|
 Sam brings over 15 years experience of equities, forex, options, and futures trading which began when he was on the floor of the Chicago Mercantile Exchange. He has traded equities, futures, interest rate markets, forex, options, and commodities for his personal interests for years and has educated hundreds of traders and investors through seminars and daily advisory services both domestically and internationally. Sam has been involved in the markets since 1991 both on and off the floor of the Chicago Mercantile Exchange. He has served as the Director of Technical Research for two trading firms and regularly contributes articles to industry publications. Sam is known for his trading, technical research, and educational guidance.
|
|
|
Trading and Gambling
Most people don't like to mix the words trading and gambling. For many, this somehow gives the impression that trading is like some secret poker game in someone's basement, a dark alley game of dice, or weekend trip to Las Vegas. While these three examples may not sound glamorous, they all share the important aspects of trading. Whether you are playing a poker game for money, trading one of the various markets we trade, or Pepsi buying commercial time on television, money is being put at risk with the intention of a desirable return on that investment. In any of these examples, there is no certainty, there is only the opportunity for better odds and the astute trader (market speculator) knows this. Even Pepsi doesn't know what kind of return they will get when they buy commercial time on a network. They have an idea but they never know the exact return; it's a gamble.
You see, when you keep it real and understand that trading is gambling, you will then understand that it is the ultimate form of gambling. It happens to be the type of gambling where we the trader can STACK the odds in our favor, much better than Vegas can. Imagine you are playing a card game in Vegas only this time, you can decide whether you want to put your money down on the table AFTER you see your cards and the dealer's cards and also bet as much money as you like on this hand. That's trading my friends and that's why it is the premier form of speculating on the planet. I have a friend who always tells me that the trading I do is just gambling and I tell him he is right only that it happens to be the type of gambling where you can absolutely stack the odds in your favor. Caesers Palace, Mandalay Bay, and the others don't enjoy the odds we are able to attain in trading.
With objective supply and demand analysis, I have the ability to clearly determine probability, risk, and reward and only put my money at risk when the odds are stacked in my favor. Here is an example:
When to buy:
A Pullback in price to demand (support)
Odds enhancer:
1) In an uptrend
2) With a substantial profit margin of at least 3:1 (reward/risk)
3) A Quality demand (support) level
a. Strong rally in price from demand suggesting a big supply/demand imbalance
b. A demand level that has not been retested yet which offers the greatest odds
c. A demand level that is near larger time frame demand
d. A demand level that is a pivot low, well placed on the larger supply/demand curve
4) Is the decline in price to demand a stair step decline suggesting a low odds buy or is the decline a sharp drop in price to demand suggesting a much higher odds buying opportunity
Each odds enhancer increases the probability of your potential trade (and there are more quality odds enhancers when you include the indicators and oscillators). After objectively assessing your odds based on the setup you see on your chart, you can then decide how much of your capital you want to risk on the trade. Vegas would LOVE to have these odds but they don't come close. The one thing Vegas does, however, that brings them consistent riches is that they don't change their rules when they lose. They know they are going to lose money every day but at the end of the day, they almost always come out ahead with profits. They have a system that tilts the odds in their favor so they know that all they have to do is stick to the plan and they will profit. Imagine if they became emotional and changed the rules each time they lost. If they did that, they would not enjoy the profits that they do.
With the ability you have in trading markets as we do, make sure you have a set of rules that stacks the odds in your favor. If you don't have that set of rules, don't trade because you are competing with traders who do and you will lose. If you are in search of rules that carry better odds, email me, take an Online Trading Academy course, join one of the powerful XLT programs, and so on. Once you have that set of objective and mechanical rules that help stack the odds in your favor, make sure you stick to it and understand you will still have losses sometimes but that's okay; think of the casino and all the times they lose in a day. Remember, in trading, gambling, speculating or whatever you chose to call it, the one thing that is certain is the lack of certainty. Instead of searching for certainty, become a part of the consistently profitable group that only searches for better odds.
Sam Seiden – sseiden@tradingacademy.com
|
|
