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Originally Posted by JRP2891

No way, 50/50 each trade, it's going to go one way or the other. Just got to get on a hot streak and pile on the size when you feel lucky.

Originally Posted by jimbo45

Hi there Look at BUY / SELL options

Buyers LOSE 85% of the time therefore SELLERS must WIN 85% of the time.

The Big BUYERS of options are institutions who use these to "protect" themselves from large losses. They can also WIN BIG too -- so for them the risk is worth it.

This is where it makes HUGE sense for the smaller / individual investor to take advantage of this by SELLING the options.

This is the nearest you are likely to come to a "Perpetual Motion" money machine anywhere in the known universe.

The option SELLER is working a bit like the CASINO OPERATOR -- you don't win HUGELY but you make a decent %'ge on loads and loads of trades.

The Casino usually doesn't care if punters make 10 or 1,000,0000 USD so long as they AVERAGE a % take per punter --

Who'se ever heard of a CASINO going bust.

I'd advise any trader to look at OPTIONS TRADING -- it's hugely mis-understood and WRONGLY considered as very risky trading.

Cheers
jimbo

Originally Posted by jimbo45

Who'se ever heard of a CASINO going bust.

Originally Posted by hoodoo man

That is a crutch used by people who wish to delude themselves that they are not gambling. Ask any real gambler - horses, casinos, sports, etc - the smart ones will tell you that if a 'system' doesn't work on level staking, it doesn't work. All of this attention to "money management", risk:reward numbers pulled out of the air - all of it is simply self delusion.

A professional posture will include appropriate position sizing. This means not being overleveraged. In a professional arena, such as a futures exchange, the margins are set at more sensible levels than for example spread betting companies. There are also position limits and liquidity considerations for larger players.

For an amateur, position sizing should be in place to reduce the risk of ruin. Without this, any other efforts are irrelevant as the trader will eventually blow up. However, without a robust strategy in place to take net points from the chosen markets each day, position sizing will not make a trader successful.

All of this is obvious, however the masses persist in attempts to control their gambling and limit losses. It is a crutch to avoid responsibility for haphazard, hit-or-miss trading or more accurately guesswork. Provided the gambler has rationalised affording to lose, he can continue.

The people who indulge in circular discussions with made up risk:reward numbers most likely don't understand the true probabilities of what they are trading. Without this knowledge in place, the numbers are all fantasy.

These terms are marketed to the class of wanabee "traders" - who wish to distinguish themselves from the mere gamblers. Therefore there must be mathematical systems, sophisticated financial terms, and other such props. The nature of the activity is the same - uninformed gambling - but a respectable veneer is added to attract the professional and managerial classes.

kimo'sabby makes a very good point about use of language. Consider the spread betting companies who brand themselves as "spread trading" companies. Consider the nature of the marketing.

Originally Posted by kimo'sabby

Use the word 'gambler', and everybody knows where they stand,...except the ones with addictive personalities.

Use the word 'trader', and everybody thinks there's a free lunch somewhere down the line.

Innit funni ow wordz realli mess wiv peeps eds?