Which would you rather be…the House or the Gambler?

I think the answer is pretty obvious but just so that you get the idea, last year the U.S. Gaming Industry profited to the tune of about $85 billion.

On the other hand the average gambler loses about $800 in Las Vegas over a four day stay. So, once again which would you rather be?

The attraction to the gambler is the possibility of winning quick, easy money, yet the casino is the one raking in all of the profits. Unfortunately, this is how the relationship between most traders and the market is as well.

Usually it is the brokers making all of the money while 90% of traders lose.

Here’s is the reason…the universe is not structured around possibilities but around probabilities. Sure it’s probable to roll the dice and win a few times, but it is not probable.

Now let me be clear, each time we make a trade it is considered a gamble in the sense that we do not know 100% if it is going to be a winning trade or a losing trade. However, when we use probabilities we can make a trade with confidence.

Many traders enter the market like a gambler enters a casino. The gambler is enticed with the “possibility” of a short-term pay out, but the casinos are deisgned to give the predictable, long-term advantage to the house.

We want to trade like the house; systematic, calculated, thoroughly tested, and focused on the long-term profits.

Most traders on the other hand are just the opposite; emotional, untested, and focused on a few scattered wins.

So how do you become a trader who is more like a casino than a gambler?

Well there are a few methods that I have learned over the years that will help you out.

1. Get a system and follow it to a tee. By system, I mean something that can be quatified into step by step terms. It doesn’thave to be complicated but it needs rules. I once heard it said that you should be able to write the rules of a good trading system on a bumber sticker. This may be a little bit of an over exageration, but you get the point.

2. Prove the system through rigorous testing. This is how you calculate the probabilities of your system. Once you know how to calculate the probabilities you will know how to bet the system so you don’t go bust during a losing streak. The best way to test is to do a simple back-test. You can do a backtest with a spreadsheet and a chart. Just go back in time and take your system trade by trade and then enter the data into your spreadsheet. There are also some fancy programs that can help you do this. Just do a Google search.

3. View your trading as the sum of all trades, not just one trade at a time. This means that you are not moved by one win or one loss. If you have a system and you have tested it you will know what it is capable of over the long run. This will help you with the mental side of trading. Without looking at your trading from this viewpiont your emotions are likely to run high. When your emotions are out of control, your trading will be out of control.

4. Use technology to your advantage. The house takes advantage of all of the latest technology to give it an edge. Smart traders do the same thing. They use the tools such as advanced charting platforms and alerts to find trends and signal trades.

This list is not the means to an end, but rather a compass to help navigate you through your journey to find the right trading system that fits you and your goals.

It is my goal through Advent Forex to support you with as many resources as I can. Advent Forex is all about giving you the resources to become like the house.

Until next time, good trading.

Cecil Robles

Ethos Traders Inc.
Strategic Advice For Trading More Profitably
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