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Gambling (with life)


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Gambling (with life)

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  #1 (permalink)
Site Administrator &
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Manta, Ecuador
 
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Guys,

I was watching something on TV that made me think of starting this discussion thread.

I think that in our path as traders, there are some (maybe many if we are being honest) that are more gamblers than traders.

And that's fine. Usually. But, not always.

I think that if it's viewed as a hobby, and money spent on your trading is being spent in a responsible way that doesn't jeopardize yourself or your family, then basically it's all in good fun at the end of the day -- and probably, a lot of people fall into this category.

Then there are those of us who are professionals and treat it like a business. For the purpose of this thread, we aren't taking about this category.

But... Then there are some who are literally gambling with their life. Their savings. Their families. Their kids college funds. They are maybe taking on debt. Maybe they are hiding this from their family. In fact, maybe they are hiding this from themselves.

We are a community. A special community. Almost family! It's a safe place where we can be honest. I'm worried that there are a lot of people here that truly have a problem, and they need help. For their sake, for their families, for their future -- for their lives.

I hope that you will open up and share here in this thread. Lean on the community, talk about your struggle. Maybe come clean and admit there is a problem.

There is also another related thread I encourage you to read called Support of wife and family. Sorry I'm on my phone and can't link it easily.

Best to all you guys.

Mike

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  #2 (permalink)
vancouver, canada
 
 
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Thank you Mike. People need to hear that though not easy to hear. Please keep saying what everyone is thinking. Avoidance never works.

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  #3 (permalink)
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Big Mike View Post
There is also another related thread I encourage you to read called Support of wife and family. Sorry I'm on my phone and can't link it easily.

Best to all you guys.

Mike

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https://futures.io/psychology-money-management/3296-support-wife-kids-loved-ones-your-trading.html

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  #4 (permalink)
McAllen, TX
 
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I like following the markets, I feel there is opportunity in them. But one thing I don't like is spending my time in front of a computer screen all day. So I have had to adjust how i trade the markets.


Anyhow when I had real money I didn't put in my brokerage account because I knew it wouldn't end well. The most I have deposited in a trading account is 800 dollars in an AMP brokerage account. And took a series of losses and stopped trading.

But I still consider myself an aspiring trader. And have been doing combines mainly to become consistent winner. Every time I do a combine I learn a lot from it. And my trading has changed a lot. Now I am content with 1 - 3 trades a day. And in fact when I sit down to trade manually is when I can sabotage my profit.

I don't consider myself addicted to trading, because I genuinely enjoy it. For me school and work come first, then trading.
One day when I have a good job and have extra funds I will most likely trade my own account conservatively. And perhaps move onto stocks instead of futures. but who knows.

I just want to say that its possible to be profitable big mike has shown it other traders here have shown it. But you have to let the market come to you at your price in your terms. Those who are chasing profits are chasing a carrot and its not going to end well.

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  #5 (permalink)
NSW, Australia
 
Experience: Intermediate
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My systematic trading is EOD, very business like, and after many years I have removed the 'me' from the equation and results are reflecting this. Some systems are automated, while others are manually entered which I place without question. I have removed an earlier problem I had with second guessing the market around position entry.

But my problem is I enjoy day trading after a day at work. I love being in tune with the market and making profits with the volatility of breakouts. But, in reality I really suck at it and at best am not much above break even. The Gambling part is increasing these discretionary daytrade positions to win back losses which I have done a few times. If I continue this will bite me big one day. Age is starting to work against me so to achieve life goals I need to stick to the plan. My difficulty is totally removing this discretionary trading. Putting this now in writing I am hoping is the first step to remove this form of gambling - that is now part of the plan.

Thanks for the post Big Mike.

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  #6 (permalink)
New York, NY, USA
 
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Shades View Post
The Gambling part is increasing these discretionary daytrade positions to win back losses which I have done a few times. If I continue this will bite me big one day. Age is starting to work against me so to achieve life goals I need to stick to the plan. My difficulty is totally removing this discretionary trading. Putting this now in writing I am hoping is the first step to remove this form of gambling - that is now part of the plan.

This is all good and partially applicable to me, including age (56).

Statistics and Probabilities will take their pound of flesh from your account if you trade too large. For position sizing the Kelly Criterion is your friend: https://en.wikipedia.org/wiki/Kelly_criterion - learn this and you'll know how large you can trade.

For me the MES and MNQ have been important tools to advance as a trader. The notional values of a single MES or MNQ contract are plenty large to learn how to trade. Per FT71 and others, get consistent with small size and try to gradually increase your size.

That said, I'll still take an ES trade when there's a good R setup, but I won't leave the screen until that trade is closed, and I only trade ES with the best scalp setups. ~3380 x $50 = $169k notional. That's a very large position for most of us.

Finally, don't neglect being long some good stocks, ETFs, or mutual funds. Some of my largest gains from a single trade were from buying $10k - $20k sized positions of MSFT, AAPL, etc and doing nothing for months or years. Short term discretionary trading can provide realized capital gains to be invested in other long-term assets or to more quickly pay down a mortgage. Many brokers allow you to trade for zero commission, so you might periodically add another couple of shares to your favorite stock holdings from your short-term trading profits.

Finally, the time spent doing the short-term trading needs to be weighed against other income-earning activities you might choose to do. I have a nagging feeling in the back of my mind that short-term trading is not my highest calling, but the leverage if you consistently trade well is higher than almost anything else most of us might do.

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  #7 (permalink)
Pensacola FL
 
 
Posts: 57 since Jun 2016

Mike and all,

I don't know how many of you ran or worked for one of the largest hedge funds on the planet.

I have made millions of dollars (over and over).

Without the gamblers I would be driving a truck.

Most of you will hate me for this:

In the business, we LOVED GAMBLERS. Think of me as Steve Wynn, except I can do this from home and don't need to spend $300 Million on a big building and hire pretty waitresses to get you guys oiled up so you can dump all your money into my bank account.

Steve sells $29.00 books on how to beat the dealer.

Larry Williams (I know Larry well) recognized this very early and wrote "How I made $1 Million dollar trading commodities last Year"

Richard Dennis started the Turtles, hiring only gamblers by the way.

I love people who think they can come into a chat room and pick up the holy grail for free.

They have an addiction.

When I was seriously trading, thousands of contracts, millions of shares each day, DO YOU THINK I HAD ALL DAY TO POST CRAP ON WEB SITES TO HELP LITTLE TRADERS TRADING THEIR KIDS COLLEGE fund.

I never posted anything. Didn't have time.

At night, we flew out big time clients from the NY heliport to my home in East Hampton. No time to help the little guy.

I am 70 now. For fun I trade maybe 5 to 10 contracts, and I have some time to post stuff. Still I don't post thousands of times.

Anyone posting thousands of times IS A SHILL working for some idiot trying to TEACH YOU HOW TO BE SUCCESSFUL and he will only charge you $50.00

WHY $50?

Because little people can only afford that.

There are whales out there, fund managers with fiduciary responsibilities who will pay you $30,000 per month if you are good.

And here is another stupid response I get. But the super duper trader LOVES PEOPLE SO HE WANTS TO HAVE A TRADING ROOM AND SHARE WITH ALL beause he is gregarious.

BS

I am gregarious.

I can spend time talking to a whole bunch of fun people. WHO ARE PAYING ME $30,000 per month.

Then if the above response is so good and truthful: "I am rich and want to share my secrets for $50.00 per month because I love people, WHY NOT DO IT FOR FREE?"

I get calls all the time to testify at CFTC and FINRA and SEC enforcement actions. So I know about all these rip off slobs.

They should get the death penalty.

At least John Gotti let you know that he was a mobster.

TB

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  #8 (permalink)
Budapest
 
 
Posts: 1 since Jul 2019
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This is my first post here. Thanks for this, nice topic. Also the family support topic.
I guess many new trader are hidden. Cause they have losses during the searching their way.
And many of them have no support, or worst: BAD support. Many trader gives suggestion without any real or deep knowledge.
I learned what is leverage on my first Short Strangle (suggested by teacher) on /CL same time when optionsellers went bankrupcy. But I was faster and just went with delta 5. In the first minutes of this jump, this 96% OTM put/call had 600 USD loss due vola peak, and VIX rockets.
My last 4 years in trading world (Forex, Stocks, Day and Swing, Technical analisys, small fundamental, Options, Options on futures, combined tactics up tu 20 legs. I am over 40 paid full course)
realized:
- only few real trader are teacher, many teacher have no real positive income, and CANT show a positive ballance to you
- markets priced well, and you have maybe a small edge
- many theory dont talk about Commissions, Slippage, Bid/Ask spread, Routing, and additional costs. Taxing.
- many people dont know what happens if sometimes go wrong. (lets say, prices are running so fast you cant quit, cause the other side of trade book went to home )
- Trade small trade often is partially a lie
- Too complicated or frequent trade needs your time and whole life
- Simple trades also needs your time and life. IT is a JOB.
- Most of the traders loosing. maybe 80-90%. To be in the winner 10%, you have to better than other 90%.
- There is no ultimate strategies. Every strategies have their comfortable market. It it changes, you have too.
- Without family support is much harder
- Starting with few thousands.. ..you are undercapitalised in most cases.

Thats all. Now if somebody comes with a new animal name of option spread, I can react, Where is the risk offsetted via prices, greeks, and secondary greeks etc. RISK is always there, and waiting for you.

I feel I am still on very the beginnig of this road. I Have work, family, life.

Best, Raf

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  #9 (permalink)
Columbus
 
 
Posts: 14 since Mar 2017
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Here is a bit of honesty:

The entire business is built upon larger players taking money from the smaller ones. You would be stunned what I am told as an analyst for several larger sites.

If you need proof: Explain the 'need' for micro futures. It's about getting more money out of the hands of dreamers.

Cheers....

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  #10 (permalink)
Chicago IL
 
 
Posts: 2 since Dec 2018
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I lost a lot of money at first. If my wife knew the extent of the losses she would have killed me. $50k. I stopped. Now I trade as a hobby cuz I really enjoy it. Some years Iím up $5k; other years Iím down $5k. Trading has transformed my life. In spite of the initial losses, itís made me look in the mirror and look at the things Iíve been sweeping under the rug. In response, I uprooted my family, lowered our overheard, cut unnecessary spending, streamlined my business; basically overhauled my life. In part, my initial interest into trading was because I was looking for an escape and refused to face my problems straight on. I still fall back into -ď thereís got to be a get rich scheme there for me - I deserve it! Iím meĒ So dumb. You have to work hard and work smart in this life. I still aim to make consistent money at this, but itís a long marathon of learning. Itís not a sprint to big money and riches.

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  #11 (permalink)
New York + New York / USA
 
 
Posts: 76 since Jan 2020
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I think the distinction you want to really make are
the traders/investors who are aware and so are serious like business
then you have the AWARE gamblers, those who are, as you say, just enjoying a casino with much better payoff odds

but what is really "gambling with your life" is the people who fancy themselves traders or investors
and who take outsized risks and do FOMO and on and on..

most of these are spurred on by lucky gamblers...
in a pool of 100 people who risk too much, and do this, a few will actually succeed..
they will claim its their skill... (and if they dont get serious or start earning money making up some course you pay for, they will blow their accounts and eventually fall back to anonymity)...

these are akin to gambling addicts..

once in a while my wife and i will go to a casino..
i am blessed with a wife who is like me... ie. hate losing, like winning, define losing as less money than you came

i tend to win at the roulette table... but i call it losing slowly..
why? because i put my chips on the crosses.. and with a 5 dollar table and an 8 dollar pay out
i can put down 6 crosses, and 1 on a number... that gives me 25 numbers covered..
but i am not making much... if i make... i am also losing slowly if i lose
but i get way more in comps till they figure out that i am not like other "gamblers"
[been sent a cooler... was accused of stealing a 10k chip (to phase me), even clothing looked at. etc]

but i pointed out a true gambler to my wife..
a woman came down, and was placing small stacks of chips on lots of numbers..
i said to my wife, count the chips... she put down so many that even if she wins one of the numbers
the winning would not cover her losses.. she was playing to FEEL the win, not really have a win

i once met a man who bragged to me in the steam room how he made 50k the night before
he hated me the minute i asked: How much did you take home?
he gave it all back... in his mind, he won.. in my mind, he lost...

i think i will leave it at that..
as that should generate a lot of discussion.
the gambler tends to feel the win, even if they are losing
they also do things like take revenge positions... ie, go in and try to get it back

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  #12 (permalink)
Tel-Aviv Israel
 
Experience: Advanced
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If you gamble in trading - you have no method/trading model with high probability winning #. You will lose and the unknown is just how fast your account will show balance 0.

If you gamble in the casino you will loss since the house got the edge. Every game you play your odds are lower than the house.

If you want to be a trader, learn the profession, have and edge, method/system that shows high winning probability. Above all have the mental capacity for this kind of work.

If you do not have it, keep your day job.

Simple.

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  #13 (permalink)
San Francisco CA USA
 
 
Posts: 40 since Jan 2020
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DoubleUCapital View Post
If you gamble in trading - you have no method/trading model with high probability winning #. You will lose and the unknown is just how fast your account will show balance 0.

If you gamble in the casino you will loss since the house got the edge. Every game you play your odds are lower than the house.

Simple.

In blackjack players have the edge over the casino if they play the right system. That's why casinos are always keeping an eye out for these people and kicking them out.

The point is, if you're going to gamble, whether be in the casino for the stock market, gamble smart. Use the right system whatever you're doing and over the long term you'll have positive results.

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  #14 (permalink)
Nottingham, United Kingdom
 
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TheBenefactor View Post
Mike and all,

I don't know how many of you ran or worked for one of the largest hedge funds on the planet.

I have made millions of dollars (over and over).

Without the gamblers I would be driving a truck.

Most of you will hate me for this:

In the business, we LOVED GAMBLERS. Think of me as Steve Wynn, except I can do this from home and don't need to spend $300 Million on a big building and hire pretty waitresses to get you guys oiled up so you can dump all your money into my bank account.

Steve sells $29.00 books on how to beat the dealer.

Larry Williams (I know Larry well) recognized this very early and wrote "How I made $1 Million dollar trading commodities last Year"

Richard Dennis started the Turtles, hiring only gamblers by the way.

I love people who think they can come into a chat room and pick up the holy grail for free.

They have an addiction.

When I was seriously trading, thousands of contracts, millions of shares each day, DO YOU THINK I HAD ALL DAY TO POST CRAP ON WEB SITES TO HELP LITTLE TRADERS TRADING THEIR KIDS COLLEGE fund.

I never posted anything. Didn't have time.

At night, we flew out big time clients from the NY heliport to my home in East Hampton. No time to help the little guy.

I am 70 now. For fun I trade maybe 5 to 10 contracts, and I have some time to post stuff. Still I don't post thousands of times.

Anyone posting thousands of times IS A SHILL working for some idiot trying to TEACH YOU HOW TO BE SUCCESSFUL and he will only charge you $50.00

WHY $50?

Because little people can only afford that.

There are whales out there, fund managers with fiduciary responsibilities who will pay you $30,000 per month if you are good.

And here is another stupid response I get. But the super duper trader LOVES PEOPLE SO HE WANTS TO HAVE A TRADING ROOM AND SHARE WITH ALL beause he is gregarious.

BS

I am gregarious.

I can spend time talking to a whole bunch of fun people. WHO ARE PAYING ME $30,000 per month.

Then if the above response is so good and truthful: "I am rich and want to share my secrets for $50.00 per month because I love people, WHY NOT DO IT FOR FREE?"

I get calls all the time to testify at CFTC and FINRA and SEC enforcement actions. So I know about all these rip off slobs.

They should get the death penalty.

At least John Gotti let you know that he was a mobster.

TB

Love your Candid honesty about how the sytem REALLY works!

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  #15 (permalink)
Richardson
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Emini ES
 
Posts: 4 since Jan 2020
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I can so relate to this thread. I'm one of the little hopeful guys trying to figure trading out. I've read Al Brooks (I respect him a lot), watched Mack's Youtube's for years and I keep searching for the right method for me. I got laid off 6 months ago so I have had a lot screen time lately. But the unemployed doesn't need to give up money and I have. Not given up the farm, but I have paid some trading "tuition" to learn what does not work. I will probably just have to get a real job again. Been applying. I'm not sure how anyone really learns to daytrade unless already financially free, unless you work at night, but that won't work for me. And you can't cheat on your employer and trade during work hours. Not ethical.

And then there are all the emails I get from Ninjacators promising me they have discovered the next miracle solution for trading and getting rich. Really? I'm watching Market Depth Orderflow today and see that prices knife through "support" and "resistance" at will. But I can be a sucker for these things. True confession. Anyone making money with the Volume Spread Scalper they pushed a few weeks ago? I bought it. Made a few bucks with micro contracts, but only because I scaled in to trades. A bit scared to really trust it. Just one of many ideas I've tried.

I've even been in Al's trading room, which is great education, but most of the time the market is in a "limit order market phase" and he can't call those trades out complete with entry, stop, and exit, and still run the trading room. He does give good advice and things to consider, but no short cuts to profits. Each person must do their own hunting.

My problem is my time is running out. I wanted to prove I could trade by making some money so I wouldn't need to get another job. That is not a good recipe for starting out.

Ok I vented pretty well for my first post. Sorry, but this thread really hit home for me.

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  #16 (permalink)
Lake Worth Florida USA
 
Experience: Advanced
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Medboy View Post
I can so relate to this thread. I'm one of the little hopeful guys trying to figure trading out. I've read Al Brooks (I respect him a lot), watched Mack's Youtube's for years and I keep searching for the right method for me. I got laid off 6 months ago so I have had a lot screen time lately. But the unemployed doesn't need to give up money and I have. Not given up the farm, but I have paid some trading "tuition" to learn what does not work. I will probably just have to get a real job again. Been applying. I'm not sure how anyone really learns to daytrade unless already financially free, unless you work at night, but that won't work for me. And you can't cheat on your employer and trade during work hours. Not ethical.

And then there are all the emails I get from Ninjacators promising me they have discovered the next miracle solution for trading and getting rich. Really? I'm watching Market Depth Orderflow today and see that prices knife through "support" and "resistance" at will. But I can be a sucker for these things. True confession. Anyone making money with the Volume Spread Scalper they pushed a few weeks ago? I bought it. Made a few bucks with micro contracts, but only because I scaled in to trades. A bit scared to really trust it. Just one of many ideas I've tried.

I've even been in Al's trading room, which is great education, but most of the time the market is in a "limit order market phase" and he can't call those trades out complete with entry, stop, and exit, and still run the trading room. He does give good advice and things to consider, but no short cuts to profits. Each person must do their own hunting.

My problem is my time is running out. I wanted to prove I could trade by making some money so I wouldn't need to get another job. That is not a good recipe for starting out.

Ok I vented pretty well for my first post. Sorry, but this thread really hit home for me.


Nice post and honesty. Your situation actually reminded me of a time when I was starting to turn the corner on trading and and I asked the group/chat room I belonged to if it made sense to quit my job and take a year off to really see if I could make this thing work. Most in the group who said they tried that basically told me that made things worse. If you arenít ready it just leads to more pressure, over trading, etc. For some, having more time is obviously a great solution but maybe not for others, especially if you arenít in a focused environment, with a real edge, with good habits and discipline already established. Are you going to stop trading at 9:46 because you hit your limit down for the day? Or will you sit at the computer all day because you have nothing else to do and are looking to get back to even and make the pain go away. Most of us know how that turns out. Of course if your day job takes place during market hours like most peopleís does, that doesnít work too well either. I guess thats what makes this whole deal so challenging.

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  #17 (permalink)
Tel-Aviv Israel
 
Experience: Advanced
Platform: NT
Trading: ES
 
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ChrisDouthit View Post
In blackjack players have the edge over the casino if they play the right system. That's why casinos are always keeping an eye out for these people and kicking them out.

The point is, if you're going to gamble, whether be in the casino for the stock market, gamble smart. Use the right system whatever you're doing and over the long term you'll have positive results.

When you have an edge (statistical advantage) it is not gambling. That what you need at trading. You do not have it at any game at the casino, not even blackjack as the rules prohibit counting and they added more cards to the block. (no edge)

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  #18 (permalink)
Richardson
 
Experience: Intermediate
Platform: NinjaTrader
Trading: Emini ES
 
Posts: 4 since Jan 2020
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I appreciate your perspective. Yeah, I stay at the computer and try to make back my losses when I'm behind. Doesn't work often enough. If I haven't done well by 1:30pm CST, it won't probably end well for the day. I may need to research markets I can trade in evening hours or use longer time frames when I get a day job again.

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  #19 (permalink)
Tel-Aviv Israel
 
Experience: Advanced
Platform: NT
Trading: ES
 
Posts: 55 since Dec 2019
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@Medboy,

You said" My problem is my time is running out. I wanted to prove I could trade by making some money so I wouldn't need to get another job. That is not a good recipe for starting out. "

Trading is a profession. it can take years, many thousands of screen hours to identify your edge (if you find one)

You will not say what you said if it was to be a lawyer (they make a lot of money) or accountants or a orthopedic doctor. WHY? because they learn the profession for years before they see the first $ comes in. Why do you think trading is different? Why do you think it easy to learn how to do it and make money? how many successful traders do you know personally? (not the ones you talk to on the internet at a chat room), but real day to day financial traders. Ask them how long did it take them to be a trader - a professional that makes living from trading.

Read my and others posts at the at the thread:

Good luck.

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  #20 (permalink)
Richardson
 
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Good points and thanks for the link. I'll check it out. I have read one of the books by Mark Douglas. He was a good teacher.

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  #21 (permalink)
Legendary Pratik_4Clover
Mumbai, India
 
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When I started out it was due to curiosity, it quickly became something that "I thought I could do on side". And dear god I was wrong.

I don't blame anyone for that, trading teaches you lot about life, about people, about money and most importantly about yourself. I discovered many many things, its akin to traveling places and learning new things.

First few years were great up and downs, the only saving grace was that I kind of started early and as a still student in my post grad course I didn't really have much money to lose to begin with. You heard it right, what saved me was having small pockets and not some ingenuous realizations.

Luckily I also got placed in related activity/organization, though rather complex process, that gave me look into other-side of the trading world, the big shots, many times my jaws were hanging due to shear amount of money I was seeing (digitally), there were numbers that I couldn't even read out in single glance. Later I left that job to pursue my "side" thing as full thing, I had also developed source of passive income for survival. Last 2-3 years have been full time tracking and trading, my current lifestyle allows me to do that.

For this purpose alone I also sidelined activities that are socially deemed most important, like that of building family early, at least in my culture if you are already not married by 30-31 and have decent enough fixed earning and own roof on head then you are considered to be -bad apple-. Even your neighbors dog judges you, completely unrelated people will harass you, give you their opinions "about you", give you looks that are akin to looking at a failure of human being. Whats funny here is that I've masters in Business management on top of having Mechanical engineering degree, I also have bunch of other certified courses under my belt that should've set me on decent path, at least according to them. Now in their eyes I'm just wasting my time, and most of these peoples haven't even went through graduations of their own. You learn here that only certificate that really matters is amount of money that you are collecting, that's the only certificate of success in the eyes of society.

I carry on, with meager profits, with meager trading earning and my humble but comfortable lifestyle. You know what keeps me on? My drive to succeed in something I enjoy doing. I may or may not start a family, I may or may not become billionaire or CEO/MD of some company. But I'm internally happy that I had guts to pursue what I liked, despite all odds, for some weird universal law of return, trading is also slowly but surely improving.

Gambling away life? I dunno, it sure looks like it, I would even say it to be true 100% if goals were still not reachable after almost 5 years (2 as uni student and 3 as responsible adult), but that is not the case, goals are slowly getting achieved.

I dunno who said it first, but there is saying here, "You are truly only wasting your life if you are not enjoying what you are doing"
I agree, its okay even if its gambling, I believe most people that duck it out in this profession have at least this much mental toughness, maybe thought process differs, but they have the same will.

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  #22 (permalink)
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Great conversation to tackle because you are right, most are gamblers.

I started off that way, looking for the easy cash these training people tell you is yours for the taking, and I experienced all of the issues you see in this site and more, up one day down the next.

I decided a long time ago to ďnormalizeĒ this into a foundational business and treat it just like any other services business. After several bumps in the road I started automating, refining and applying continual improvements to a Nasdaq futures trading strategy that I operate on TradeStation. One market, One trade styleÖ. Like so many of the others, my systematic trading product has been designed, engineered and over time has been fine tuned into a slick little tool that takes ďmeĒ out of the equation (as mentioned above). Until we can be honest with ourselves and realize that our emotions will drive us into bankruptcy, you are rightÖ. Gambling.

10 years later I let my system run during the day, re-optimize on the weekends and just stay out of the wayÖ.. But again to be honest, if I am watching the market when my systems enters a trade, even today sometimes I will read the tape or price action and determine that I should interfere and exit or hold a position. I am always WRONG, almost 100% if I left it alone it usually works out.

Until a trader understand his biggest roadblock in this business is themselves and their emotionsÖ you are right, its gambling.

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  #23 (permalink)
Rovigo (ITALY)
 
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I think there is something more to add to this discussion: are you really smart enough to make some money trading?
Some years ago I went to a trading event in Madrid (Spain) and I met a group of non professional traders, all of them were old men that traded through some CFD companies based in Cyprus, most of these companies were complete scammers.
These people did not speak a single word of English and thus had limited access to top-notch trading education.
They were plumbers, barbers and a couple of cooks.... honestly do you think they have enough formal education to understand Expected values, normal probability distribution or stuff like that?

There was also one guy, who had a clear mental deficit. He was clearly not "normal". Of course nobody can tell this person on his face that his intellectual abilities are not made for trading. During the trade fair he opened a couple of trading account with some brokers.

I think that trading is an intellectual activity and since only 1-5% or traders make money, it is fair to assume that those who make money are somewhat smarter than the average, or at least have more formal education in math or finance related material.

How honest can we be about our mental abilities? can we admit to ourselves that we are not smart enough?
What if we were like the guy with a mental deficit, nobody will ever tell us and we could jeopardize ourself and our family.

I suggest a couple of "proxies" to gauge our intellectual abilities:
1) IQ test
2) univeristy/school grades
If you were among the worst students in your class you were probably not smart enough or disciplined enough. What makes you believe that with trading you will be different?

I know this is not politically correct. But we cannot be all in the top 1% of the IQ bell shape.

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  #24 (permalink)
Legendary Pratik_4Clover
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SamJames View Post
I think there is something more to add to this discussion: are you really smart enough to make some money trading?
Some years ago I went to a trading event in Madrid (Spain) and I met a group of non professional traders, all of them were old men that traded through some CFD companies based in Cyprus, most of these companies were complete scammers.
These people did not speak a single word of English and thus had limited access to top-notch trading education.
They were plumbers, barbers and a couple of cooks.... honestly do you think they have enough formal education to understand Expected values, normal probability distribution or stuff like that?

There was also one guy, who had a clear mental deficit. He was clearly not "normal". Of course nobody can tell this person on his face that his intellectual abilities are not made for trading. During the trade fair he opened a couple of trading account with some brokers.

I think that trading is an intellectual activity and since only 1-5% or traders make money, it is fair to assume that those who make money are somewhat smarter than the average, or at least have more formal education in math or finance related material.

How honest can we be about our mental abilities? can we admit to ourselves that we are not smart enough?
What if we were like the guy with a mental deficit, nobody will ever tell us and we could jeopardize ourself and our family.

I suggest a couple of "proxies" to gauge our intellectual abilities:
1) IQ test
2) univeristy/school grades
If you were among the worst students in your class you were probably not smart enough or disciplined enough. What makes you believe that with trading you will be different?

I know this is not politically correct. But we cannot be all in the top 1% of the IQ bell shape.

That's for sure but I would also like to add that its probably more EQ than IQ that matters.

When you get really into trading, you realize that its about doing lot of simple things right than doing lot of complex things right. Usually your lack of control on yourself is whats your undoing.

I know quite a lot of intelligent people, but very few who have developed understanding of their base nature and learned to control themselves. Lot of them trade too, but very few of them manage to be "consistently profitable", guess the overlapping group of people?

Ultimately, if I had to put down one thing that is absolutely most crucial is ability to stay "disciplined", not giving in to greed or fear. With advent of technology lot of people do that with automated trading, and this is why you will see even more people coming into picture, even more people gunning for "easy money making strategies which they can code", often they don't do enough research of their own and fall in the pitfalls, usually these people are quite intelligent, just not with enough EQ.

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  #25 (permalink)
Tel-Aviv Israel
 
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Trading is not gambling but a real business as @Jeff5801 said above.

If you do not have the base (edge, funds, emotional IQ) for this business, YES you gamble.

Retail traders need to deal with 2 major obstacles - competitive advantage= trading edge and the emotional burden. (funds are always available but not replacing the first 2 elements above)
From my experience (Trading for over 12 years. Junior partner at a small hedge fund) and talking with many traders, its too hard to deal with for the long run with out the 3 and therefore many new into this market sadly fail.

High probability winning method and as much automated signal generating/buy/sell placing orders make day to day trading a lot easier. That is our way to deal with our emotions -eliminating the greed/fear/hesitation/over thinking.

If we are able to develop a method high win/loss that shows a positive outcome over hundreds of trade with acceptable DD, the auto trade will make us winners. (see the casino game theory and try to find a casino that closed due to losses generated at the game tables- I never heard of any)

The reason most traders DO NOT go this way is due to lack of trade method to show the + numbers at the end of the day/week/month/year. System that will eliminate the fear/greed and will just follow the original trade parameters at all cost - each one of them - day in day out.

A great input that helped us in our day in day out trading are the points we took from Mark Douglas videos.
They clearly point to us how to move from a trader that plays the Roulette to be the owner of the casino.
The best advice we give to any new trader is to follow Mark's logic and trade only after you archived all part of his phases in creating your trading method. Really free gold.

https://youtu.be/QgaTlTfQnZI

Good luck.

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  #26 (permalink)
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I would agree with DoubleUCapital, at least a little bit. Trading is both a real business and gambling. Gambling of course is not really what you want to be doing if you donít have a system or strategy that puts the probability in your favor. However, gambling can also be a real business. If youíre gambling with the probability of success on your side then gambling is definitely real business. You can buy stock in companies that specialize in gambling, those are real businesses. If your trading, and doing it intelligently, you are gambling and running a real business. If youíre just picking your trades willy-nilly your gambling and being stupid.

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  #27 (permalink)
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When you gamble you HOPE to win.
In the business of trading you do not hope to win. You know your win/lose ratio and you just follow your model to execute the trades. it's a real business.
No business exist on hope.

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  #28 (permalink)
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DoubleUCapital View Post
When you gamble you HOPE to win.
In the business of trading you do not hope to win. You know your win/lose ratio and you just follow your model to execute the trades. it's a real business.
No business exist on hope.

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What about professional poker players make millions of dollars at the game, is that gambling or that something else?

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  #29 (permalink)
Tel-Aviv Israel
 
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You have the answer in your question. PROFESSIONAL.
It's a business. They have win/lose ratio and they do not hope the market will go their way.
Same as professional traders. Not hope but statistical knowledge.

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  #30 (permalink)
Site Moderator
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When "gambling" and "trading" are discussed, there's always an issue of definition. What are you going to regard as just gambling, and what is responsible management of risk?

Or, you could think of it in terms of a spectrum, with good management of risk at one end and just rolling the dice at the other, and then there would be gradations in between.

But remember that the initial intent of the thread was something else, essentially gambling addiction:


Big Mike View Post
I think that if it's viewed as a hobby, and money spent on your trading is being spent in a responsible way that doesn't jeopardize yourself or your family, then basically it's all in good fun at the end of the day -- and probably, a lot of people fall into this category.

Then there are those of us who are professionals and treat it like a business. For the purpose of this thread, we aren't taking about this category.

But... Then there are some who are literally gambling with their life. Their savings. Their families. Their kids college funds. They are maybe taking on debt. Maybe they are hiding this from their family. In fact, maybe they are hiding this from themselves.

...

I hope that you will open up and share here in this thread. Lean on the community, talk about your struggle. Maybe come clean and admit there is a problem.

This is where the issue becomes not just how to trade better, but whether actual gambling behavior has taken over someone's life, and they need help.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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  #31 (permalink)
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Iím not going to argue with anyoneís definition of gambling or trading. However, in my opinion, trading is definitely gambling. You can be good at it, you could make smart decisions, or you can be bad at it and not make well thought out decisions.

The fact is Iíve made some extremely well thought out and researched trades that turn out to go bad for whatever reason. The first one that comes to mind is when I bought stock in Chipotle the day before it was announced someone got sick with from E. coli back in 2015.

Of course, these situations are few and far between, but every trade is a gamble, even for the most educated and professional traders.

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  #32 (permalink)
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Life is a gamble - everyday.

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  #33 (permalink)
washington, D.C.
 
 
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ChrisDouthit View Post
Iím not going to argue with anyoneís definition of gambling or trading. However, in my opinion, trading is definitely gambling. You can be good at it, you could make smart decisions, or you can be bad at it and not make well thought out decisions.

The fact is Iíve made some extremely well thought out and researched trades that turn out to go bad for whatever reason. The first one that comes to mind is when I bought stock in Chipotle the day before it was announced someone got sick with from E. coli back in 2015.

Of course, these situations are few and far between, but every trade is a gamble, even for the most educated and professional traders.

Thatís why one should always have a well defined risk as stop loss.

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  #34 (permalink)
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Big Mike View Post
Guys,

I was watching something on TV that made me think of starting this discussion thread.

I think that in our path as traders, there are some (maybe many if we are being honest) that are more gamblers than traders.

And that's fine. Usually. But, not always.

I think that if it's viewed as a hobby, and money spent on your trading is being spent in a responsible way that doesn't jeopardize yourself or your family, then basically it's all in good fun at the end of the day -- and probably, a lot of people fall into this category.

Then there are those of us who are professionals and treat it like a business. For the purpose of this thread, we aren't taking about this category.

But... Then there are some who are literally gambling with their life. Their savings. Their families. Their kids college funds. They are maybe taking on debt. Maybe they are hiding this from their family. In fact, maybe they are hiding this from themselves.

We are a community. A special community. Almost family! It's a safe place where we can be honest. I'm worried that there are a lot of people here that truly have a problem, and they need help. For their sake, for their families, for their future -- for their lives.

I hope that you will open up and share here in this thread. Lean on the community, talk about your struggle. Maybe come clean and admit there is a problem.

There is also another related thread I encourage you to read called Support of wife and family. Sorry I'm on my phone and can't link it easily.

Best to all you guys.

Mike

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This is a great thread Mike and some very good points.
I have been in the position with a lot at stake and im sure a lot of people have too so im sure this will help out.

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  #35 (permalink)
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SunTrader View Post
Life is a gamble - everyday.

You got that right!

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  #36 (permalink)
Boston Massachusetts
 
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Women are a gamble for men.

Men are a gamble for women.

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  #37 (permalink)
Houston Texas
 
 
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My 14 year old son is always on his phone.
My wife regularly confronts him with his behavior.

Nowadays he says: but dad is always looking at his charts. He is doing the same...

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  #38 (permalink)
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ChrisDouthit View Post
Iím not going to argue with anyoneís definition of gambling or trading. However, in my opinion, trading is definitely gambling. You can be good at it, you could make smart decisions, or you can be bad at it and not make well thought out decisions.

The fact is Iíve made some extremely well thought out and researched trades that turn out to go bad for whatever reason. The first one that comes to mind is when I bought stock in Chipotle the day before it was announced someone got sick with from E. coli back in 2015.

Of course, these situations are few and far between, but every trade is a gamble, even for the most educated and professional traders.

I think you have this view because in everyday life we live and do things our risks tend to be hidden in the normalcy of it all, and we dont have such a clear view of them... we do not see the risk in being a taxi or uber driver the same way we see the rare event in a trade. in fact, if you go to the insurance companies listings and see risk as we believe it vs actual risk.

We often do not see risk to ourselves as much or as easily as we see risk to our wallets once realized
mostly because a bad event in the market is not only something that we watch, but happens fast...

We over-react to intentional actions, and under-react to accidents, abstract events, and natural phenomena.
We over-react to things that offend our morals.
We over-react to immediate threats and under-react to long-term threats.
We under-react to changes that occur slowly and over time.


Quoting 
People exaggerate spectacular but rare risks and downplay common risks. They worry more about earthquakes than they do about slipping on the bathroom floor, even though the latter kills far more people than the former. Similarly, terrorism causes far more anxiety than common street crime, even though the latter claims many more lives. Many people believe that their children are at risk of being given poisoned candy by strangers at Halloween, even though there has been no documented case of this ever happening.

and


Quoting 
People underestimate risks they willingly take and overestimate risks in situations they canít control. When people voluntarily take a risk, they tend to underestimate it. When they have no choice but to take the risk, they tend to overestimate it. Terrorists are scary because they attack arbitrarily, and from nowhere. Commercial airplanes are perceived as riskier than automobiles, because the controls are in someone elseís hands -- even though theyíre much safer per passenger mile. Similarly, people overestimate even more those risks that they canít control but think they, or someone, should. People worry about airplane crashes not because we canít stop them, but because we think as a society we should be capable of stopping them (even if that is not really the case). While we canít really prevent criminals like the two snipers who terrorized the Washington, DC, area in the fall of 2002 from killing, most people think we should be able to.

i leave you with this to think about:


I used to develop software for the insurance industry, and learned this and tons more about real risks and how people behave... the truth about the market is that you have a decent amount of control of the risk, unlike having a car accident... and its THAT control that separates the gamblers (who throw caution to the wind and take on too much risk) and the professionals, who manage their risk constantly

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  #39 (permalink)
Boca Raton, FL
 
 
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Absolutely and I would add traders conflate risk with trading account funds at play once a trade is put on.

Risk is the event of something happening, mostly something negative. Not losing X amount of dollars.

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  #40 (permalink)
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Even professional gamblers have a system and strict money management same as traders or
we will fail without them

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  #41 (permalink)
Market Wizard
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I first started trading after a friend took me to a Forex seminar sponsored by a company called Wizetrade. The product was called Forex made easy. It basically eschewed conventional trading procedures like Candle charts or price action. Instead you entered on a combination of green or red lights and crosses of green and red lines. Did I mention the software cost close to $4000.00? For reasons I still can hardly comprehend, I bought the software and embarked on a "life ruining" journey.
Was I a Gambler? I didn't think so at the time. I never had any interest in gambling in my entire life. Even the couple of times I went to Las Vegas, I never bothered gambling. I always thought it was silly. Nor would I say I had an addictive personality. I was able to drink alcohol moderately and do a few other things without ever having problems. I had always considered myself to be fairly well disciplined as well. I worked out, ate extremely healthy and never missed any obligations. But trading brought out a side to me that I had no idea existed.

When I began, I was in very good financial shape. I had plenty of money in Savings and I owned a nice home free and clear. I had done well investing in Real Estate, but since this was around 2009 and the market had crashed..I got out of Real Estate. I SIM traded for a few months and did great, even with the silly Forex Made Easy program. I found that I was good when there was extreme volatility in the currency pairs. I was totally deluded. I opened up a $50,000.00 account and started trading a sizable number of lots. Looking back, the amount of delusion and stupidity I had almost defies belief. I started having some serious losing days..$5000.00 and up. I found I was totally unable to stop trading when I was down. No max daily loss limit could be adhered to. My heart would pound and my palms would sweat as I would try to double or triple my lot size in order to recoup my losses.

I started keeping a journal and when I'd read what I did, it was like I was seeing a whole different person. I blew out at least three $50,000.00 accounts. My girlfriend begged me to quit. I couldn't. I felt, I had put too much time and money in to give up. I tried automated trading and lost lots of money on that. I finally stopped trading for a few months...

Then I decided to try Futures. That was several years ago. I took many losses at that too, but now I was trading smaller amounts. But those small accounts were also blown out. Why I continued is a total mystery. I am doing fairly well now, but it will be a long time before I ever recoup what I lost. Honestly, all the time, money and anguish this has caused me is probably not worth whatever small success I have now. If I could go back in time, I would never get involved in this. Let's face it...like I wrote a while back..finding actual consistently profitable Retail traders is about as easy as finding Sasquatch.

Failure is not an option
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  #42 (permalink)
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Medboy View Post
I can so relate to this thread. I'm one of the little hopeful guys trying to figure trading out. I've read Al Brooks (I respect him a lot), watched Mack's Youtube's for years and I keep searching for the right method for me. I got laid off 6 months ago so I have had a lot screen time lately. But the unemployed doesn't need to give up money and I have. Not given up the farm, but I have paid some trading "tuition" to learn what does not work. I will probably just have to get a real job again. Been applying. I'm not sure how anyone really learns to daytrade unless already financially free, unless you work at night, but that won't work for me. And you can't cheat on your employer and trade during work hours. Not ethical.

And then there are all the emails I get from Ninjacators promising me they have discovered the next miracle solution for trading and getting rich. Really? I'm watching Market Depth Orderflow today and see that prices knife through "support" and "resistance" at will. But I can be a sucker for these things. True confession. Anyone making money with the Volume Spread Scalper they pushed a few weeks ago? I bought it. Made a few bucks with micro contracts, but only because I scaled in to trades. A bit scared to really trust it. Just one of many ideas I've tried.

I've even been in Al's trading room, which is great education, but most of the time the market is in a "limit order market phase" and he can't call those trades out complete with entry, stop, and exit, and still run the trading room. He does give good advice and things to consider, but no short cuts to profits. Each person must do their own hunting.

My problem is my time is running out. I wanted to prove I could trade by making some money so I wouldn't need to get another job. That is not a good recipe for starting out.

Ok I vented pretty well for my first post. Sorry, but this thread really hit home for me.

Good stuff. I laughed at the NINJACATORS reference because I want to buy a lot of their stuff but have not yet. Wow do they email blast that S*** outta you. All day long. Like that ORDER FLOW gimmick that expires TODAY for only $197. I want it.

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  #43 (permalink)
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lancelottrader View Post
I first started trading after a friend took me to a Forex seminar sponsored by a company called Wizetrade. The product was called Forex made easy. It basically eschewed conventional trading procedures like Candle charts or price action. Instead you entered on a combination of green or red lights and crosses of green and red lines. Did I mention the software cost close to $4000.00? For reasons I still can hardly comprehend, I bought the software and embarked on a "life ruining" journey.
Was I a Gambler? I didn't think so at the time. I never had any interest in gambling in my entire life. Even the couple of times I went to Las Vegas, I never bothered gambling. I always thought it was silly. Nor would I say I had an addictive personality. I was able to drink alcohol moderately and do a few other things without ever having problems. I had always considered myself to be fairly well disciplined as well. I worked out, ate extremely healthy and never missed any obligations. But trading brought out a side to me that I had no idea existed.

When I began, I was in very good financial shape. I had plenty of money in Savings and I owned a nice home free and clear. I had done well investing in Real Estate, but since this was around 2009 and the market had crashed..I got out of Real Estate. I SIM traded for a few months and did great, even with the silly Forex Made Easy program. I found that I was good when there was extreme volatility in the currency pairs. I was totally deluded. I opened up a $50,000.00 account and started trading a sizable number of lots. Looking back, the amount of delusion and stupidity I had almost defies belief. I started having some serious losing days..$5000.00 and up. I found I was totally unable to stop trading when I was down. No max daily loss limit could be adhered to. My heart would pound and my palms would sweat as I would try to double or triple my lot size in order to recoup my losses.

I started keeping a journal and when I'd read what I did, it was like I was seeing a whole different person. I blew out at least three $50,000.00 accounts. My girlfriend begged me to quit. I couldn't. I felt, I had put too much time and money in to give up. I tried automated trading and lost lots of money on that. I finally stopped trading for a few months...

Then I decided to try Futures. That was several years ago. I took many losses at that too, but now I was trading smaller amounts. But those small accounts were also blown out. Why I continued is a total mystery. I am doing fairly well now, but it will be a long time before I ever recoup what I lost. Honestly, all the time, money and anguish this has caused me is probably not worth whatever small success I have now. If I could go back in time, I would never get involved in this. Let's face it...like I wrote a while back..finding actual consistently profitable Retail traders is about as easy as finding Sasquatch.

You may or may not have now realized by now NOT to try to make back the money lost.

Obviously the goal for a struggling trader should always be to make it to profitability long term. And stay there.

But what happened in the past is in the past.

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  #44 (permalink)
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lancelottrader View Post
I first started trading after a friend took me to a Forex seminar sponsored by a company called Wizetrade. The product was called Forex made easy. It basically eschewed conventional trading procedures like Candle charts or price action. Instead you entered on a combination of green or red lights and crosses of green and red lines. Did I mention the software cost close to $4000.00? For reasons I still can hardly comprehend, I bought the software and embarked on a "life ruining" journey.
Was I a Gambler? I didn't think so at the time. I never had any interest in gambling in my entire life. Even the couple of times I went to Las Vegas, I never bothered gambling. I always thought it was silly. Nor would I say I had an addictive personality. I was able to drink alcohol moderately and do a few other things without ever having problems. I had always considered myself to be fairly well disciplined as well. I worked out, ate extremely healthy and never missed any obligations. But trading brought out a side to me that I had no idea existed.

When I began, I was in very good financial shape. I had plenty of money in Savings and I owned a nice home free and clear. I had done well investing in Real Estate, but since this was around 2009 and the market had crashed..I got out of Real Estate. I SIM traded for a few months and did great, even with the silly Forex Made Easy program. I found that I was good when there was extreme volatility in the currency pairs. I was totally deluded. I opened up a $50,000.00 account and started trading a sizable number of lots. Looking back, the amount of delusion and stupidity I had almost defies belief. I started having some serious losing days..$5000.00 and up. I found I was totally unable to stop trading when I was down. No max daily loss limit could be adhered to. My heart would pound and my palms would sweat as I would try to double or triple my lot size in order to recoup my losses.

I started keeping a journal and when I'd read what I did, it was like I was seeing a whole different person. I blew out at least three $50,000.00 accounts. My girlfriend begged me to quit. I couldn't. I felt, I had put too much time and money in to give up. I tried automated trading and lost lots of money on that. I finally stopped trading for a few months...

Then I decided to try Futures. That was several years ago. I took many losses at that too, but now I was trading smaller amounts. But those small accounts were also blown out. Why I continued is a total mystery. I am doing fairly well now, but it will be a long time before I ever recoup what I lost. Honestly, all the time, money and anguish this has caused me is probably not worth whatever small success I have now. If I could go back in time, I would never get involved in this. Let's face it...like I wrote a while back..finding actual consistently profitable Retail traders is about as easy as finding Sasquatch.

Why did you go for options + futures?

It seems to me that most beginners should start with unlevered / retail instruments like stock. Curious what attracted you to futures + options.

(FYI I just re-read "how i trade for a living" by gary smith - highly recommended and zero bs. one thing that I've been picking up from several investors across the spectrum is how they hate leverage.)

I keep on repeating to myself "there is no skill in clicking the button" - aka it takes no more wisdom to trade than not to trade. Also, while developing, it makes zero sense to trade in ES or SPX/ES options - it makes much more sense to trade SPY or something less levered (now - maybe /MES). AKA be product indifferent and size according to your account size.

It takes no different skill to use order entry "1" vs. order entry "10" (except psychologically).

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  #45 (permalink)
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I have not read all of this. I just want to comment on alot of post said ;"your not gambling, you are trading. "
I will point out that all trading including risk management and targets are built on game theory. You ARE gambling. You just trying to be the casino that have the little edge. You will lose alot of times, depending on your approach. The trick is to have checked your edge if it gives you more winnings than you loose. (avg%winxavg win - avg%lossxavg loss gives you your expected win pr every trade from now. If you win your next trade tho is a coin flip. And I really don't know any better way to describe how to gamble than a coin toss!

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  #46 (permalink)
Market Wizard
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smtlaissezfaire View Post
Why did you go for options + futures?

It seems to me that most beginners should start with unlevered / retail instruments like stock. Curious what attracted you to futures + options.

(FYI I just re-read "how i trade for a living" by gary smith - highly recommended and zero bs. one thing that I've been picking up from several investors across the spectrum is how they hate leverage.)

I keep on repeating to myself "there is no skill in clicking the button" - aka it takes no more wisdom to trade than not to trade. Also, while developing, it makes zero sense to trade in ES or SPX/ES options - it makes much more sense to trade SPY or something less levered (now - maybe /MES). AKA be product indifferent and size according to your account size.

It takes no different skill to use order entry "1" vs. order entry "10" (except psychologically).

I never said options..I said I started with Forex and went to Futures.

Failure is not an option
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  #47 (permalink)
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It is a great misnomer that stocks are somehow "safer" than futures.

IMO having traded them both for many years it is exactly the opposite.

At least in so far as considering either "safer".

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  #48 (permalink)
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Interesting. How do you figure that?

For instance, based on notional value + being product indifferent: 2 ATM SPX options = 1 ES future = 10 SPY options = 1000 SPY shares.

So (and this is all assuming you're trading equity indexes + not spreading to reduce risk + before MES was introduced) - how could trading 1 ES be less risky than trading 1 share of SPY?

Also, if you do the math, you'll see you really need a non-trivial account to trade 1000 SPY at brokerages where you can buy an ES contract intraday for < $500 margins.

But yes - I think all things are risky if you don't know what you are doing. Walking down the street can be risky, as can driving an automobile at 120mph. But clearly (aside from certain situations) you'll be more alert when doing one over the other.

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  #49 (permalink)
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What is your response to this situation?

Tom1978 View Post
My 14 year old son is always on his phone.
My wife regularly confronts him with his behavior.

Nowadays he says: but dad is always looking at his charts. He is doing the same...

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smtlaissezfaire View Post
Interesting. How do you figure that?

For instance, based on notional value + being product indifferent: 2 ATM SPX options = 1 ES future = 10 SPY options = 1000 SPY shares.

So (and this is all assuming you're trading equity indexes + not spreading to reduce risk + before MES was introduced) - how could trading 1 ES be less risky than trading 1 share of SPY?

Also, if you do the math, you'll see you really need a non-trivial account to trade 1000 SPY at brokerages where you can buy an ES contract intraday for < $500 margins.

But yes - I think all things are risky if you don't know what you are doing. Walking down the street can be risky, as can driving an automobile at 120mph. But clearly (aside from certain situations) you'll be more alert when doing one over the other.

Your words:

2 ATM SPX options = 1 ES future = 10 SPY options = 1000 SPY shares.

and

how could trading 1 ES be less risky than trading 1 share of SPY?

1 share? Typo I guess?

Anyway I said stocks, not ETF equivalent.

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  #51 (permalink)
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SunTrader View Post
Your words:
1 share? Typo I guess?

No - not a typo. That's the whole point - you can actually scale down where with ES you can't (or couldn't, until the micros). And a stock brokerage house wouldn't let you take the same level of leverage even if you wanted to.

Also - presumably you could trade low beta stocks so it could be even less risky than 1 share of SPY.

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  #52 (permalink)
Market Chamois
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Tom1978 View Post
My 14 year old son is always on his phone.
My wife regularly confronts him with his behavior.

Nowadays he says: but dad is always looking at his charts. He is doing the same...

Just take the phone away. Period. He gets it back once he earns it back. You decide what earning it back looks like.

You and your son are not equal. You can look at charts or a phone in a responsible way. You have a VERY different brain than a 14-year-old. Kids are way too impressionable and need guidance, limits and boundaries. They feel safe if these are firmly in place. They know someone is in charge. But they are going to test these boundaries BIG TIME to see if they are real. To see if their safety is an illusion or not.

PM me if you want to discuss this more. I don't want to hijack this thread but feel it was important I say something.

Ron

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  #53 (permalink)
Boca Raton, FL
 
 
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smtlaissezfaire View Post
No - not a typo. That's the whole point - you can actually scale down where with ES you can't (or couldn't, until the micros). And a stock brokerage house wouldn't let you take the same level of leverage even if you wanted to.

Also - presumably you could trade low beta stocks so it could be even less risky than 1 share of SPY.

Well then you are comparing apples to ... SPY's.

Come on 1 share. Give me a break.

You could do a lot of things. Sure.

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  #54 (permalink)
Market Wizard
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smtlaissezfaire View Post
Interesting. How do you figure that?

For instance, based on notional value + being product indifferent: 2 ATM SPX options = 1 ES future = 10 SPY options = 1000 SPY shares.

So (and this is all assuming you're trading equity indexes + not spreading to reduce risk + before MES was introduced) - how could trading 1 ES be less risky than trading 1 share of SPY?

Also, if you do the math, you'll see you really need a non-trivial account to trade 1000 SPY at brokerages where you can buy an ES contract intraday for < $500 margins.

But yes - I think all things are risky if you don't know what you are doing. Walking down the street can be risky, as can driving an automobile at 120mph. But clearly (aside from certain situations) you'll be more alert when doing one over the other.

Also remember, back when I started..you had to at least have $25,000.00 in an account to trade stocks. A lot of people found they would rather open a Forex account for a few hundred dollars when they were beginners. That's the big reason most people didn't start with stocks.

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  #55 (permalink)
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Please adjust your post to be more helpful and less critical. We are about being helpful not simply judging. Share your experience in a positive way.

Just explain in a helpful and useful way why you believe trading less than 100 shares at a time doesn't make sense or is unrealistic or whatever your position is exactly.

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Mike
SunTrader View Post
Well then you are comparing apples to ... SPY's.

Come on 1 share. Give me a break.

You could do a lot of things. Sure.

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  #56 (permalink)
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SunTrader View Post
Well then you are comparing apples to ... SPY's.

Come on 1 share. Give me a break.

You could do a lot of things. Sure.

I agree - no one is going to trade with 1 share of SPY. But my point is that trading any money with no edge is dumb - even one share of SPY.

But - then again maybe that gets to the point of this thread. Why do people trade? And why do they gamble? Are they trying to make money or are they using it as a proxy to feel significant?

You can't feel very significant if you are only making only a few bucks on SPY.

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  #57 (permalink)
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Bruce Kovner drove a cab while taking out the $3000 he had on his credit card to deposit into a trading account.

Did he gamble his life?

I think he knew what he is doing. See his net worth today.

In my opinion - and after so many years of trading and dealing with many traders - If you know your statistical outcome and the probability is positive, its a start of a businesses, not gambling/HOPE it will work out for you.

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no drama Llama
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DoubleUCapital View Post
Bruce Kovner drove a cab while taking out the $3000 he had on his credit card to deposit into a trading account.

Did he gamble his life?

I think he knew what he is doing. See his net worth today.

In my opinion - and after so many years of trading and dealing with many traders - If you know your statistical outcome and the probability is positive, its a start of a businesses, not gambling/HOPE it will work out for you.

You make it sound like he knew exactly what he was doing and no luck or hope was involved. You are completely disregarding the random/luck variable. Out of the millions of people who have no doubt tried the exact same thing but failed, odds are that someone in that number will have the personal characteristics that are required to trade succesfully. It was still a gamble for him. Statistics and probabilities dont tell you what will happen next even if you have a 60% chance of an event occuring, you still only have 50/50 odds going forward.

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  #59 (permalink)
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Grantx View Post
You make it sound like he knew exactly what he was doing and no luck or hope was involved. You are completely disregarding the random/luck variable. Out of the millions of people who have no doubt tried the exact same thing but failed, odds are that someone in that number will have the personal characteristics that are required to trade succesfully. It was still a gamble for him. Statistics and probabilities dont tell you what will happen next even if you have a 60% chance of an event occuring, you still only have 50/50 odds going forward.

In my opinion you are totally wrong in your above conclusion.

If you read Kovner bio you may find out he was not LUCKY.
The millions of wanna be traders you talk about did not put in what needed/they did but could not find an edge/were unable to control emotions required to be successful at this line of business.

If your statistics and probability shows + over long term you will be profitable 100% over time (please read a book or two about gaming theory, study statistics/probability, Monte Carlo Method of computing and why casinos are in business in the first place)

Also suggest watching Mark Douglas videos explaining the above and how to do it the right way in layman language.

Good luck or serious study and perfect execution.

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no drama Llama
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DoubleUCapital View Post
(please read a book or two about gaming theory, study statistics/probability, Monte Carlo Method of computing and why casinos are in business in the first place)

Funny you should mention that. I am currently studying BSc (honours) economics and mathematical sciences and two modules away from attempting this years final stat exam.


DoubleUCapital View Post
If your statistics and probability shows + over long term you will be profitable 100% over time

This is just completely wrong. Not going to argue with you though its for you to learn. I am surprised you dont have a disclaimer warning your clients that past results dont gaurantee future results (or something to that effect). Instead you are giving out these 100% gaurantees. You should be careful with that.

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  #61 (permalink)
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Grantx View Post
Funny you should mention that. I am currently studying BSc (honours) economics and mathematical sciences and two modules away from attempting this years final stat exam.



This is just completely wrong. Not going to argue with you though its for you to learn. I am surprised you dont have a disclaimer warning your clients that past results dont gaurantee future results (or something to that effect). Instead you are giving out these 100% gaurantees. You should be careful with that.

We do not have OPM. We trade our own money. Based on 7 years results, I know what I am talking about. We do know what we talk about via Ivy league academic and work at top tier firms. We are VERY happy with what we do with our money trading our account.

Good luck with your study. (If you can get in some computer science it will be very beneficial in the real world)

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  #62 (permalink)
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I've noticed how easily this thread strays off into peoples' views on whether trading is gambling, and on probability, and on how to trade correctly, and definitions of gambling and/or trading, and on risk management (which actually is relevant to it), and anything else that the word "gambling" brings to mind.

Obviously, these are all valid trading topics and people naturally do have their views on them.

But the original post was about traders who may have gotten in over their heads, who have gotten extended beyond their means, or who have other problems that are essentially related to gambling addiction, and it was to provide a way for someone in that situation to find help or advice, or even just acknowledge the situation.

This is not directed to any particular individual, just a reminder of what the topic actually is. In the context of helping, the discussion of risk and its management and its role in trading (as well as just about every other trading topic) is absolutely relevant. But that's the context: helping people who are in a jam or may be heading for one and need a way out.

Bob.

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  #63 (permalink)
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trick1000 View Post
I lost a lot of money at first. If my wife knew the extent of the losses she would have killed me. $50k. I stopped. Now I trade as a hobby cuz I really enjoy it. Some years Iím up $5k; other years Iím down $5k. Trading has transformed my life. In spite of the initial losses, itís made me look in the mirror and look at the things Iíve been sweeping under the rug. In response, I uprooted my family, lowered our overheard, cut unnecessary spending, streamlined my business; basically overhauled my life. In part, my initial interest into trading was because I was looking for an escape and refused to face my problems straight on. I still fall back into -ď thereís got to be a get rich scheme there for me - I deserve it! Iím meĒ So dumb. You have to work hard and work smart in this life. I still aim to make consistent money at this, but itís a long marathon of learning. Itís not a sprint to big money and riches.

I would second this. Trading is rarely profitable for retail traders. However, the lessons it can teach will far outweigh monetary rewards for many, if they are willing to listen to those lessons.

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  #64 (permalink)
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Grantx View Post
Funny you should mention that. I am currently studying BSc (honours) economics and mathematical sciences and two modules away from attempting this years final stat exam.
....

Ever hear the story of LTCM and their many Nobel Laureates?

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  #65 (permalink)
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Been working on my edge...

waiting for python to finish doing a histogram of my 19,954,035 adjusted closing prices
i actually have even more data in another db... with history data going back in some cases to the 1960s
working on some neural nets... not that they are oracles... but they can be good tools...

at least its better than some things people do

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  #66 (permalink)
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SunTrader View Post
Ever hear the story of LTCM and their many Nobel Laureates?

Larry Hillibrand was my personal advisor when building my trading model.
(The best after the fact lesson I learned from him - cut your losses short before its too late - How Genius will NOT FAIL)

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  #67 (permalink)
Brunegg
 
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I can say from myself that I'm the most stupid trader ever. I'm started some years ago but only on demo accounts or 0.01 Lots on ETF's.
Later on I tried with Topsteptrader and blow up more of those combines as you ever could imaging.

So therefore I'm curious about the question if trading is gambling or not. Going to the a casino is gambling but trading is not. I'm loosing nearly 100% and not 50/50 as it would be on a coin flip.

I'm spending many hours in front off my screens and therefore I have less time for my family. Get in bad mood if trading sucks.
Even If I'm not trading a live account it cost me a lot of money, what I can afford. But not the time I missed with my kids.

I don't know why I'm loosing every day but each day I'm starting over I'm very sure I can made it. :-)

For me trading it's the most exiting thing I'm doing.

If you don't have the money don't think you can get it by trading without lots of experience.
In my opinion it has nothing to do with money management, you have to see (maybe also feel) what the market is doing.

BUT please do not gamble with your family and money. Use demo accounts. All of us think they are smarter as others and will make it soon.

Good luck all.

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  #68 (permalink)
New York, NY, USA
 
Experience: Intermediate
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I can relate.

Van Tharp recently stated that if you're looking for excitement it's probably cheaper to just go to a casino and get it over with.

The late, great trading coach and author Mark Douglas wrote several books and taught people how to deal with the inner forces that cause each of us to do self-destructive activities. It's not something you can fix quickly, and perhaps you can never fix yourself permanently, but improvement away from self-destructive behavior, or catching yourself quickly after an impulse trade, and closing the position, is certainly possible.

One's trading technique can be engineered to force you to wait for the best opportunities to setup instead of taking many low-expectation trades. Verniman's trading style does this, and his methodology is full of pauses.

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  #69 (permalink)
Boca Raton, FL
 
 
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Polygon View Post
...

I don't know why I'm loosing every day but each day I'm starting over I'm very sure I can made it. :-)

For me trading it's the most exiting thing I'm doing...

That is your answer right there.

Excitement, not success is what motivates you.

If you want excitement try bungee jumping instead. Trading is serious stuff.

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  #70 (permalink)
Rovigo (ITALY)
 
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SBtrader82's Avatar
 
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The big difference between gambling and trading is that in trading the house always has the edge, and you cannot build and edge that favours you. There have been some cases thoughout history, like blackjack counting etc... but now they are a thing of the past.
In trading you can actually obtain an edge over "the house" (the market in this case), but it's not easy.

I do not compare trading with gambling, in my mind there is a very big difference. However I often go to the casino, since I love playing blackjack, and I realize people do not understand probabilities, they do not apply basic strategy in blackjack, and if you try to explain them, and you tell them that you have a MSc in math and engineering and they do not listen to you..... so I can easily understand that if you cannot play blackjack correctly you will never make it in trading.

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  #71 (permalink)
Bracknell/UK
 
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Gambling, trading, tea leaf reading or whatever you call it doesn't really matter. At the end of the day you either got it or not. It's that simple.

Regards,
Bel.

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  #72 (permalink)
Singapore
 
Experience: None
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The most appropriate saying is this i guess.

"Everyone gets what they want from the markets" By Ed Seykota in the Market Wizards.

So its really the mindset the trader brings into the markets which determines his outcome.

The good news is, to exit the gambling mindset, all it takes is for you to switch your mindset to that of a professional trader and you will stop gambling. Coz that means you will be seeking to improve your skill and have proper risk management. The moment when you decide when you wanna behave more like the professional is when you stop gambling but the motivation must come from you.

Anyway, its possible to gamble with your life with just about anything in your life, not just trading, its really just the mindset that matters.

Lets say you decide to run a grocery store or a 2nd hand mobile phone store, or anything 2nd hand, is it gambling or a business? Notice its really the mindset, if you can run it well and know wheres the market, whats profitable and what has an edge, wont it become a business which allows you to make ends meet?

So its really the mindset that matters, just like the book trading in the zone.

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  #73 (permalink)
Toronto
 
 
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No long ago I watched a great movie about that. Named Intacto. Awesome Italian movie. Highly recommend to watch it

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  #74 (permalink)
Boca Raton, FL
 
 
Posts: 134 since Nov 2018
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Spanish, not Italian.

If I get a chance I'll watch even if I do not believe in such a thing called luck.

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  #75 (permalink)
Toronto
 
 
Posts: 7 since Jun 2020
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Yeah, right, Spanish the film with great premise.

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  #76 (permalink)
Dhaka Bangladesh
 
 
Posts: 50 since Sep 2018
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Its like game of poker. You play your hand and rarely its a split pot. Most of the time its zero sum game where your win will result in opponent's loss. Not everybody is a good poker player. If you are the kind of player who will go all in pre flop with a high pair then there is risk. However if you pick your spot and only bet on right cards you will do ok in the long run. Wall Street even don't play poker. With the help from fed and myriad other mechanisms they will stack the deck in their favor. You can definitely ask if its legal but so far nobody is questioning. I love it while watching a game and someone made a big bet and opponent asks, 'Do you like action?' Its because opponent has suspicion he is beaten but no idea how its going to end up.

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  #77 (permalink)
sacramento ca us
 
Experience: Intermediate
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poker has discipline and strategy like trading

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  #78 (permalink)
Pamplona Spain
 
 
Posts: 9 since Jan 2020

As for gambling in trading, it has its pros and cons. The disadvantages are the apparent lack of self-control, not quite adequate decision-making, and often all this leads to significant losses. But at the same time, the excitement adds interest in trading, making it less annoying and more time-consuming. All traders are, in a way, gamblers, even if they do not want to admit it, but a good trader will learn to control the gambling and will use it to their advantage.

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  #79 (permalink)
Boca Raton, FL
 
 
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Life is a gamble but if some find trading boring ..... stop trading.

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