Professional Gambler comes to the markets

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options-george

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Last year I made a living from gambling professionally. I noticed a lot of similarities between the gambling and the financila markets, as far as statistical models, risk management and expectancy was concerned. I have now decided to try and take what I have learned from the "gambling" and apply it to the markets (I have spent time trading in the past but was not able to do so profitably). Is there anyone on the forum who has come from a professional gambling background to the markets? Would love to hear from you if that's the case.

George
 
not my case, but you might do fine with your background indeed. understanding expectancy and behaving accordingly is a big part of the job
 
options-george said:
Last year I made a living from gambling professionally. I noticed a lot of similarities between the gambling and the financila markets, as far as statistical models, risk management and expectancy was concerned. I have now decided to try and take what I have learned from the "gambling" and apply it to the markets (I have spent time trading in the past but was not able to do so profitably). Is there anyone on the forum who has come from a professional gambling background to the markets? Would love to hear from you if that's the case.

George
Click to expand...

What sort of trading did you try OG,and was the style of trading based around scalping or just taking a short term position.
 
also an interview about this very topic in the second market wizzards book from J. Schwager
 
sighthound said:
What sort of trading did you try OG,and was the style of trading based around scalping or just taking a short term position.
Click to expand...

hi sighthound, the first time round i was using options for making short-term/intra-day directional trades on US equities. I kind of lost my discipline there and blew 80% of my trading account in 9 months. In the next round I again traded using US equity options, this time my positions were a little longer (generally several days) and I was a lot more careful - this time I lost 10% of my account. Then I spent six months assisting a professional market-maker for Euribor option contracts, focusing on synthetic and arbitrage-type trades - this is where I learned the most (and even got a salary!). Most recently I spent 3 months doing covered-calls/quantitative based approach on a good-sized DIA position that I had acquired mixed with FX hedging. That was a break-even exercise.

The gambling was from playing cards. In 9 months I made a very good return on my bankroll (about 130%) - the return wasn't due to luck - since the final result was fairly close to the expected return.

I have realised now that it's important to be around like-minded people so I am hoping to be able to work with some people on this forum board as I get into the trading business, whilst hopefully also being able to help others with some of my (limited!) knowledge/experiences.
 
Which card game? I am guessing poker as that seems to have potential profit in the non-wild punt drunken gambler stakes.
 
options-george said:
The gambling was from playing cards. In 9 months I made a very good return on my bankroll (about 130%) - the return wasn't due to luck - since the final result was fairly close to the expected return.
Click to expand...
Hi options-george,
Welcome to T2w!
Given that your forays into trading hitherto haven't been particularly successful in terms of returns on your capital, where as your card 'gambling' has been very successful - relatively speaking - I'm curious as to why you want to play the trading game? Why not stick with what you're good at and - hopefully - improve next year and the year after that? Obviously, you're someone who understands odds very well. I know nothing about 'traditional' gambling (e.g. card games etc.), but I imagine that the odds of a new gambler making consistent profits month on month, year on year, are pretty low. That's certainly the case with trading. Allegedly, 90% who try their hand at this game fail. Let's not argue about what 'failure' actually means (a moveable feast at the best of times!) But, suffice it to say, it ain't easy. Therefore, I would have thought that the odds of you making it in both disciplines has to be pretty low. If you're doing well in one of them, namely cards, then I'd say stick with it and make hay while the sun shines! Out of 200k T2W members, the number who I believe equal (or better) your percentage returns from the card tables can be counted on the fingers of one hand. Then again, maybe I don't move in the right circles!
😉
Tim.
 
timsk said:
Hi options-george,
Welcome to T2w!
Given that your forays into trading hitherto haven't been particularly successful in terms of returns on your capital, where as your card 'gambling' has been very successful - relatively speaking - I'm curious as to why you want to play the trading game? Why not stick with what you're good at and - hopefully - improve next year and the year after that? Obviously, you're someone who understands odds very well. I know nothing about 'traditional' gambling (e.g. card games etc.), but I imagine that the odds of a new gambler making consistent profits month on month, year on year, are pretty low. That's certainly the case with trading. Allegedly, 90% who try their hand at this game fail. Let's not argue about what 'failure' actually means (a moveable feast at the best of times!) But, suffice it to say, it ain't easy. Therefore, I would have thought that the odds of you making it in both disciplines has to be pretty low. If you're doing well in one of them, namely cards, then I'd say stick with it and make hay while the sun shines! Out of 200k T2W members, the number who I believe equal (or better) your percentage returns from the card tables can be counted on the fingers of one hand. Then again, maybe I don't move in the right circles!
😉
Tim.
Click to expand...

Hi Tim, thanks for the welcomg! You raised some good questions and made some valid points there!

I havn't totally given up on the gambling, but the opportunity was unfortunately only there for a time - now I have to search for similar opportunities more carefully elsewhere but think I can do that in conjunction with trading. Otherwise I would agree with you - just keep on doing the things that are going well. One thing though is that the natural standard deviation of returns with the gambling is quite high - so the variance is one aspect that I didn't like and hope that i can find lower variances in the markets.


I think the odds of me making it in gambling and the markets are not independent. Succeeding in one should improve your chances of making it in the other. From the gambling I learned some concepts/skills that I did not know when I traded previously - concept wise understanding expectancy of returns, Kelly risk management/risk of ruin and standard deviation of returns - and skill wise i learned to be extremely disciplined in sticking to my rules and not letting my emotions get the better of me. So I would dare to say that professional gambling and trading in the markets shouldn't necessarily be regarded as two different items, rather as possibly the same thing but say with a slightly different product.

Like your comment regarding the small number of traders making big profits, in the gambling cirlces that I ventured through I realised that the number of people who were making a good living from it (globally) were few, nevertheless they were out there though they didn't advertise themselves a lot.

Yeah making ROI of 130% with trading in 9 months is most likely not a realistic goal for me :cheesy: but i would happy if I could achieve something in the 25% range over 12 months though I realise even that is highly ambitious!!

I thought carefully about my experience with the City trader and some of the comments that he made in passing, as well as my gambling experiences - to realise what my competitive advantage in the markets would be - I have learned some of my weaknesses and shortfalls as a small-time trader but I have also figured out some of the advantages that come with that. After thinking about that for a months, and some other business things not going so well, I got to this point of coming back to trading.

Wow, that was a lengthy reply. But we all know people like to talk about themselves dont we!!

By the way, this forum looks very good!!
 
I was thinking earlier, my experiences of gambling are experimenting with roulette and poker, both unsuccessful (partly due to a lack of interest/enjoyment in the games). However, the closest thing I've had to success with "gambling" was via binaries on IG Index. I don't know what they are like these days (I hear they've widened the spreads) but if you have some sort of idea, you do have the option of bailing early rather than having to wait for the "trade" to run its course. I also don't know how this compares to Options trading.
 
shadowninja said:
I was thinking earlier, my experiences of gambling are experimenting with roulette and poker, both unsuccessful (partly due to a lack of interest/enjoyment in the games). However, the closest thing I've had to success with "gambling" was via binaries on IG Index. I don't know what they are like these days (I hear they've widened the spreads) but if you have some sort of idea, you do have the option of bailing early rather than having to wait for the "trade" to run its course. I also don't know how this compares to Options trading.
Click to expand...

i spent a whole week once trying to spot some inefficiency in the way the binary bets were set up but couldn't do it. I had thought that it must happen quite regularly that they price those inefficiently. At that time the spreads were something like 4 points on the Dow. Not sure what they are now either.
I think binary bets are actually quite similar to options, the only difference being that they have real rapid time decay!
 
A binary call(put) option is equivalent (through replication), in the limit, to a vanishingly tight call(put) spread.
 
I have gambled professionally. Mostly sports and poker, but other things too when the opportunity arose. I might still do it again, but over time I discovered I don't like the company of gamblers much, and trading allows me to put the same skills to work in a socially acceptable context.

I think the markets, in the short term, are a gambling problem just like any other - your are offered a series of bets, and have to decide which to accept and which to reject based on your knowledge of the odds of various outcomes. If your math is right and your knowledge is better than that of the guy offering the bets, and you trade that knowledge correctly, you win. Most of the best offered are minor losers in terms of expectations and thus should be rejected, but some are highly profitable.

The up side of trading is that, up to a point, you can increase you bet size in positive expectation situations without drawing any heat for it. That's rather refreshing. The down side is that initially it's harder than any other gambling game - much harder than mid to high stakes poker, for example.
 
A friend of mine who trades his own cash in Gibraltar has recently started making decent coin on the horses. He's devised a system to get in and out based on where he sees momentum heading. I think it's only natural if you trade to look at other markets (like the gee gees) or vice versa. Patience and fortitude are the common requisite attributes.
 
Actually I think there are quite a lot of opportunities for good financial traders in sports betting as the markets are much less efficient. Interesting how some of the 3rd party applications for in-running play on Betfair look very similar to trading applications. And the websites of the 'make your fortune from betting on horses using this foolproof system' vendors, look identical to the ones saying the same thing for forex trading!
 
No wonder the West is going to the dogs (pardon the pun) if all we're doing is sitting and staring at a screen, trying to punt a way to a living ..... !!
 
Jack o'Clubs said:
Actually I think there are quite a lot of opportunities for good financial traders in sports betting as the markets are much less efficient. Interesting how some of the 3rd party applications for in-running play on Betfair look very similar to trading applications. And the websites of the 'make your fortune from betting on horses using this foolproof system' vendors, look identical to the ones saying the same thing for forex trading!
Click to expand...

Yup.

Trading betfair when you're bored is great fun!
 
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