Successful Traders and Professional Gamblers

Books such as "The Way of the Turtles", "The New Market Wizards" and "The Market Wizards" tell very nice trading battle stories. These books are really about the war stories of the many successful traders of our times.

The 3 books seem to resonate that professional gamblers (poker, black-jack etc) have a high chance of becoming successful traders. All 3 books describe trading as very similar to professional gambling.

In professional gambling, gamblers:

• Bet small when the odds are unknown. This is their risk management strategy.


• Will have many losses


• Bet bigger when the odds favour them. For instance, professional black jack gamblers have strategies to count the cards and know when the odds favour them. This is their edge.

It is with this edge that turns the game into a positive expectancy game. In the long run, the professional gamblers will win, provided they stick to their rules strictly and patiently.

As you can observe, trading borrowed many terms from professional gambling: risk management, edge, expectancy etc.

Hence, it is so important to trade with a edge. By trading with an edge, we know that we will be profitable in the long run, and we will not suffer from trade execution paralysis - especially we have lost many trades consecutively. As we know that we will ultimately come back because we trade with an edge.

The next question is: How to trade with an edge?