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Gambling VS Trading
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Gambling VS Trading

  #1 (permalink)
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Gambling VS Trading

I had an interesting conversation with a friend of mine this weekend and thought I would share.

First of all, I have been trading, supporting my family for the past several years. I live comfortably and am happy with my lifestyle. My wife doesn't work and we can do whatever we'd like. My friend who is a long time family friend is a professional craps player and former IBM engineer. He has played craps professionally for over 20 years.

While I was at my dad's this weekend he stopped by and during our conversation he commented how he would never risk his money like I did. This came as a surprise to me knowing what he does for a living.

To keep it short, he basically compared trading as a less than 50/50 proposition and his style of playing craps as a 79/21 proposition.

I know nothing about craps but it did get my thoughts going. In trading, experience is a factor that while you cannot quantify it, certainly does improve your odds better than 50/50.

All I could say to him was that I'm happy with where I'm at but I would have loved to come back with some better reasoning or statistics

Since I know there are smarter people in here than I, I look forward to your thoughts.

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  #2 (permalink)
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mkaminski View Post
I had an interesting conversation with a friend of mine this weekend and thought I would share.

First of all, I have been trading, supporting my family for the past several years. I live comfortably and am happy with my lifestyle. My wife doesn't work and we can do whatever we'd like. My friend who is a long time family friend is a professional craps player and former IBM engineer. He has played craps professionally for over 20 years.

While I was at my dad's this weekend he stopped by and during our conversation he commented how he would never risk his money like I did. This came as a surprise to me knowing what he does for a living.

To keep it short, he basically compared trading as a less than 50/50 proposition and his style of playing craps as a 79/21 proposition.

I know nothing about craps but it did get my thoughts going. In trading, experience is a factor that while you cannot quantify it, certainly does improve your odds better than 50/50.

All I could say to him was that I'm happy with where I'm at but I would have loved to come back with some better reasoning or statistics

Since I know there are smarter people in here than I, I look forward to your thoughts.

you could use whatever numbers you wanted to then i guess.. however big you feel your edge is and it would be just as hard for him to argue.. unless your getting extreme odds on craps, like 100x(offered at very few casinos) which is very close to 50/50 against the house, i dunno where he is getting the 29 extra points from.. unless he is cheating..

im sure there on tons of posts on here about gambling and odds on stuff like that, but there is another forum for pure gambling called http://www.twoplustwo.com/ and also the best place for actual information on gambling http://wizardofodds.com/

dont believe anything you hear and only half of what you see

¯\_(ツ)_/¯

(╯°□°)╯︵ ┻━┻

Last edited by madLyfe; July 9th, 2012 at 09:56 PM.
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  #3 (permalink)
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COULD YOU HELP ME please?



mkaminski View Post
I had an interesting conversation with a friend of mine this weekend and thought I would share.

First of all, I have been trading, supporting my family for the past several years. I live comfortably and am happy with my lifestyle. My wife doesn't work and we can do whatever we'd like. My friend who is a long time family friend is a professional craps player and former IBM engineer. He has played craps professionally for over 20 years.

While I was at my dad's this weekend he stopped by and during our conversation he commented how he would never risk his money like I did. This came as a surprise to me knowing what he does for a living.

To keep it short, he basically compared trading as a less than 50/50 proposition and his style of playing craps as a 79/21 proposition.

I know nothing about craps but it did get my thoughts going. In trading, experience is a factor that while you cannot quantify it, certainly does improve your odds better than 50/50.

All I could say to him was that I'm happy with where I'm at but I would have loved to come back with some better reasoning or statistics

Since I know there are smarter people in here than I, I look forward to your thoughts.

i saw you trade treasury , and i am planning to test live my scalping startegy with zn, i would like your opinion about that and the difference between fills in sim /live
thanks

alejo
here you have some details
https://futures.io/elite-trading-journals/27399-alejo-s-trading-journal-12.html#post370759

La lucha es de igual a igual contra uno mismo
The fight is fair against oneself
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  #4 (permalink)
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It's all semantics

In my neck of the woods, people don't invest, trade or gamble. They buy insurance policies.

And if you ask them, they will sneer at you that gambling or investing are too risky, and moreover they do not consider insurance to be risky. Insurance represents a sort of no-risk moral high ground.

Actually, insurance is just another form of manipulating risk, just like gambling or trading. It's a kind of long term slow-motion bet wherein the real risk manifests as being eaten alive by inflation.


Last edited by suko; November 24th, 2013 at 10:36 PM. Reason: typop
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  #5 (permalink)
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alejo View Post
i saw you trade treasury , and i am planning to test live my scalping startegy with zn, i would like your opinion about that and the difference between fills in sim /live
thanks

alejo
here you have some details
https://futures.io/elite-trading-journals/27399-alejo-s-trading-journal-12.html#post370759

Alejo,

I must apologize because I just saw this. I accepted your friend request and will take a look at the link and offer my thoughts.

Again, I'm sorry.

Michael

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  #6 (permalink)
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alejo View Post
i saw you trade treasury , and i am planning to test live my scalping startegy with zn, i would like your opinion about that and the difference between fills in sim /live
thanks

alejo
here you have some details
https://futures.io/elite-trading-journals/27399-alejo-s-trading-journal-12.html#post370759

Hi Alejo,

I see you've been working hard at your trading and have received some good feedback from the forum. It looks to me like you're on your way but if there's any way you think I can help, please let me know. I feel bad I didn't see this until now.

It seems you've figured out your success will come from you and not a system outside of you, that's the right path.

Michael

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  #7 (permalink)
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Like the previous poster said I think it boils down to your edge. Personally I wouldn't take a trade if I felt I had a 50/50 chance of taking profit. I have to feel that I have more than 50% and according to my stats it's about 60%... Risk / Reward also comes into it. I won't take a trade unless I feel there is a potential for 3:1 reward:risk. Trading is a lot like poker, you bet bigger when you feel the odds are in your favour and smaller when you feel they might not be. So is trading like gambling? Sure why not. In both you take risk based on your assessment of the odds being in your favour. In both you have to have a statistically proven edge in order to be successful. I'm not sure the question is even very significant though. If trading and gambling are the same or not, what does it matter so long as the participant is comfortable taking risk and profiting from it more than not.

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  #8 (permalink)
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little skeptical

There is no such thing as a professional craps player. It's a myth. Craps is not a skill game. There is nothing one can possibly do on the table legally that would give you an edge over the house at any time. There are only two bets on the entire table that offers even odds. That bet is taking "odds" or laying "odds" on a pass line bet. All casinos limit the amount of money you can wager on an odds bet. The pass line bet that an odds bet is riding on has a house edge. Eventually, the math will run you down and you will lose. Casinos actually prefer you to play for longer periods of time because they know the numbers are skewed in their favor and they will eventually win. If you do keep showing up to a blackjack table or a craps table and winning the casino will simply refuse to take your action. They are not in the business of losing. I think your friend might be pulling your leg.

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  #9 (permalink)
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TheShrike View Post
There is no such thing as a professional craps player. It's a myth. Craps is not a skill game. There is nothing one can possibly do on the table legally that would give you an edge over the house at any time. There are only two bets on the entire table that offers even odds. That bet is taking "odds" or laying "odds" on a pass line bet. All casinos limit the amount of money you can wager on an odds bet. The pass line bet that an odds bet is riding on has a house edge. Eventually, the math will run you down and you will lose. Casinos actually prefer you to play for longer periods of time because they know the numbers are skewed in their favor and they will eventually win. If you do keep showing up to a blackjack table or a craps table and winning the casino will simply refuse to take your action. They are not in the business of losing. I think your friend might be pulling your leg.

Indeed, if @mkaminski 's friend plays craps in a casino, he willingly places his capital at risk in a game where the odds are mathematically or mechanically set against the player by his counter-party, known as the 'house'. The house sets the odds to its own advantage, and, if, by some wrinkle of skill or fate the gambler wins consistently, the house will summarily eject him from the game as a cheat.

That being said, there are many "gamblers" who are "trader-like" because they participate in games where they develop real edges based on skill, or inside knowledge, and they are not booted for winning, i.e, blackjack counters who get away with it, and tournament poker players.

And there are traders, who by lack of their own skill, are really "gamblers" - they are knowingly trading without an identifiable edge. They willingly lose their capital for many reasons - they enjoy the diversion and action of trading, or the society of other traders, or perhaps they have a psychological need to get rid of their money to sate their own personal demons.

Traders risk their capital in bets with other traders in a marketplace. The odds are not foreordained by formula or design—for the most part the trader is in full control of his own destiny, and takes full responsibility for the inevitable losses and misfortunes which he may incur. Speculators pay a 'vig' to the market; in trading friction incurred. However the market, unlike the casino, does not, often, kick him out of the game for winning, though others may attempt to adapt to or adopt his winning strategies, and the game may change over time requiring the trader to develop new strategies for new regimes.

"Gamblers" are willing losers who occasionally win. They risk their capital where the odds are unknown to them and where actual experience has shown to have a negative expectation. Successful traders and "trader-like gamblers" are willing winners that occasionally lose. They risk their capital on propositions where the odds are known to have positive expectation based on theory, empirical testing, or actual trading experience.

Traders occasionally get unlucky, and have losing streaks, but these traders incorporate that risk into the determination of their expectation. Because their approach is reason-based rather than driven by emotion, they usually have disciplined programs for sizing their bets to get the maximum compounded growth of their capital relative to the amount of risk they are willing to incur.

If a trader/player has positive expected value on a trade/bet, then it is not a gamble at all. The house does not gamble. It builds positive expectation into its games. It is a willing winner, although it occasionally loses.


Last edited by tigertrader; January 9th, 2014 at 10:20 PM.
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  #10 (permalink)
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tigertrader View Post
Indeed, if @mkaminski 's friend plays craps in a casino, he willingly places his capital at risk in a game where the odds are mathematically or mechanically set against the player by his counter-party, known as the 'house'. The house sets the odds to its own advantage, and, if, by some wrinkle of skill or fate the gambler wins consistently, the house will summarily eject him from the game as a cheat.

That being said, there are many "gamblers" who are "trader-like" because they participate in games where they develop real edges based on skill, or inside knowledge, and they are not booted for winning, i.e, blackjack counters who get away with it, and tournament poker players.

And there are traders, who by lack of their own skill, are really "gamblers" - they are knowingly trading without an identifiable edge. They willingly lose their capital for many reasons - they enjoy the diversion and action of trading, or the society of other traders, or perhaps they have a psychological need to get rid of their money to sate their own personal demons.

Traders risk their capital in bets with other traders in a marketplace. The odds are not foreordained by formula or design—for the most part the trader is in full control of his own destiny, and takes full responsibility for the inevitable losses and misfortunes which he may incur. Speculators pay a 'vig' to the market; in trading friction incurred. However the market, unlike the casino, does not, often, kick him out of the game for winning, though others may attempt to adapt to or adopt his winning strategies, and the game may change over time requiring the trader to develop new strategies for new regimes.

"Gamblers" are willing losers who occasionally win. They risk their capital where the odds are unknown to them and where actual experience has shown to have a negative expectation. Successful traders and "trader-like gamblers" are willing winners that occasionally lose. They risk their capital on propositions where the odds are known to have positive expectation based on theory, empirical testing, or actual trading experience.

Traders occasionally get unlucky, and have losing streaks, but these traders incorporate that risk into the determination of their expectation. Because their approach is reason-based rather than driven by emotion, they usually have disciplined programs for sizing their bets to get the maximum compounded growth of their capital relative to the amount of risk they are willing to incur.

If a trader/player has positive expected value on a trade/bet, then it is not a gamble at all. The house does not gamble. It builds positive expectation into its games. It is a willing winner, although it occasionally loses.


Hey @tigertrader, in the bolded statement above, do you mean that an edge can be through trading and observing the market alone, not through any indicators or hard rules (through skill as opposed to indicators and signals)? Many successful traders say that having a system, if you will, is essential, and that not having one will not lead to profitability. However I've always wondered if the truly successful do not rely on any system at all, but trade with the ebb and flows of the market based on their "intuition" from many hours/days/weeks/years of following the market.

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