Day Trading for a Living – From Gambling to Trading

Having been an active trader for 20-plus years, I’ve had the opportunity to observe much more than your average investor.

For instance, one of the unusual things I’ve observed is that many traders come from a gambling background, and horse betting in particular. In fact, many years ago I worked at a race track and placed a few bets myself.

Why do horse betters frequently gravitate toward trading?

I think it’s because there are certain aspects of trading that are more predictable than horse betting. A stock or an option or a currency pair can’t break a leg or unexpectedly fall ill.

Plus, very few guys who play the horses make a full-time living at it. But there are many, many traders who enjoy a healthy part-time income – or even make a full-time living – from trading.

I believe this is because the odds of winning as a trader are far better than the odds of winning as a horse better.

Unfortunately, many ex-gamblers hold onto bad thinking patterns, what I call “the gambler’s mindset.” It’s the mindset that you can roll the dice, or buy a lottery ticket, or pick a trifecta and suddenly win a fortune.

This kind of get-rich-quick thinking is hard to shake, and it keeps many traders from reaching their full potential.

The Danger of Gambling Psychology in Trading

If you trade like a gambler, you’re bound to lose money. You’ll make bad trades. You’ll throw good money after bad. And eventually, you’ll find yourself wondering where all your money went.

(Hint: Wall Street took you for a ride!)

Fortunately, there are a few simple mindset shifts that can turn your trading around, sometimes overnight.

Mindset Shift #1: Don’t Chase Trades; Let Them Come to You

Gambling produces some strange responses in people. If a gambler wins once, he’s likely to keep gambling until he wins again… even if he loses a small fortune along the way. And if he loses, he’s likely to keep gambling in an effort to “win back” what he lost – even if he continues losing.

These behaviors are not unique to gamblers; traders are guilty of doing the same exact things. If we win a trade, we try to force another winning trade – even if the second trade is doomed. And if we lose a trade, we try to quickly make back what we lost on the next trade.

This irrational behavior is caused in large part by our cultural conditioning. All of us are hard-wired to work 40 hours a week. If we work any less, we somehow feel that we don’t deserve the money we’re making. We believe we must “work hard” to earn a living.

This belief often carries over into trading, and so we “work hard at trading.” We enter trades even when there aren’t any good trades available. We trade for trading’s sake. Then, when our poorly placed trades move against us, that gambler’s fear of loss kicks in… and we begin making even more foolish decisions, which compounds our losses.

It doesn’t take a genius to see where this behavior will lead. So here’s a suggestion: Once you understand what makes a good trade versus a bad trade, let the good trades come to you.

One of the best ways to do this is to monitor just a handful of stocks, options, or currency pairs and become familiar with them. Over time, you’ll understand the price movements better, and you’ll be able to spot good trades more easily.

You don’t have to trade every day or even every week to make a very good living as a trader. You only have to make a few good trades when the opportunities present themselves. In trading, patience is most definitely a virtue.

Mindset Shift #2: Adopt a “Win Small” Approach to Trading

Gamblers-turned-traders are often looking to “hit the jackpot.” They want to place one trade and be set for life.

But it doesn’t work this way. It often takes scores of trades, even hundreds, to really build the kind of fortune your neighbors would envy.

With that in mind, it’s much better to aim for small consistent wins. Small consistent wins are much more realistic. And compounded over time, small wins can add up to truly staggering numbers.

The best part is this: While you are focusing on small consistent wins, you’ll be sure to experience some big wins as well, a natural byproduct of your “win small” strategy.

Mindset Shift #3: You Don’t Have to Win Every Trade

The last mindset shift – and possibly the most difficult of all – is to understand that you don’t have to win every trade to make good money as a trader. In fact, losses should be expected and planned for.

The best fund managers, the best traders, and the best trading software all have this in common: Sometimes they lose money.

Ultimately, it’s how you react to losing money that dictates whether you’ll succeed over the long haul. Do you stick to your stops? Do you follow your money management rules?

You see, it’s not how you do on a single trade that counts. It’s how well you do over a series of trades. If you win 6 or 7 trades out of every 10, you could be doing quite well.

What’s more, if you do a good job of limiting losses (a function of a solid exit strategy), then you may even be able to come out ahead if you only win half the time (five winning trades, five losing trades).

However, I understand that emotions can still run rampant in spite of your best efforts to control them. So after getting out of a losing trade, you might want to take a break for a day or two so you don’t make any more bad trades during the depths of disappointment.

Change Your Mindset, Change Your Trading Account

The truth is, you trading account reflects what’s going on in the gray matter between your ears. So the next time you start wondering why you’ve been on a losing streak, or why your trading account is shrinking, take a moment to self-reflect.

Then remind yourself to:

• Wait for good trades

• Aim for small consistent wins

• Be okay with losing trades (so long as you limit your losses)

These small “mindset shifts” will help prevent you from trading like a gambler and get you trading like a real business person instead. Not to mention it will help you grow your trading account consistently over time.

Avoid the 7 Biggest Mistakes New Craps Players Make

Many new craps players fail to realize that winning is a process. Set forth below are the 7 biggest mistakes made by new craps players.

The first mistake a new craps player makes is to fail to set a goal of how they want to win. Most people who go to Vegas (and the craps table) have the attitude that they will take with so much money and when they lose, they will stop. This is a defeatist attitude. The attitude we have is that we will win so much money and then we will stop. Depending on the size of our bankroll, we will usually set a goal to win $200 per hour. This is discussed by John Patrick in his book Advanced Craps.

The second mistake made by a new craps player is failing to understand the game, i.e., the probabilities for each number being made. Just because you may know how to place a bet, it does not mean you know how to win. Often a new player will start by winning and think it is a simple game. They increase their bet size only to have the table turn cold and lose it all. New craps players must be aware that the game of craps is based on streaks. Sam Graftstein discusses this in detail in his book The Dice Doctor Revised and Expanded.

The third mistake is not having an adequate bankroll. Craps is a game based on streaks. As such, you cannot and will not win on every bet – – you will have loses. Too often a player does not have an adequate bankroll for the size bets he is making or sets an unrealistic goal of how much to win. If you have a $500 bankroll, it is difficult to set a goal to win $1,000. It does happen, but only when people are lucky. When loses do occur, he may not have enough money to make bets and miss out on a hot shooter. Author Frank Scoblette discusses this in his book Beat the Craps out of the Casinos.

The fourth mistake is drinking while playing. If you are going to play craps, then you can either play to have fun or play to win. It is difficult to do both. New craps players sometimes get intrigued with the free booze and drink too much to concentrate on what they are doing. I have friends who travel to Vegas with grandiose ideas of winning big. I have heard them discuss that one or several of them were doing well until they started drinking. If you are going to drink and party – – wait until after you have left the craps table, not during.

The fifth mistake made by many new players is lacking discipline. Many new players will press their bets when they are winning. While this may work some of the time, too often the new player will have a lot of money on the table when the dreaded 7 appears. You need to take some of your winnings off the table. Sam Graftstein discusses this in detail in his book The Dice Doctor Revised and Expanded.

I was dealing craps for an entertainment company at a private residence for a person’s surprise birthday party. One of the players was setting the dice. Apparently he took lessons on how to be a precision shooter from Beau Parker, a/k/a Dice Coach. At first he was having long rolls and doing extremely well (Beau is an excellent teacher on how to set and influence the dice). This person, however, kept pressing his bets. He rarely took his winnings down. I asked him why he left his winnings on the table because I know personally that Dice Coach does not follow that betting strategy. His explanation was that he kept his bets up until he had a feeling. Within a short time he lost his entire “bankroll.” Good thing he was playing with pretend money instead of real money. Had he had any semblance of a betting strategy he would have done quite well.

The sixth mistake made by new players is not paying attention. New players tend to forget the bets they make, where the dealer placed their bets and also to pick up their winnings. If you forget to pick up your winnings it is considered a bet. The casinos’ policy is “if it lays, it plays.” At a crowded table, the game of craps moves quickly.

The seventh mistake made by new craps players is to believe that a craps system will work. While all systems work some of the time, none work all of the time. So be careful at the tables. You never know if the system will work for hours, days or even longer.

By: David Udjat, Walk Away Craps

Play Craps With Winning Strategies: Placing Across the Board With COME Bets

In my last article on how to play craps, I tackled the rules of the Pass Line and the Don’t Pass Bar. For this article, I will show you how to play craps with the tool of understanding probability. Below, I have created a dice diagram to visually explain the probability of each number rolling in a typical craps game.

Possible 2 = 1 + 1

Possible 3’s = 1 + 2 and 2 + 1

Possible 4’s = 1 + 3 and 3 + 1 and 2 + 2

Possible 5’s = 1 + 4 and 4 + 1 and 2 + 3 and 3 + 2

Possible 6’s = 1 + 5 and 5 + 1 and 2 + 4 and 4 + 2 and 3 + 3

Possible 7’s = 1 + 6 and 6 + 1 and 2 + 5 and 5 + 2 and 3 + 4 and 4 + 3

Possible 8’s = 2 + 6 and 6 + 2 and 3 + 5 and 5 + 3 and 4 + 4

Possible 9’s = 3 + 6 and 6 + 3 and 4 + 5 and 5 + 4

Possible 10’s = 4 + 6 and 6 + 4 and 5 + 5

Possible 11’s = 5 + 6 and 6 + 5

Possible 12 = 6 + 6

NOTICE: There are 36 possible dice combinations. The 7 is the most commonly rolled number with 6 possible combinations resulting in a statistical probability of 1 in 6 rolls.

Below this is a payout diagram for odds through place betting:

4 & 10: Pay $9 for every $5 bet

5 & 9: Pay $7 for every $5 bet

6 & 8: Pay $7 for every $6 bet

Below this is a payout diagram for odds through COME betting:

4 & 10: Pay 2:1 ($2 for every $1 bet) + EVEN MONEY for initial bet

5 & 9: Pay 3:2 ($3 for every $2 bet) + EVEN MONEY for initial bet

6 & 8: Pay 6:5 ($6 for every $5 bet) + EVEN MONEY for initial bet

The main numbers that I will use in describing how to play craps through three distinct winning strategies are numbers 4, 5, 6, 8, 9, and 10. These are called point numbers. Any other number is not a point number. For the following strategy of how to play craps wait until the game is beginning. Look for the puck to say OFF to begin.

Placing/COME Betting – Minimum of $300 bankroll for $5 table

To play craps using this strategy you will NOT make a Pass Line or Don’t Pass wager. As a result, you cannot shoot the dice. Thus you can only play craps using this strategy if there are other players at the table besides yourself.

Scenario

Let’s suppose the shooter rolls a point of 6. Now, place all numbers, including the point, for the minimum amount. This will cost a total of $32 ($5 for numbers 4, 5, 9, and 10 and $6 for numbers 6 and 8). After you place all the numbers, and before the next roll, make another bet by placing a $5 chip in the COME box. Suppose on the second roll, the shooter rolls an 8. First you would get paid $7 for your place bet on the 8. Your COME bet would then go to the 8 and you could take odds on this bet. Toss three $5 chips and make an odds bet on your COME bet through the 8.

NOTE: When COME bets go to the 6 or 8 take 3x (triple) odds. For the 5 or 9 take 2x (double) odds. For the 4 or 10 take 1x (single) odds.

When your COME bet goes to the 8, tell the dealer to take your placed 8 bet down because you do not want to cover the same number through two different wagers. Then, make another bet in the COME box. Let’s say the shooter rolls a 9. You would get paid $7 for your $5 place bet on the 9 and your COME bet would move to the 9. Now that you have two COME bets active, ask the dealer to take ALL place bets down. Make sure to toss two $5 chips for your odds on the 9.

Currently, you have the 8 and the 9 through the COME and you have won $14 through your place bets. So far you are up $14 and you are risking $35. In a worst case scenario, a 7 rolls next, you will have only lost $21. However, if you notice the dice chart, a 7 can roll six different ways. Since there are 36 possible dice combinations, a 7 will statistically roll once every six rolls. In this scenario you were able to play craps through place betting and COME betting, setting up your bets in only three rolls. Therefore, using this strategy to play craps, you would have at least two more rolls to make even more money back and, ultimately, a profit.

Let’s suppose the shooter rolls an 8 next. You would then get paid $5 for your initial COME bet and $18 for your odds bet. If you are confused please look at the table above for a visual aide. The dealer would then give you back your investment and your winnings on the 8. Therefore, it only takes one COME bet to hit in order to make all your money back. At this point, you have a profit of $2 if a 7 rolls next. However, the next roll would be the fifth roll and a 7 is not due, according to probability, until the sixth roll. This means you still have a decent chance to win on your 9 COME bet, resulting in a total profit of $22 on two COME bets.

If you want to play craps more conservatively for this system, simply take 1x (single odds) on all COME bets instead of the typical (1x, 2x, 3x). This way, you can risk less, but still have great potential to make a profit. On my next article on how to play craps I will explain the strategy of “placing the inside.”

Casino Night Teenage Party

The best way to host a teenage party that stays under control is to provide an activity that completely involves and engages the kids. That way, they’re not interested in doing the things you don’t want them doing. Of course, they need to socialize, but within the parameters of your planned activity. A Casino Night party for teenagers does the trick and does it well.

Casino games are great fun and people enjoy playing them- that’s why casino nights are so often used as fund raising events. And this goes for teens as well as grown-ups. The fact that a Casino night theme seems like a very ‘sophisticated’ thing to do helps get the kids invested in your party activities from the very beginning.

Playing card and dice games isn’t and doesn’t have to be the equivalent of gambling. Make it clear at the outset, on your invitation, that “Only Fun Allowed- No Gambling”. You can use poker chips to keep track of score, or your counters can be pennies, M&M’s, matchsticks, anything. Further invest the kids in your party by encouraging them all to “Dress for Vegas”; fancy clothes can equate to better behavior in the kids’ minds.

Borrow a bunch of card tables and chairs, but you can have more kids than seats to allow for that socializing when there’s no available game to play. To keep the dice contained rather than flying onto the floor, make some dice trays using the low cardboard trays from the beer or soda store. You can paint them, contact paper them, or leave them just the way they are. You’ll need cards and dice enough for every game.

Set up a buffet table to encourage grazing. Keep it easy with store-bought frozen meatballs, purchased or home-made chicken wings with sauce, salad, and/or a 6 foot hero. It doesn’t need to be fancy food, just look nice with some dice, jokers and face cards, and poker chips sprinkled around the buffet table for themed decoration. Have a big tub of soda and bottled water on ice for the kids to grab as needed. Tunes in the background will keep the mood festive.

In addition to the ever popular poker and blackjack games, you can find a variety of appropriate and fun dice games on line. If you’ve got the room and the budget for it, I strongly recommend including a craps game in your casino night lineup. A craps table cover can be bought for $20-$30, so it’s not out of sight. Craps is by far and away the most fascinating and complex of the dice games, and many would say it’s by far the most fun. If you’ve ever been to a casino, you know that it’s always the loudest with laughter and whoops. It will definitely challenge the kids to learn how to play all the variations contained in a craps game and think about the differing odds for each.

And there’s one other advantage to including a craps game: you’ll need a croupier to man the table that understands the game, and no teenage guest is going to want to be stuck with that job all night long. So- your croupier needs to be an adult, who then becomes an adult presence in the room. And that’s a good thing. There’s plenty of online help to learn how to play the game to get your croupier up to speed so he or she can in turn teach the kids and run the game.

A casino party isn’t hard to pull off and everybody will have lots of fun. The games will keep the teens busy competing to do well and to do better than the next guy (or girl). You can finish the evening off with a silly prize or two for the nights ‘big winners’. While teens are indeed harder to please and to engage in games than younger kids, it CAN be done, and casino games will do it. The more engaged they are, the less likely it is that your teenage gathering will spin out of control into activities you don’t want occurring.