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Hi all. It's been a while since I posted anything to the list.
I ran accross this article I had written quite a while ago, and
I thought that since there are a lot of new cyber-faces on the
list, they might find some value in it.
Walt
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Playing the Trading Game For Keeps
By
Walt Downs
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In trading, the technical aspects of the game are
a far cry from actual trading.
The thing I remember most about my first efforts as a trader
was the absolute frustration of not being able to produce consistent
results. I was comfortable with my trading style, and my money
management seemed alright, yet whatever I pulled from the market, the
market always took back.
In time, I came to view my systems and indicators, not as some
panacea or "answer" to the riddle of the markets, but more as a
hand one might be dealt at the Poker table; though my methodology
had signaled a strong hand, the game was only beginning!
Not far from where I live, there is an Indian reservation which sports
a Casino. In the Casino, they play several different types of Poker
One of them is a standard 7-card Stud 25-50 cent limit table. This
afforded me a unique (cheap :) ) way of trying to figure out what
separated the winners from the losers, in a game very similar to
trading.
What I came away with from these tables was
a lasting impression of the types of people that play, and how they
relate to the game. The knowledge was worth the ante, and I would
like to share the impressions that finally brought the Trading game
home to me, and provided me with the consistency I needed.
As a header to each gaming personality I will present, I would also
like to add quotes from the song "The Gambler", sung by Kenny Rogers,
It is a handy little mental tool to remember how the game is
played. :)
Each player begins the game with $20 dollars.
See if you can recognize yourself in one of these methods
of play:
HIT IT KENNY..........!!
Kenny: "You've got to know when to hold 'em....."
THE OVER-CAUTIOUS PLAYER.
The over-cautious player is afraid of losing.
Because he folds so quickly, his losses are small. Unfortunately, his
winners are also small, because his cautious play does not allow him the
possibility of larger profit.
Gradually, his funds are depleted through little mistakes, and the Vig.
(Short for "Vigorish". In this case, the percentage from each pot that
the house keeps.).
His rate of loss is slow but consistent. His $20 dollars is taken
away $2 dollars at a time. Finally, he must leave the table.
Kenny: "....Know when to fold 'em ........"
THE UNDER-CAUTIOUS PLAYER
The under-cautious player never folds, whether his cards are of
sufficient strength to play the hand or not. With every card that is
dealt, he bumps the pot to it's limit. He attempts to "win" the game
by throwing money at it.
Because of his style, his wins might be large, but his losses are also
large. Because he lacks the control to wait for the better hands, His
Losses are often immediate. Because he is so active,
the Vig eats him alive.
The giant rush of "betting it all", is quickly replaced with a
feeling of puzzlement, as his $20 dollars is swiftly removed from
the green felt in front of him.
His rate of loss is swift. His money is taken in 2 or 3 large chunks.
Sadly, this is usually not the end for this player. He will dig in
his pocket for more $20 dollar bills, until the pocket is........
empty.
Kenny: ".....Know when to walk away......"
THE "WEEK-END" PLAYER
A good technical card player. Sometimes he plays hands quite well,
holding or folding as he should. At other times he makes silly mental
errors. He does not play the game often enough to stay in "sync", and
lack of consistency is the price he pays.
His technical proficiency is enough to keep him in the game for a
fair amount of time, with the winners and losers being roughly
equal. Eventually, two factors make him lose more than he wins:
A sudden mental slip of "What the heck, it's only a few bucks to
stay" , or the constant drain of the Vig.
His rate of loss is moderate, and because he is technically good,
and reasonably smart, he usually walks away with $4 or $5 dollars
left from his original $20 dollar stake.
Kenny: "....Know when to run!......"
THE "SMART" PLAYER
The "smart" player has a College education. He feels he has studied all
the angles of the game, and that he has the ONE method that will
defeat the odds of the game. He does not fold bad hands, because he
KNOWS he is right.
The technical skill is there, but he lacks the willingness to
consider his play in an objective light. He will win 3 times
in a row, and then have one loser, which he allows to bleed
until all profits and then some, are given back. The Vig will
add to his misery.
This player's demise is possibly the worst of all. Flushed from
his successes, he has only his hindsight, to remind him of the
ONE trade he let bleed him dry.
Kenny: "......You never count your money, when you're sittin' at the
table........"
THE "LONG-SHOT" PLAYER
The long-shot player always holds to the end, pulling to the "Inside
Straight", Three of a suit looking for the "Flush", or even a small
pair.
His assumption that his small continued investments will pay off in
the "Big One", is countered by the heavy odds against his success.
In the end, the small continued losses and the Vig, will do him in.
Kenny: ".......There will be time enough for countin', when the
dealing's
done.........."
THE SOLID PLAYER
the solid player knows the odds of the hand he holds, and he rarely
bucks them. His systems are statistically valid, but simple, and he
realizes there will be times when the stats lie. If his hand is strong
he plays, if unplayable he folds immediately.
Because he consistently plays better hands, he wins more than he loses,
or his winners are much larger than the losses. He doesn't carry much
emotional attachment to the game while he is playing it, other than
enjoyment of the play itself. By limiting his exposure mostly to
opportunities which were profitable, he controls the effects of
the Vig as much as it can ever be controlled.
In the end, this player will wind up with 90% of the chips, minus
the Vig.
So, at that time in my fledgeling trading "career",
where did I fit in to this equation of the players
I had listed? Which was I?
At one time or another, ALL OF 'EM!......except the last. :)
I have worked very hard to change that.
When I strap that telephone to the side of my head, I only know 3
things:
1. I know nothing.
2. I have the hands dealt me by the market.
3. I will play the hands according to their strength.
What makes this game we play so much better than Poker?
We get to CHOOSE the hands we play. Other than that, it's all in the
way we play them...... :)
Kenny explains the last real "secret" of trading better than I :
Kenny:
".....Every player knows,
That the secret to survival,
Is knowin' what to throw away,
And knowin' what to keep.
'Cause every hands a winner,
And every hands a loser,
And the best that you can hope for
is to die in your sleep......."
That's a wrap!
EXIT TRADER
FADE TO BLACK.....
Walt Downs
CIS Trading
http://www.cistrader.com/
Copyright@xxxx Walt Downs CIS Trading Cos.
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