carcanaques

Trading isn't a zero sum game after commission. It's a negative expectancy game. The bookmaker takes a vigorish (5% for online operators, 10% for Vegas sportsbooks) and brokers take a commission. In fact, the odds are better with a bookie, because only the winners (you read that right, it's not the losers) pay the vigorish, but in trading, both sides pay a commission.

The old elitism is better argument. Ever read "When Genius Failed?" I think sports bettors, poker players or garbage collectors can be outstanding traders managing their own capital and make a very handsome living. Not everyone wants to work for GS or has a need to.

But let me be clear. It is a well known fact that 90% of ALL traders lose money and I guess the universe of members here are no different than the norm. A few of them who may be chasing a dream of a trading career and blowing out accounts could have other underlying psychological issues they may not be aware of. So if this posts help anyone who thinks they may have a problem, then it has value and I hope they take action to improve their lives.

The information comes from GA. Don't get me wrong, I'm not saying trading is gambling for everyone, but clearly it is for many people who have the propensity to destroy themselves. I thought the post was helpful and if it doesn't relate to you, terrific, but it may be a wake up call to others who aren't enjoying the success you are. You also sound a bit defensive, and I think you took the message out of context. It's no different than a don't drive and drink ad--if it doesn't apply you ignore it, but if it does, heed the warning and get help before it's too late.

Correct money management is easy to explain. It is almost impossible to adhere to. There have been about as many 'systems' for varying the bet size as there are systems to beat the craps table. None of them work and all of them do harm by giving false expectations. Double-up systems, star betting, the Kelly Criterion, etc. all have the same thing in common. They adversely affect the cash flow and they raise the breakeven percentage that must be acomplished. Any time you vary your bet size by the slightest amount, you increase the breakeven percentage of 52.38. If you refigure your percentage after each bet, your breakeven jumps to over 55%. If you have 1 star and 5 star bets or bet twice as much on some plays, you should understand that only the large bets are meaningful to whether you will be a winner. You might as well not bet the smaller ones. In the end, they won't matter. Some touts say you should increase your bet when you are on a winning streak and decrease it when you are on a losing streak. The key word is 'are'. If you won yesterday, you 'were' on a winning streak. But that was yesterday. If you know you will win today, why not bet it all? If you know you will lose today, you might consider not betting at all. The problem with bet size is not the streaks, but the breakeven. If you have a 56% advantage on each bet, over 200 games you will win less than 50% about 17% of the time.You will win more than 60% about 17% of the time. Winning 100 and losing 100 with a 5% unit, you will lose 50% of your bankroll to the vigorish. (100 wins times $50 less 100 losses times $55 equals minus $500 on a $1,000 bankroll).You will lower your bet and never get even. I recommend playing no more than 2% of your bankroll. Anything over 2% is unacceptably risky, even for recreational bettors. The reality is that each person may be trying to accomplish something different. If your goal is to afford entertainment and not go broke, that is entirely different than my goal of making a living. If you bet $100 a game on Monday night football to enjoy the game, it will cost you $5 a week if you can go 50-50. There is nothing wrong with that. It's cheaper than a movie. But that is entertainment expense, not an excellent investment vehicle. 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. The amazing thing about sports betting is the return on investment (ROI) that is possible. And there is no magic. The return on investment is a function of the winning percentage and the amount that is invested. The amount invested is a function of how many games (investments) are bet and how much is bet on each game. It is the same as any business. How many widgets did you sell and how much did you gross per widget. In my case, I averaged 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. And again, I will bet 1000% of my bankroll. The same money 10 times in a year. That is why such a return is possible. 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%. A word here on that $7.60. I've seen many people try to make a living playing sports. Some of them think they can bet $100 a game and do it. Well, think about it. If they play 20 games a week, they will bet $2,000 and, if they are good, make $7.60 times 20=$152. At $200 a game, they can expect $308. That's pretty hard to live on. I think the minimum that must be bet is $500. That's only $760 a week and leaves no room for a bad streak. To bet $500 at 1%, you need $50,000. Like any business, you should continue to invest some of the profits to grow the business. As soon as you can draw from the business, you should put yourself on a salary. That way you can know what to expect for an income and won't be bothered by the short term vagaries of Lady Luck. You just need to know the number of bets, the amount per bet, and the win percentage, and you will know what to pay the IRS next year. 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. I know what to expect. With a 56% expectation, your bankroll would reach a new high only 5% of the time. Nineteen out of 20 days you will be below your bankroll high. The novice thinks you should have more money each day. I also know that with a 56% win rate and 100 bets a month, I will lose money every 9th month. Good money management is aided by knowing what to expect. As a final note on bet size, I should add that I used a plateau system. I bet 1% of my bank and continue to flat bet until my bank grows by at least 25%. Then I recalculate the 1%. Thus if I started with $10,000, I would bet $100 a game until my bank grows to at least $12,500. At that point, I would refigure my unit to $125. It would stay there until I reached at least $15,625. That way my actual risk reward ratio doesn't get too high. The other thing that I do that is unique and rather arguable is that I never lowered my bet. Remember, if you vary the bet, your breakeven goes up. At a 1% unit and 19 year's experience, I'm comfortable that I can ride through a losing streak. If you lose 10 games at $200 a bet and lower the bet to $180, you must win 12.2 bets to get back to even. That is how I got my 100% annual ROI. My actual bet went up during the year as my bankroll reached higher plateaus.

After reading the sister thread to this "Good poker players make good traders?" I thought this make spark some dialogue. I am a professional sports bettor turned trader. The transition was not easy, or at least as easy as I originally thought. There are many similarities and many differences among each activity as you can imagine. In this thread I will focus on the key aspects of sports betting and let the more experienced traders add to the discussion with analogies, differences and other tid bits that may be helpful to aspiring and seasoned traders or those of you who are seriously considering a career in sports betting.

Gamblers Anonymous offers the following questions to anyone who may have a gambling problem. These questions are provided to help the individual decide if he or she is a compulsive gambler and wants to stop gambling. Substitute the words trading or trade for gambling or gamble. Did you ever lose time from work or school due to gambling? Has gambling ever made your home life unhappy? Did gambling affect your reputation? Have you ever felt remorse after gambling? Did you ever gamble to get money with which to pay debts or otherwise solve financial difficulties? Did gambling cause a decrease in your ambition or efficiency? After losing did you feel you must return as soon as possible and win back your losses? After a win did you have a strong urge to return and win more? Did you often gamble until your last dollar was gone? Did you ever borrow to finance your gambling? Have you ever sold anything to finance gambling? Were you reluctant to use "gambling money" for normal expenditures? Did gambling make you careless of the welfare of yourself or your family? Did you ever gamble longer than you had planned? Have you ever gambled to escape worry or trouble? Have you ever committed, or considered committing, an illegal act to finance gambling? Did gambling cause you to have difficulty in sleeping? Do arguments, disappointments or frustrations create within you an urge to gamble? Did you ever have an urge to celebrate any good fortune by a few hours of gambling? Have you ever considered self destruction or suicide as a result of your gambling? Most compulsive gamblers will answer yes to at least seven of these questions.

Search Google. You should find quite a few.

I don't know any of the people here personally and I doubt anyone else does either, so stepping up isn't a big deal. And besides, trading is ALL ABOUT MAKING MONEY. That's how we measure our success. We don't have to ask our neighbors how much money they make if we see a Ferrari sitting in the driveway of their macmansion on a lake next to a country club. We know they got it, but here we know nothing. The question is only directed to professionals, not novices. I know a handful of pros who make mid six figures in their bathrobes at home, not prop shops. And they all trade size, not nickels and dimes. Starting out undercapitalized with the hope of turning $10K into $100K+ in a highly leveraged instrument like futures is a very low probability trade. The odds are great the account will dissapear.

True. But a six figure income is a good line in the sand. All of the professional traders I know don't earn less than that year in and year out. I'm really interested in hearing from those who are at that level. Then, I can read their posts here and hopefully gain some knowledge of what seperates them from the others. My impression is the traders here are an honest bunch and don't engage in self delusion.

Are any of you earning at least $100K and making a living solely from trading?

I'm not mad. Maybe insane, but not mad.

Uh.....no. :doh:

He did and his last name was Cousteau, not Carcanaques. Jacques in France is like Bill in USA. Extremely common.

James, would you please change the stats section entitled "Luckiest People" to "Most Skilled People" on the casino thread? Thank you. By the way, when are the cash prizes going to be paid?

How many decks are in the BJ game and are the cards reshuffled after each hand? Any chance of getting a craps and bacarat game?

I mean to say I think you are confusing Carcanaques with Cousteau. But you're right, he did great work.

I love pot. Makes me horny and sexy and that's why I wouldn't dream of getting high to trade. The best smoke I ever found was in Amsterdam. A small cafe with opiated moroccan hashish. Sticky and rolled in small pellets like peas. I bought a bag of it and stayed in my hotel for a week with a beautiful woman and room service.

You mean Cousteau?

Fell free to join me :martini: