I feel as though I’ve almost cheated you, the reader, already. What can (professional) traders learn from expert gamblers?
Well here’s the thing, most ‘professional’ traders are indeed expert gamblers. Which is what I loved about this video when I found it last night whilst browsing the YouTube App on my Apple TV. Let us not argue this point at least; they’re damned good with their auto-suggestions.
Allow me to present the video first for those who might be impatient to just see what I’m talking about already. Although I will add one qualifier first, despite his recent record not living up to his nickname, the ‘BOND KING’ Bill Gross, was indeed a professional poker player before he entered the world of bond trading.
And side-note, I don’t think his recent performance is as reflective of him as it is of the performance of bonds themselves after Q.E. and TARP kicked off in the U.S. of A. Here’s the video, I have a few points to make after it which you can check out after watching it.
So the main takeaways I have from the video, with regards to trading, are the points he makes about risk-management.
- The ‘expert’ gambler always knows there’s another race coming after this one, so there’s no need to put all your money into this one. Which to me is simply a matter of capital allocation when applied to trading. Don’t take any ‘YOLO’ trades. You might only live once, but your capital might literally once have the tolerance to live once.
- The ‘expert’ gamblers bet on probable outcomes and shifted their allocations when they knew things to be more probable.
- Back to my first point, they didn’t bet the house! They have “Risk Intelligence” as this speaker puts it…so when there’s a time for risk, they use it but they still don’t “all-in”. They exercise caution and use common sense. There’s always another race; there’s always another stock.
Hope you guys enjoyed that one and were able to see some of the corollaries with your own trading that I was able to glimpse of mine whilst watch the video.
Cheers and trade safe. I’ve got another video on the subject of gambling that applies to trading; that’ll get posted later.