Trading analogy

[NeoTrader]

most times money will be left on the table

As the days go by, I can see more and more the wisdom in these words...

 

[ETcallhome]

obviously... Donald Trump.


Seriously, if you think this analogy has potential as a learning tool or as a thought in passing... at all; feel free to fill in some of the blanks or clarify the limitations...

At any rate, I am done for the day--

All analogies have some use as a potential learning tool. But if you are still trying to make money playing slots, you must ask, "Where does the money I win come from?" Sell everything, move to Las Vegas and look for that one slot that performs the way you describe. They all pay out somewhere in the high 90's.

Why not go to the roulette wheel and wait for too many blacks to come up and start betting on red until the probabilities even out? Or bet black when it starts trending?

A better approach is to accept risk the casino wants to lay off.

 

[SunTrader]

Be a "wrong bettor" on the strip (Vegas) and on the street (Wall and Broad).

Just don't strip on the street!

 

[J_Smith]

Mark Douglas talks about having a slot machine mentality as a trader. Suppose you were designing a slot machine that resembled trading. It might have 4 or 5 layers of probability, randomness or choice.

When you sit down in front of the machine, the trader’s slot machine starts twirling until it comes up with a signal. At that point the trader has a choice of putting his coins (his risk) in – and you don’t have much time to do this or it starts twirling again. There is a judgement here as some signals are for a small payout (scalps) and other signals are for more – and in addition to that, the more risk you put in (lot size) the greater proportion the payout adjusts for. So the first choice is to play. Then there is a random factor in the signal showing up, this is no problem, it is just a matter of time. When the signal comes up, there is a choice as to risk size. So there are 3 layers of probability, randomness or choice so far.

OK, so now you have put your coins (risk) into the slot machine. Everything stops and one token/coin comes out. It is weighted so that “heads” (a winner) comes up a certain percent of the time. The slot machine gives you a specific coin for the pattern that is showing. For a trader this is the same as back testing. For example, perhaps a small payout (scalp) would have a coin weighted for a higher % of heads (wins). This is a 4th layer of probability, randomness or choice.

At this point it is straight forward. You flip the token or coin and heads you win, tails you lose.

But it’s not that simple. Suppose you design the machine so that any payout just trickles out into the tray below. And the tray is hinged so that when a certain amount of weight is on it… it ‘trips’ and the payout drops out of sight back into the machine. And further, the amount of weight required to trip the tray randomly changes – totally unknowable. So at any point you can lock in the amount of payout you see, but if you do -- that is all you get. A 5th layer of probability, randomness or choice.

Hummm. I have the impression that many professional traders would keep it simple and ignore this last choice.

Most will spend many years wasting their time

J_S

Coin Hopper and Cashbox theft - Although this method might lack the romantasism associated with other gambling cheating methods it is possibly the most effective way of stealing money from the casino. Slot machines and Video Poker Machines mainly use tubular locks which with some practice can be picked with relative ease. What is unique about these locks is that they can be picked and by using a lock decoder a master key can be made without actually opening the machine in question. Once the master key is made the master will usually open a bank of slot machines or video poker machines. Once the cheat can unlock a machine the bill cashbox or the the Coin Hopper can be be emptied by an experience theif in as little as 7 seconds.

 

[SunTrader]

Hate to burst your bubble but ... then video will be shown all over the net of the clown being escorted to the back room. Soon thereafter to the pokey.

 

[J_Smith]

Hate to burst your bubble but ... then video will be shown all over the net of the clown being escorted to the back room. Soon thereafter to the pokey.

It is an analogy, and the key words have been underlined for ease of understanding.

Of course robbing is no way to go thru life, but most allow themselves to be robbed each and every day!

J_S