by: Jeffey Wilde
Rule 4: Money management - Use a stop loss. In each new game I would start with the same $100.00 buy in which gave me 100 - $1 units. If I lost 30 units I would end the game and take a break.
Many traders have no set money management plan before they get into a trade and just wing it. You absolutely must know what your risk is before you enter the trade and use protective stops to protect your capital.
Rule 5: Getting a read on the game. I know from experience that when a machine is really hot I will be profitable practically right away and it will pay out often. These characteristics give me important clues to games that want to stay in until I hit my win target.
In trading what often happen is that when the trader is quickly profitable they get really excited and at the same time nervous. This is because they are so worried about losing all the time, that they get the overwhelming desire to get out of the trade and lock in some profit.
The problem with this is that they never ride the trade up far enough and to succeed at this game you have to fight the urge to bail out of a winning trade. You must learn to stick with a profitable trade so that you can lock in some big trades. It is the only way to succeed as it will make up for all your losses.
On the other hand, I would leave if the machine wasn’t paying out quickly. Sometimes I would sit there for 15 minutes and keep winning a few and losing a few. After all this effort I would still not be above my starting buy-in amount.
This type of game was a sure sign that things were not going my way and probably wouldn\'t do so either. When I am in this situation I will walk away. When faced with this situation the average gambler will convince himself his luck will change. This is rarely the case as the casino usually gets the last laugh!
In my trading courses I teach that if a trade doesn’t go your way within 5 bars it is more than likely going to turn into a loser. The reason is that there is no momentum. When you observe this type of market behavior then it is usually better to exit the trade and wait for a new setup.
Rule 6: Money management - Setting a stop win. When you are in Las Vegas everyone has the “Las Vegas Mentality”. They think that when they start winning that their luck will continue and they are going to get rich. This is exactly the stupidity that the casinos count on as they know the longer a gambler stays at the table the less likely the odds will stay in his/her favor.
It was interesting to watch my Father play as he has the “Las Vegas Mentality” and on many occasions he would have a nice profit and I would tell him to walk away. He would always say, “Just a bit longer” and I constantly watched him lose not only his profit but his entire buy-in amount as well.
When you trade you must have a “Stop Win” strategy. What this is is a pre-determined profit objective for you to exit at. For example it could be when you are up 5% or $200 or 15 points etc. It could be when the market hits a particular price level. For example, say you buy a stock at $10.00; you would tell yourself ahead of time that if it hits $11.00 then you are getting out. Your strategy cousl also be based on using a trailing stop.
You absolutely must decide what your “Stop Win” strategy is before you get into the trade!
My “Stop Win” strategy for the poker machines was 50 units. Anytime I was above this level I would simply cash out and take a break. For example, I got real lucky in one game and hit for 220 units on one hand and another time I hit for 1240 units. In each instance, I took the money and ran.
After 3 days in Las Vegas, it was interesting to see how I had a very profitable experience while my Father had the exact opposite. The only difference between us was that I had rules and he didn’t.
Viva Las Vegas!!!
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