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How professional Gamblers approach their business
i have come across a very interesting informations on how professional sports bettors approach their business.
unlike us traders a sports bettor risks 11 to make 10. we can do that the same,
but we havent to, there are many ways to increase our payoff ratio (avgwin/
avgloss) to mostly 1,5 or even 2 by scaling out and let one contract run.
the sports bettor cant do this. he "lays" 11 to make 10 and as a professional
he expect to win only 56% of the time!
without moneymanagement you are doomed to fail miserably.
"To do sports betting in a serious way, you must treat it as you would any other business. In sports betting, your inventory is your cash. If you run out of cash, you are out of business. The old saying is that you should not use your rent money to bet with. That is true. But if you're betting for a living it is equally true that you must not use your gambling bankroll to pay the rent. "
its the same to us traders. trading is a business not a bonanza!
"In my case, I average between 1,000 and 1,200 plays per year. Let's call it 1,000. My pain tolerance is a 1% unit. I will bet 1.1% of my bankroll on every bet. That means I will bet 1% of my money 1,000 times...1000% of my bankroll....That's 1000% of my bankroll."
he bets always the same amount of money until his equity has grown by 25%
and then he refigures his betting unit.
"Now if I can win 56% of my plays, I will get a return on investment of nearly 100%. I will win 560 bets and lose 440 bets. I will pay a broker fee to the sportsbook of 44 bets. Therefore, I will win 76 units. (76 times 1% equals 76%). I will win $7.60 for every $100 that I bet. I will explain later how I end up with 100%. "
the average trade is 7,60. it sounds hard to believe to make money with
this system, it has wild equity swings, but with discipline and money-
managment its very possible.
as joe says "trading is a business" , the same says professional sportbettor
"After 19 years, I know the number of plays I have each year. I know what my bet size is. And with 1,000 plays, the standard deviation for my win percentage is 2. So I know I will win between 55% and 57%. Sounds rather dull when I put it that way. And I guess it actually is. Bernard Baruch, the great financier, said he always looked for boring businesses. They were well run, without surprises and he knew what to expect. "
now, my friends think about our wonderful business trading!
we have the possibility to let our winners run, we can cut our losses
short. we have our setups and signals from the chart directly in front of
us and dont have to collect years of statistical data of sporting events.
with sound money management and discipline we have a much better
chance to suceed in trading than in sportsbetting.
thanks to r.j.miller and his website, i dont want to post it here.
That's interesting and makes a good point. It's not so much the "bet" itself, its managing it, and understanding your edge and most likely outcome (winning %)....
Thanks for posting that. Helps give me perspective and points out he risks 1%...so when he has a 7x or 8x losing streak he's not down 50%.
THE RISK OF LOSS IN TRADING FUTURES CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FUTURES TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT.