance, luck, winning streak, or just because we're great gamblers?
We are consistent because we have mastered ourselves, and mastered a way to quickly predetermine our risk / reward.
You can read tons of books, and get all types of odds and stats, but if you kept things as simple as risk/reward you'd find greater success.
When I'm in a bad trade, I KNOW IT IMMEDIATELY AFTER IM IN THE TRADE. It is my denial that keeps me in, it is right at that moment, I have become a gambler. On the other side, when I'm in a trade accidentally, I get out immediately, WIN LOSE or DRAW. Holding on to it and saying, "Hmm, let's see what happens." is just plain bull. There is SOME validity that if a stock is down by "X" amount of periods it may reverse. But there are so many other damn factots to take into consideration.
1) They primary game was blackjack. (The risk reward was much greater than any other game)
2) The followed strict rules, and whenever they deviated from them, they lost. They can't change the odds, but they respect them. When the odds slide in their favor, they wager heavy. When the odds go against them, they lighten up.
3) Their family and friends criticize their occupation, they're GAMLBLERS.
4) They believe that the gambler, is the person who shows up and believes that they will win with chance. That's where PROFESSIONAL GAMBLERS AND TRADERS capitalize. Who ever said trading is a zero-sum game.
By the way all three guys started between '95 and '99 and they're all still here, doing very well.
Definition
To bet on an uncertain outcome, as of a contest.
To play a game of chance for stakes.
To take a risk in the hope of gaining an advantage or a benefit.
To engage in reckless or hazardous behavior.
How did these people consistently make money over and over and over again? How is it that we, as consistent traders make a living in the market, and pay our bills, consistently? Is it chance, luck, winning streak, or just because we're great gamblers?
We are consistent because we have mastered ourselves, and mastered a way to quickly predetermine our risk / reward.
You can read tons of books, and get all types of odds and stats, but if you kept things as simple as risk/reward you'd find greater success.
When I'm in a bad trade, I KNOW IT IMMEDIATELY AFTER IM IN THE TRADE. It is my denial that keeps me in, it is right at that moment, I have become a gambler. On the other side, when I'm in a trade accidentally, I get out immediately, WIN LOSE or DRAW. Holding on to it and saying, "Hmm, let's see what happens." is just plain bull. There is SOME validity that if a stock is down by "X" amount of periods it may reverse. But there are so many other damn factots to take into consideration.
I don't care if somebody wants to call me a gambler, so what. If I am a gambler so is George Soros and any other big time guy you care to mention.