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What are similarities between trading and gambling?

  • #201
  • Nov 10, 2015 2:43pm Nov 10, 2015 2:43pm
Quoting nubcake
If you know djokovic took a ball to the balls earlier that day then maybe you'd bet against him because you know he'll be running slower due to testicular torsion.
ROFL. Love it.
  • #202
  • Nov 10, 2015 2:43pm Nov 10, 2015 2:43pm
ok - please go back to my first post on this thread. I deploy superstition and expect to win because of it.
  • #203
  • Nov 10, 2015 2:45pm Nov 10, 2015 2:45pm
Quoting R19
ok - please go back to my first post on this thread. I deploy superstition and expect to win because of it.
Fair enough. Let's just agree to differ, and leave it at that.
  • #204
  • Nov 10, 2015 3:35pm Nov 10, 2015 3:35pm
Quoting R19
I deploy superstition and expect to win because of it.
Topkek. Nice trolling.
Congratulations ScalaFX for coming out of the closet!
  • #205
  • Nov 10, 2015 3:44pm Nov 10, 2015 3:44pm
Quoting nubcake
{quote} Topkek. Nice trolling.

I couldn't really care less what you believe and I've pretty much wasted enough time and energy on this thread. Next I get to hear how all of you run quant algorithms to trade for you and you're killing it yet when there's a 'show me your ride' thread on here none of you post:
- You have nothing to show
- You don't like cars
- You are only driven around and everyone has a Rolls Royce Phantom


YAY!
  • #206
  • Nov 10, 2015 4:07pm Nov 10, 2015 4:07pm
Quoting R19
{quote} I couldn't really care less what you believe and I've pretty much wasted enough time and energy on this thread. Next I get to hear how all of you run quant algorithms to trade for you and you're killing it yet when there's a 'show me your ride' thread on here none of you post: - You have nothing to show - You don't like cars - You are only driven around and everyone has a Rolls Royce Phantom YAY!
Totally impressed. Maximum lel.

You would have been in your element during the time of Brijon. You missed your time. Buhbyes bb xoxo
Congratulations ScalaFX for coming out of the closet!
  • #207
  • Nov 10, 2015 7:57pm Nov 10, 2015 7:57pm
Quoting R19
... You act like it can't be possible because some professors say so? Why aren't all these smart guy professors taking their genius to the financial markets then? They should all be gajillionaires....
Again, not all games played at a casino are gambling for an experienced player. Poker is an example of a casino game where it is possible for someone to develop an edge so that he can gradually make money in the long run. If he has achieved that level, he's not gambling.

However, with other games, like roulette, it is impossible to get an edge. Now, that is not to say that it is impossible to make a lot of money on roulette. Certainly, you could put all your money on black and win, and keep doing that 20 times in a row. That's not impossible; it could happen, but if something like that happens, it's just luck.

Do you honestly think that there's something you can do with your bets that changes where the ball lands? Those green zeros will always be there, and there will always be a chance (the same chance) that the ball lands on a zero. You don't think that if it has landed on red 15 times in a row, then it's more likely to land on a black the next time, do you?

Oh, and by the way, the reason why most professors don't make a lot of money in the markets is because most finance professors believe in the efficient market. They actually don't think it's possible to consistently make above-average returns in any financial market. They think it's gambling (in the purest sense of the word), so they don't even try. They're just content holding a "well-diversified" portfolio of "blue-chip stocks" and getting 8% a year.
  • #208
  • Nov 10, 2015 8:04pm Nov 10, 2015 8:04pm
Quoting mathematician
{quote}Do you honestly think that there's something you can do with your bets that changes where the ball lands? Those green zeros will always be there, and there will always be a chance (the same chance) that the ball lands on a zero. You don't think that if it has landed on red 15 times in a row, then it's more likely to land on a black the next time, do you?
Betting will not change the play's results, but can substantially affect your own play performance. Everything we are doing and I see out there is very conservative in the betting aspect.

Real play can go in random chop or streaks. That is how real play happens. It definitely is not like a random number generator.
  • #209
  • Nov 10, 2015 8:23pm Nov 10, 2015 8:23pm
Quoting R19
{quote} Betting will not change the play's results, but can substantially affect your own play performance. Everything we are doing and I see out there is very conservative in the betting aspect. Real play can go in random chop or streaks. That is how real play happens. It definitely is not like a random number generator.
So then I guess you believe that the previous spins of a roulette wheel have some effect on the next spin. Otherwise, what would be the basis you use for making your bets? What would have to happen to make you decide to increase your bet at a particular time? I mean if you believe that some system of betting can help you win, then those decisions would have to be based on the events that have recently happened, right? Do I understand your philosophy correctly?
  • #210
  • Nov 10, 2015 8:31pm Nov 10, 2015 8:31pm
Quoting mathematician
{quote} So then I guess you believe that the previous spins of a roulette wheel have some effect on the next spin. Otherwise, what would be the basis you use for making your bets? What would have to happen to make you decide to increase your bet at a particular time? I mean if you believe that some system of betting can help you win, then those decisions would have to be based on the events that have recently happened, right? Do I understand your philosophy correctly?
The safe word is "eggplant". If at any stage things get too intense make sure to say the safe word clear and loud.
Congratulations ScalaFX for coming out of the closet!
  • #211
  • Nov 10, 2015 9:04pm Nov 10, 2015 9:04pm
Quoting mathematician
{quote} So then I guess you believe that the previous spins of a roulette wheel have some effect on the next spin. Otherwise, what would be the basis you use for making your bets? What would have to happen to make you decide to increase your bet at a particular time? I mean if you believe that some system of betting can help you win, then those decisions would have to be based on the events that have recently happened, right? Do I understand your philosophy correctly?

If you look, my comments have been almost purely about baccarat and 3 card poker. I did mention that I have seen friends play roulette successfully. I think that in any card based game there will not be perfect shuffle and a shoe of X decks of cards will most likely have some bias in it.
  • #212
  • Nov 10, 2015 9:25pm Nov 10, 2015 9:25pm
Quoting R19
{quote} If you look, my comments have been almost purely about baccarat and 3 card poker. I did mention that I have seen friends play roulette successfully. I think that in any card based game there will not be perfect shuffle and a shoe of X decks of cards will most likely have some bias in it.
Well I agree with you that someone could have an edge in poker. I don't know anything about baccarat. But no one can have an edge in roulette. I do believe, however, that someone can have an edge in trading.
  • #213
  • Nov 10, 2015 9:40pm Nov 10, 2015 9:40pm
Quoting mathematician
{quote} Well I agree with you that someone could have an edge in poker. I don't know anything about baccarat. But no one can have an edge in roulette. I do believe, however, that someone can have an edge in trading.
Agree in general but.......

With regards to roulette and good old Newton's Mechanical Laws with the assistance of a steath computer or two it is possible to tilt edge in your favour if you can determine within sufficient confidence limits initial conditions and applied force. Whether or not you escape surveillance from the house is a different story.

.....and there will be times when a table bias possibly could be detected provided you have a sufficient sample size and predictable characteristics of a croupier.
  • #214
  • Nov 10, 2015 10:00pm Nov 10, 2015 10:00pm
Quoting Copernicus
{quote} Agree in general but....... With regards to roulette and good old Newton's Mechanical Laws with the assistance of a steath computer or two it is possible to tilt edge in your favour if you can determine within sufficient confidence limits initial conditions and applied force. Whether or not you escape surveillance from the house is a different story. .....and there will be times when a table bias possibly could be detected provided you have a sufficient sample size and predictable characteristics...
I could imagine a machine that's fast enough and good enough at monitoring the position of the ball through time and calculating odds through rapid physics modelling to be able to gain a slight edge in predicting where the ball will land. I am amazed that we already have the technology for it -- Do they really work? -- but regardless, I can imagine that such a machine could exist some day, if not already. I could even imagine that a human (maybe some sort of savant) could be good enough at tracking the ball and able to intuitively get a probabilistic sence of where the ball is going to land.

But none of that matters. You don't get to place your bet after the ball starts moving, do you? It's 1. Bet, 2. Spin, 3. Settle, isn't it? I don't see how being able to slightly predict where the ball will land will help you change the bet you've already made on the soon-to-be-realized outcome of this ball. Are you saying that you could somehow predict where the next ball is going to land after this ball stops and is spun again?
  • #215
  • Nov 10, 2015 10:10pm Nov 10, 2015 10:10pm
Quoting mathematician
{quote} I could imagine a machine that's fast enough and good enough at monitoring the position of the ball through time and calculating odds through rapid physics modelling to be able to gain a slight edge in predicting where the ball will land. I am amazed that we already have the technology for it -- Do they really work? -- but regardless, I can imagine that such a machine could exist some day, if not already. I could even imagine that a human (maybe some sort of savant) could be good enough at tracking the ball and able to intuitively get a...
The calcs occur before last bets are made . There is a space of time between ball leaving croupiers hand and then calling last bets. Some devices now have miniature cameras that video photograph ball trajectory and external position with respect to numbers on the wheel and then a computer takes over and integrates angular momentum etc. to determine probability of landing in a particular 'region' and then determine likelihood of a chosen number within that region. It's a bit like plotting the trajectory of a space mission from earth to land at a particular region on the moon with a degree of confidence. There is no end to creativity when it comes to taking on the house edge. Obviously however whoever uses it needs to apply very covert methods to avoid detection and this is also where you could get creative employing teams and selecting casino's to hit......but you just know it is going to end in tears for the bright sparks :-)
  • #216
  • Edited 10:41pm Nov 10, 2015 10:27pm | Edited 10:41pm
Maybe a better thread would have been called; what are the differences between trading and gambling?

The constructive answer is in this question. They are not at all the same, but I guess a general comparison could be drawn between profitable traders who act as the house with a positive expectation in the long run, and the "punters" who are like the unprofitable traders who are going against the house.

That's all that needs to be said really. It's misleading to view the market as some game where every "spin of the wheel" is based upon the same rules. Because this is the core difference. Although the market has a certain structure on which is operates, the very nature of this operation itself changes the rules of the game constantly making it nearly impossible to apply some lazy rigid "system" to "beat the game". Like a game within a game within a game.

The very nature of the market itself makes it an uncomfortable notion to work with, so its a natural tendency to (want to) view it on a simplistic level thought. This is very deliberate but uncomfortable for the "punters" because they must be consciously aware at all times, and they must apply effort to avoid the traps and take advantage of the opportunities, it takes a lot of mental work to do this, and perhaps people got into this business to avoid just that. Think about it.

Poker would be the only casino game that comes close to this description. But naturally we want some security when we approach the market, but none exists.

The vast differences between casino games and the markets makes these kind of threads intolerable. Because yes metaphors can be drawn the same way you could compare trading to baking a cake, or crossing the street, or golf, or any other 100 metaphoric symbolisms. But it never comes close to capturing the depth required to make any positive conclusion.

The market structure itself feeds on the fact that we are all wired a certain way, so it's this paradox that goes against the grain of how we want it to be or how we think it should be. I was hoping I could make a more coherent answer, but perhaps that's the point.
Time hides Nothing
  • #217
  • Nov 10, 2015 10:32pm Nov 10, 2015 10:32pm
All of this has got me thinking: We normally think of casinos as acting cool, calm, and collected because they know they have an edge on many of their games. But what if we think of casinos in the opposite light? What if there is some casino owner out there who's really supersticious and bad at probability. lol

Imagine how he'd think of his business:
Quote
"Every day players come and I (the casino) make money from some players and owe money to others. Win some; lose some. Occasionally a shark could come through and leave me with a large loss. Not to mention all this crazy technology out there like roulette-predicting computers! The world keeps changing and you never know what could happen next. That's some serious risk!"

So then our nervous casino owner starts running his business, well, like a business: He'd try to control his risk and maximize his wealth.

  1. Stop Loss: If any player makes over $1M in a night, kick him out of the casino.
  2. Risk Percentage: Make sure I'm adequately funded so that even a $1M loss is just a small percentage of my total capital. That way, I know I'll be able to keep running the casino tomorrow.
  3. Diversify: Make sure a lot of people are playing lots of different games at all times. That way, even if a shark comes through, all the other tables will be making enough money to pay him!
  4. Investment Strategy: Only invest in games/tables that I know have an edge. Get rid of any that lose their edge.
  5. Trade setup: Take every trade that every player wants to take because I know my expected return is positive.
  6. Testing: Test every game every day thousands of times in real life with real people and real money.

Heeeey, I'm starting to like this guy.

  • #218
  • Nov 10, 2015 10:40pm Nov 10, 2015 10:40pm
Quoting mathematician
All of this has got me thinking: We normally think of casinos as acting cool, calm, and collected because they know they have an edge on many of their games. But what if we think of casinos in the opposite light? What if there is some casino owner out there who's really supersticious and bad at probability. lol Imagine how he'd think of his business: {quote} So then our nervous casino owner starts running his business, well, like a business: He'd try to control his risk and maximize his wealth. Stop Loss: If any player makes over $1M in a night,...
That's just crazy talk. You are making it sound more and more like a Market Maker broker model and we know that retail trading is different to gambling...*scatches head* :-)
  • #219
  • Nov 10, 2015 11:29pm Nov 10, 2015 11:29pm
Do you think the executive management was pleased with this outcome?:

The Press of Atlantic City:
Second high roller takes Tropicana for another $5.3 million at craps, blackjack, mini-baccarat
Posted: Tuesday, June 7, 2011 6:00 am
  • #220
  • Nov 10, 2015 11:33pm Nov 10, 2015 11:33pm
Quoting CindyXXXX
Maybe a better thread would have been called; what are the differences between trading and gambling? The constructive answer is in this question. They are not at all the same, but I guess a general comparison could be drawn between profitable traders who act as the house with a positive expectation in the long run, and the "punters" who are like the unprofitable traders who are going against the house. That's all that needs to be said really...
As you can tell from my last post, I think there are actually a lot of similarities -- if you trade like the house.

Quoting Copernicus
... we know that retail trading is different to gambling...*scatches head* :-)
Well, yes, I guess every participant is "gambling" in the sense that no one knows with 100% certainty what will happen next. It's just that one side is gamling with positive expected return, and the other is not.

Quoting CindyXXXX
... It's misleading to view the market as some game where every "spin of the wheel" is based upon the same rules. Because this is the core difference. Although the market has a certain structure on which is operates, the very nature of this operation itself changes the rules of the game constantly making it nearly impossible to apply some lazy rigid "system" to "beat the game"...
It's interesting ... because ultimately, I don't think the every tick of the price is statistically independent of every other tick (in the way that every spin of roulette is independent). However, there are times when I find it useful to think in a mode where each event is independent:

I trade by building positions, so each position is a small set of trades. I view the cluster of trades that make up one of my positions as statistically dependent because I consider price movements to be at least somewhat dependent upon recent previous prices. Therefore, as I'm managing a position, I don't think of each decision in that process to be like a separate spin of the roulette wheel. I will choose to or choose not to add to a position or reduce a position based on the way the price movement unfolds.

However, I do think of different positions to be statistically independent of each other -- They could be positions in different markets (because I choose markets with low correlation to make them more independent) - or they could be positions separated by enough time in the same market. This is when I think of each position as an independent spint of a roulette wheel. And this mode of thinking I find very psychologically liberating. This sort of cold, the-past-is-the-past kind of thinking is very helpful if you want to ignore a previous loss to prevent it from clouding your judgement, or even to ignore a recent winning streak (because I know that in a largely independent set of events, just as in flipping a coin, I'm not "due" for a loss if I've had a very long string of wins).

So I think it's important to be able to toggle between these two different modes of thinking. When I was defining my strategy, testing it, and adjusting it, I was certainly considering the dependent nature of price movements. But am rigid and think in the independent events mode in the way that I keep using the same approach position after position.

Quoting Copernicus
{quote} That's just crazy talk. You are making it sound more and more like a Market Maker broker model ...
Well it sort of is like you're a market maker. You're just in the right place at the right time. Like a traditional trader of goods!

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