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From: Robert A. Christy
Editor/Publisher, ‘The Intelligent
Trader’
http://www.intelligent-trader.com
http://www.christyinvestments.com
Date: August 10, 2009
The annual ‘Forex and Options’ Expo was held last week at
Caesar’s Palace in Las Vegas. It was my first trip ever to Las Vegas. I
liked the city and decided to extend my stay for the duration of the
week. Las Vegas is my kind of town.
The indicators continue to push north into the high risk zone. I think
now is a good time to talk about the topic of risk and money management.
I am not a gambler and this is probably the reason that I never found my
way to gambling’s Mecca prior to now. I was a complete novice and I had
no idea how to gamble.
I do now.
I also used the time to reconnect with a former college roommate. Scott
and I hadn’t seen each other for 31 years and it was great to catch up
with him. Scott headed west 12 years ago and is a dealer at one of the
strip’s larger casinos. He gave me an advanced degree in casino games.
I keenly observed that there are at a minimum three distinct ways to
lose money: (1) slot machines; (2) table games (blackjack, roulette,
craps, baccarat, poker, etc.) and (3) betting on sports.
Slot machines, also known as one-armed bandits are simply ATMs in
reverse. People sit in front of these machines and plunk anything from
pennies to dollar bills into them hour after hour. These games of
plunder are run by computer chips that are programmed to pay “x” after
so many “y” pulls. I was told that the daily cash in-take from the slots
cover most if not all of the losses incurred by the table games.
People amaze me and I am always at a loss for words as to why they do
what they d. Psychologists explain that it’s the thrill (out of boredom)
and the monetary reward (greed) that drive people play these things.
I was given a few slot machine coupons during check-in and promptly gave
the money back to the house. A drone could not have done it faster.
I stopped next at the table games which supposedly offer a better
risk-reward return. I couldn’t calculate the odds fast enough in my head
so I passed on the table games.
I found a home at the sports book. I liked betting on baseball. I’ve
written about baseball for years and everyone knows about my passion for
the game. I’ve played it, coached it or umpired it for the past 47
years. I know the game better than most and this leveled the playing
field dramatically.
I bet 5 games each day and my winning percentage for the week was 65%.
My winning percentage would allow me to earn a reasonable full-time
living as a professional sports (baseball) bettor. Debby has other
thoughts on the matter.
Sports betting and trading have a lot in common.
1. People bet on sports for the thrill of the action. People trade for
the same thrill.
2. The wall to wall digital screens bring the action directly to you,
just like the trading station on my desk.
3. Sports bettors are inundated with information, much of which is
useless. I sift through mounds of information each day looking for just
one or two nuggets I can use.
4. Successful bettors need an edge. Traders also need to have an edge.
Successful traders know what their edge is.
5. Unlike table games, sports bettors don’t have to bet every game and
can concentrate on the games where they feel they have the odds in their
favor. As a trader, I have the same option. I don’t have to take every
trade and can do so only when I think I have an edge. This is the most
powerful factor in my favor.
6. A major key to winning a sports bet is to have the discipline to wait
for the right game to come along and to not rush and see an opportunity
where there isn’t one. The same holds true for trading. The most
successful have the discipline to wait for a high probability set up
Unfortunately, few have the discipline to stay out of the markets until
a high probability setup presents itself. Undisciplined traders take
very weak versions of their setup, or deviate altogether from their game
plan altogether just to participate in the market. The end result is
utterly predictable as the market just like Vegas takes back our hard
earned profits.
Let me not leave you today with any illusions. Las Vegas casinos and the
market are not our friends. They are oblivious to our participation.
However, both will take your cash in the blink of an eye if you’re not
prepared and disciplined.
The key to making money is letting the odds work in your favor, making
wise choices and money management. The bottom line is this – the only
time that trading and gambling are one and the same is when the trader
throws his risk management plan into the hot desert wind.
Tomorrow, I’ll touch on what I learned about money management.
That’s about it for now. Let me here
from you if you have any questions.
Robert Christy
The Intelligent Trader
P.S. We continue to make changes and
upgrades each month at the Intelligent Trader. In addition to our blogs,
you can now sign up and follow us on:
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Intelligent Trader and/or Robert Christy (Atlanta area)
Skype: stcktradr
P.S.S. The currency market (forex) is
the place to make money this year. If you’d like to know more about how
you can participate in this, just send me an email and I’ll send out the
information to you.
P.S.S.S. Please fee free to forward
this to your peers, friends and anyone you think would benefit from its
contents. They will thank you for it - and so will I!
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Robert Christy is a professional
currency trader, stock trader, money manager, author and speaker. Mr.
Christy is the President CEO of Christy Investment Group, Ltd., a
fee-only registered investment advisory firm. He is also the Managing
Partner and Portfolio Manager of Crabapple Capital Group, LLC and the
editor/publisher of The Intelligent Trader, a subscription based
long/short trading service. At the time of publication, Mr. Christy may
from time to time write about stocks in which he, Christy Investment
Group Ltd, Crabapple Capital Group, LLC or The Intelligent Trader has a
position. In such cases, appropriate disclosure is made. Under no
circumstances does the information in this column represent a specific
recommendation to buy or sell stocks. Mr. Christy appreciates your
feedback and invites you to send it to
rac@intelligent-trader.com .
Robert Christy
The Intelligent Trader
The Christy Investment Group
P.O. Box 625
Alpharetta, GA 30009-0625
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