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Author Topic: Professional Gamblers  (Read 1239 times)

Offline donnaforex

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Professional Gamblers
« on: March 30, 2017, 02:20:31 PM »
Some thoughts on "Gambling"

There was a very interesting conversation I saw today in a private Facebook group i'm part of. This group is for what i'd call "professional gamblers" of the true gambling kind - I'm talking about racing horses and football here, not Forex or Stocks. It made me consider a few things which i'd like to share here.

Now, these gamblers are not ordinary gamblers. They don't usually take punts on something and cross their fingers and wait, they have specific systems which they use to guarantee profits on a 'trade' (matched-betting if anyone is familiar with it is one of many methods: if you are unfamiliar see this Wikipedia).

Their world has a huge number of parallels to what we do here in 'real' trading. What is also interesting is that 'gambling' has such a bad reputation in Forex, as if we are above and beyond it when in actual fact this is exactly what I argue ALL of us do on a daily basis; we are simply manipulating the figures and looking for opportunities where the odds are pushed in our favour.

For instance, once we know that on any one trade we will get +50 or -50 pips, then all we need to know is that we will statistically win >50% of the time and we are onto a winner, right? Apart from the fact we also have to factor in our "house edge" (the spread). Which is why it's better to have a long term system doing +/- 500 pips per trade than a similar system doing +/- 10 pips per trade - a 2 pip spread is a huge percentage of our short term example, but a very minor percentage of our longer term one.

I'm quite impressed (or horrified) by the fact that these gamblers seem to know more about statistics than we do as traders. One of the benefits traditional gamblers have is that they can work out an exact estimated profit/loss and know exactly where they will stand before they even enter a trade. They KNOW they are guaranteed X amount. Other gambling systems are a little more akin to forex in that they know they will only make a gain let's say 10% of the time and the other 90% they might lose, but they do crunch all the numbers and use statistically relevant sample sizes to determine the outcomes and whether or not it's worth doing a particular gamble.

One of the benefits they have over us is that in for example, casino games involving a bonus they can easily run many hundreds of thousands, or millions, of examples and get very statistically relevant figures output at the end of it. For us in forex we are limited by the amount of trades we can generate on our (often flawed) backtests. More tenuously, a lot of FX strategies i have used myself for manual trading are based around behavioural responses that are visible on the charts, again something i cannot say "Yes, i can guarantee that if i make 100,000 trades like this i'll get exactly $25 per trade on average."

Before you think i'm converting to the other side, i want to note a big downside to what they do: you cannot leverage it upwards. You might be able to earn $x a month but you won't be able to compound that upwards and many bookies have incredibly low maximum bets which are allowed even assuming you could, and the time involved can work out to be an issue. With us, we get to leverage and compound to a relatively huge extent (100 lots per trade or more, anyone?) with no extra time input.

So anyway, my thoughts for today,

Are we all actually gamblers in a way that even my professional gambling friends are not? Many of the people in the private facebook group seem horrified by the idea of Forex infact, in the same way that many reading this will think of gambling as the devils work. Admittedly, the foray into trading that they have had seems to be based around binaries, which fills me with sadness, but still, it made me stop and think.

What distances us from being a "mug punter" and puts us in the league of a "professional gambler"? Is it so wrong to give ourselves this seemingly derogatory label, especially considering how many in the gambling world are many times better behaved than so called "Forex professionals"?

Do we sit there all day watching the slot machines spin around, fingers crossed hoping and waiting? (or rather, sit there watching the ticks go up and down, wondering when our jackpot will come in?) At the end of the day we are all here trying to beat the 'house edge' whether through bonuses, or market strategy, it all amounts to the same thing. We never know for sure whether the next trade we make will win or lose, we can only have confidence based on statistics and any of the flaws that come with that.

We have to strive to be the professional and not the mug punter.

I am Donna, and i'm a forex gambler  ;D
« Last Edit: March 30, 2017, 02:27:52 PM by donnaforex »
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Offline lonewolf

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Re: Professional Gamblers
« Reply #1 on: March 30, 2017, 02:58:29 PM »
Hello Donna

I think the issue with labelling it gambling is that everyone thinks of gambling as having the odds against them. To call yourself a gambler and not have people think negatively of you would be lovely, but I can't see that happening..

Chance is everywhere, yet we don't walk around and call everything gambling. Although it does apply to it all.



Offline donnaforex

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Re: Professional Gamblers
« Reply #2 on: March 30, 2017, 03:21:31 PM »
Understand, i think my post will be a bit controversial, especially as some traders only trade because it's *not* labelled as "gambling" therefore it's socially acceptable ;)
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Online Humble Trader's Fx.

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Re: Professional Gamblers
« Reply #3 on: April 24, 2017, 11:47:16 AM »
Understand, i think my post will be a bit controversial, especially as some traders only trade because it's *not* labelled as "gambling" therefore it's socially acceptable ;)


Hello, Donna.

It would be naive not to think of Forex Trading as gambling.

The recent weekend is a good example:

I had placed two manual trades last Friday, April 21 st, when the EUR/USD, was heading south. It was looking good at the time so I increased my lot size to one lot and then it reversed on me at the last hour. I thought nothing of it and just placed a stop/loss at 1.0745, thinking I would be safe over the weekend because the trade could go either way depending on the French results.
As you can see from the attached pic, I got a margin call from Pepperstone with the excuse:

Thank you for your email.

We notice that you were trading during a major news event - The French
election market open. At this time there was a major spike in price
action and during these spikes liquidity levels are far lower than
usual. During news events, spreads widen due to the uncertainty as
liquidity providers are no longer willing to offer the same tight
spreads and liquidity to protect themselves. When opening trades over
news releases you will sometimes be affected by this.

Furthermore, if you have a stop loss order, it will be a request to close the trade
at the next available price should the market move past your close
level. In this case, there was a gap in pricing due to the news release
which meant the next available price was substantially different, so
your market order was closed at this next quoted ask price.
Stop losses and other pending triggers act as requests to close trades and
are not guarantees that your trades will close at an exact price. As an
ECN broker we do not offer a fixed spread on our currency pairs, but
instead we provide the inter bank spreads that exist in the market.


The claim here is "that I was trading during the weekend news events",, which is a joke. Major news events could take place at any time during the week. So placing a stop/loss or not in your trade is never a protection.

I remember, way back when, during the London underground bombing, a group of us lost 1.2 million USD; this was during the week.

In summary, (a) Forex Trading is gambling. (b) Your account could be wiped out at any time and there is no such thing as safe FX trading, no matter what. (b) Like all forms of gambling you are always at the merci of the dealer/broker or other intermediary.

For the longest of time, I was against martingale or grid trading as is the normal advice we have been getting and giving here but I think, the people that do trade such systems, are onto something. If they are going to gamble, they might as well do it where they "might" make a large amount of profit in a short time and pull out. The other option is to use such scalper EA's as Best Scalper, where you are in the market for only minutes, hoping that in those few minutes, the major news does not take place.

Regards,
Ilios Ellas


« Last Edit: April 24, 2017, 11:54:01 AM by iliosellas »
We humbly approach the Forex Market and take only what is earned by our hard work and intelligence.

Offline donnaforex

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Re: Professional Gamblers
« Reply #4 on: April 24, 2017, 12:11:56 PM »
Great post, iliosellas. My Forex Funnel test account also lost a lot of money due to the weekend gaps - it was on its last legs anyway but the gap not only blew the account up but took it to -56 so i owe my broker money (this is still something that a lot of people think doesn't happen due to effective margin calls, but it very much does as you can see on my account - only 56GBP but it could have been very much bigger!) https://www.myfxbook.com/members/donnaforexreal/funnel-trader/2040871
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Online Humble Trader's Fx.

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Re: Professional Gamblers
« Reply #5 on: April 24, 2017, 02:34:44 PM »
Great post, iliosellas. My Forex Funnel test account also lost a lot of money due to the weekend gaps - it was on its last legs anyway but the gap not only blew the account up but took it to -56 so i owe my broker money (this is still something that a lot of people think doesn't happen due to effective margin calls, but it very much does as you can see on my account - only 56GBP but it could have been very much bigger!) https://www.myfxbook.com/members/donnaforexreal/funnel-trader/2040871

Thank you, Donna:

The main issue we should be looking at here, is what does a "stop/loss" really mean?

In your case with Funnel Trader, if I am not mistaken, you had an open trade(s) placed by the EA with apparently no stop/loss; in my case, there was a definite stop/loss placed two days prior to the event of the elections. Next, although I am located in North America, fx opens up in Asia on Sunday. Thus, Pepperston and its servers are located and active during early market open. As such, when a volume or orders are placed one way or the other, and this is done by computer trading: If they have a "reasonable" computer set up, stop/loss trades can be activated long before such a gap evolves.

The question we should be asking brokers such as Pepperstone, is whether they honor stop/loss or "maybe" if it is in their favor?

Regards,
Ilios Ellas

We humbly approach the Forex Market and take only what is earned by our hard work and intelligence.

Offline donnaforex

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Re: Professional Gamblers
« Reply #6 on: April 24, 2017, 02:38:31 PM »
Simple answer to that is a stop loss is never guaranteed - i don't actually know of any brokers offering to fully guarantee SL these days, IG used to offer it if you pay an extra spread, not sure if they still do but that's the only example i can think of.  If price moves too fast for the broker to close at your SL = bigger loss, if markets gap over the weekend = bigger loss, if broker spread widens for some unknown reason = bigger stoploss. All the stoplosses in the world won't help you under certain market conditions, which can and do happen.
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Online reinerh

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Re: Professional Gamblers
« Reply #7 on: April 24, 2017, 02:54:40 PM »

ilio,
they cant fill at sl values when there is no bids from their liquidity providers. it can only be filled at whatever bids come in after a major event.

but it can pay well too if you are on the right side.

Online deathlord

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Re: Professional Gamblers
« Reply #8 on: April 25, 2017, 08:52:00 AM »
A stop loss is always a market order triggered by a price. So placing a stop loss is never a guaranteed safety net, especially for weekend gaps. I also got two or three stop losses hit Sunday night at market opening, and of course all of those trades would have been much better of without the SL. But unfortunately we can never know upfront what is the better strategy. We just have to try to use a proper risk management.


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Online Humble Trader's Fx.

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Re: Professional Gamblers
« Reply #9 on: April 25, 2017, 11:58:01 AM »
Simple answer to that is a stop loss is never guaranteed - i don't actually know of any brokers offering to fully guarantee SL these days, IG used to offer it if you pay an extra spread, not sure if they still do but that's the only example i can think of.  If price moves too fast for the broker to close at your SL = bigger loss, if markets gap over the weekend = bigger loss, if broker spread widens for some unknown reason = bigger stoploss. All the stoplosses in the world won't help you under certain market conditions, which can and do happen.

I understand Donna.

What is misleading is the terminology, "STOP/LOSS"; perhaps it should be changed to something else, "HOPE/NO LOSS? ;)

The other observation to make is that all this takes place by computer trading, in microseconds of time. To my way of thinking, it would take a computer(s) much more time to react to 1000 different fill orders, to build a position in one direction or other, than to close or trigger several existing "STOP/LOSS" position(s). But then again, this is just a mental perception.

I am glad I brought this to people's attention and discussion.

Regards,
Ilios Ellas
« Last Edit: April 25, 2017, 12:30:49 PM by iliosellas »
We humbly approach the Forex Market and take only what is earned by our hard work and intelligence.

Offline Wenji

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Re: Professional Gamblers
« Reply #10 on: July 16, 2017, 09:12:56 PM »
Hi people,
I am a new newbie and this is my very first post! I am learning much from each one of you having gone before me... enjoyed many of your posts. Thanks Donna for this forum.

My mullings on gambling is this. Hypothetically, if all the gambling games are to stop, people will not be missing any product because no product is produced other then enjoyment, hope, thrill, and the product and services build around to support it (eg. horse racing, casinos, etc...) In the case of forex, there is a product, which is the hard cash which still needs to change hands, regardless of speculations, for buying and selling of real goods. What do you think?

Offline Paul.Trafford

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Re: Professional Gamblers
« Reply #11 on: August 18, 2017, 07:05:24 AM »
Hi Dona,
Quite interesting topic. Here are my toughs. I would personally call it "gambling" if you are just hoping to win. Now as you describe the case, where you have a serious work of analyses guaranteeing some % each month - this is pure professionalism. Why ? For the rest it might seem that they are some times winning and some times loosing. While in reality, most of the time they are wining and sometimes loosing. Overall once they draw the line, if the result is + then you are not gambling. Cheers

 

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