[The professional gamblers] don't take unnecessary risks or gambles. They know when the odds are in their favor and will bet more when the odds get better. If the odds aren't there, they won't risk nearly as much, if anything. They know how to protect their winnings, and they know how to call it a day when Lady Luck is blowing on some other guy's dice. Having this discipline lets them come back to the table the next day. [...]They know that losing is part of being successful, and as long as they do the right things, they are okay with losing; they won't try to make it all back on the next hand. They know that if they stick to their rules, they will make it back in the future by being consistent. [...]Successful gamblers also know they don't have to be in every hand. A good poker player is disciplined enough to fold hand after hand until the right one comes along. [...] For the most part it's the amateurs who try to bluff. Pros do not do it nearly as much; they would rather go for the sure hands and sit out the rest. [...][The professional gambler] doesn't necessarily increase the size of his bets because he is on a good streak or has doubled his money. Very rarely does a pro make bigger bets because he has a hunch or feels invincible.
October 2, 2009
Trading Vs. Professional Gambling
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2 comments:
Very timely post, Muser. I was explaining gambling (attempting to, anyway)to the girlfriend this weekend. Spent the weekend in Vegas and bet the college and pro football games. I won't go into the details, but I did alright. I would not want to offend Mr. Felix Salmon with my "hubris." ... :-)
I only participate in sports betting and specialize in Major League Baseball - making 10 to 15 bets a season (which gets to your selectivity point). This year I did better than alright (Sorry, Felix) ...
With the other sports I "dabble" - a small fraction compared to the MLB bets.
Anyway, she asked if I also bet horses or liked poker. I told her no for both. I don't trust the horse game. And it seems crazy to me. I randomly picked a race on the screen and explained the odds said let's see what happens. The "worst" horse won (29 to 1), the "second worst" horse came in 2nd (15 to 1) and the third best horse came in 3rd (5 to 1). The favorite (2.5 to 1) came in last. Go figure.
With poker, the risk reward is so fluid - so dependent upon the actions of others. Playing recreationally, I cannot tell you how many times I was "on the button" and dealt a sweet hand and then almost everyone folds before I even utter a word.
To me, that is like the trading equivalent of a great set up in the market, then your clearinghouse tells you that your margin has been increased by 4 or your leverage has been inexplicably cut, etc. - forcing you to trade a smaller position and accept a smaller payout.
Does this book primarily rely upon poker examples to explain good and bad gambling?
SSK
SSK, nice analogy: nothing worse than a good setup that you somehow are unable to fully take advantage of.
As for the book, the comparison with gambling was just the introduction to a chapter on the importance of money management. If you want a full mathematical treatment of gambling vs. trading, you would want to read any book by Ralph Vince.
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