# Business or Gambling, that is the question



## It's Snake Pliskin (5 July 2006)

This was posted by one of our expert advisors here on ASF:



> ...how a methodology actually improves their trading from Gambling to Business.




How is this done, for beginners and advanced alike. I`m sure it could be a good discussion. 

So for clarity sake: How does a trader improve their trading from gambling to a business? 

Two things to consider before the discussion:
1. Are traders gamblers?
2. Are traders businessmen?

*To enhance your understanding lets look at the word "gamble": * 

gam·ble    ( P )  Pronunciation Key  (gmbl)
v. gam·bled, gam·bling, gam·bles 
v. intr.

To bet on an uncertain outcome, as of a contest. 
To play a game of chance for stakes. 
To take a risk in the hope of gaining an advantage or a benefit. 
To engage in reckless or hazardous behavior: You are gambling with your health by continuing to smoke. 

v. tr.
To put up as a stake in gambling; wager. 
To expose to hazard; risk: gambled their lives in a dangerous rescue mission. 

n. 
A bet, wager, or other gambling venture. 
An act or undertaking of uncertain outcome; a risk: I took a gamble that stock prices would rise

*Now lets look at the word "business":*

busi·ness    ( P )  Pronunciation Key  (bzns)
n. 

The occupation, work, or trade in which a person is engaged: the wholesale food business. 
A specific occupation or pursuit: the best designer in the business. 
Commercial, industrial, or professional dealings: new systems now being used in business. 
A commercial enterprise or establishment: bought his uncle's business. 
Volume or amount of commercial trade: Business had fallen off. 
Commercial dealings; patronage: took her business to a trustworthy salesperson. 


I will opine a bit to get it going.  

Objectives: where are you going, and why?
If you can`t answer the following question you should stop now:

What am I doing this for?

Mr Tech/a has posted in another thread some reliable material:
https://www.aussiestockforums.com/forums/showthread.php?t=3754


Snake


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## wayneL (5 July 2006)

Trading (if done properly) of course has features of both business and gambling.

But here's couple of views to throw into the mix:

I used to be in the furniture manufacturing (upholstery) game. The fabric merchants would come around and peddle their indent lines. Sometimes we would bite and indent a quantity of a particular fabric.

Will it sell? Will it sell on our furniture? Will it sell at a price we can make a profit on? If it didn't sell, not only did we not make a profit on the fabric, but also the underlying piece of furniture as well. Will I have to sell it at a loss to recoup some capital?

I could invest thousands of dollars spend weeks of my time on building a new design. Will it sell? Will it enhance the reputation of my company? Will it bark at me every morning when I walk in the shop? (had a few of those) Will I have to send the piece of crap to the auctions to get rid of it?

Is this all not an uncertain outcome? A gamble if you will?

If someone opens a shop on a high street selling widgets. Will the widgets sell? Will enough widgets sell? Will enough widgets sell to pay the rent/overheads and my wages.

Is this not an uncertain outcome?

I guess it all comes down to research, planning and management; the oft quoted positive expectancy.

Business can become a gamble and gambling can become a business (eg Crown Casino)

Indeed, "What am I doing this for?" is a paramount (if not rare among traders) consideration. Often it's just a fuzzy notion of "making money" or "getting rich".

For some trading most certainly is a gamble. For many it is "The occupation, work, or trade in which a person is engaged"

Just a couple of points to add to the discussion.

Cheers


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## kgee (5 July 2006)

well if bloomberg has a sports show based on picking the winners it kinda suggests that both gambling and business are intermingled


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## swingstar (5 July 2006)

I agree with wayneL regarding uncertain outcomes in business. The alarming statistics (whether they're true or not I don't know, they're often quoted though) of businesses that fail says to me that no one can really be certain of a business's outcome. 

Trading has risks, but you can certainly have some idea of the overall outcome. When I place a trade, I don't care so much about the individual trade, I'm looking at the longer term picture. 

With trading, you are basically exploiting or customising an already existing 'business' architecture - the stockmarket - it has a history. To an outsider, a single trade might sound like a gamble, but if you have an idea of your system's longer term expectancy, it is certainly not gambling. At least no more than starting or investing in a business, and in fact IMO, probably less.


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## tech/a (5 July 2006)

*Gambling* in its pure sence *has no structure*.

You walk up to a roulette table and put X on Black.
Or sit at a Blackjack table with $500 and play.

* Business Has structure * its structure is designed to make a profit.
How you come to that profit--be it Trading,Playing Roulette or Blackjack or selling Upholstery goods is not important.

The structure of business---the how you derive profit---is the single most important key to all business.

Some are better at business structure than others and Business structure need also be *DYNAMIC*---your market will change and to stay profitable OR become more profitable,business must have the ability to morph into prevailing Market conditions.

Lets take Trading as the Business example.
To be successful it will need 

***** (1) Capital---it shouldnt be undercapitalised
(2) A proven methodology that cuts losses and maximises gains by either having more wins and profit that losses OR far bigger wins than accumulated losses.Positive expectancy.
(3) Its costs and Directors drawdowns must be at a level which the business can handle.
(4) Taxation must be considered.
(5) Have a Blueprint with which to "Benchmark".
(6) Have a reporting proceedure which monitors business success and clear action plans for best and worst case scenario's.

As a business establishes it should have an expansion programme and a clear structure to shift it to the next level/s.*****

*How successful* That business will be or could be will be determined by the mechanics of the internal structure of the business and to a large degree the thouroughness and business acumen of its Directors or Management team.
Often care to detail is overlooked in persuit of the BIG PICTURE.

As an example of internal structure---- I could if I had the capital have 10 Techtrader methods running in the one market---that would be the market which is powering ahead of others,OR
I could have 3 other methods running in tandem with the Longer term method OR I could have a method of switching off my Long Trading and Switching to Short Trading,OR Trade Futures or Commodities--- or all of the above---endless.

Youll note there is no mention of How I trade or what I trade---thats simply the Commodity and Plan of business.
The above is *THE STRUCTURE OF BUSINESS ******

*Without it most have the Commodity and a chosen plan of a business but NO BUSINESS STRUCTURE with which to carry out their business.*

Just like renting a shop and Selling upholstery---90% will fail however those figures will sharply decrease with a sound *REPORTABLE and MEASURABLE * business structure.

I sincerely hope people can see the subtle yet *POWERFUL * difference to a trading with a plan.


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## coyotte (5 July 2006)

IMHO Gambling has aquired a undeserved bad reputation by the vast majority who do not know how to gamble !
ie: TAB Punters, Poker machine players, Lotto players etc  --- these groups simply do not care about or understand ODDS , They are HOPING for a BIG WIN whilst at the same time getting a bit of entertanment --- this is not gambling in its true sense.

A TAB Punter for example is like a "Day Trader " who instructs his broker to "BUY"  XYZ @ the OPEN and SELL @ the "CLOSE"  , hoping to make a profit !

A Professonal Punter on the other hand would attend the track and obtain the best FIXED price , ONLY on the selections that are @ greater  odds than  that he/she has  calculated ----- worlds appart-- but both are for some reason classed  as gambling .

Pocker Machine,Lotto Players are all playing with the ODDS stacked AGAINST them, where as a CARD COUNTER is playing with the odds stacked their way 
---- again worlds apart --- but gambling 



As a Share Trader you are placing a BET that " XYZ will rise to a profitable level -- before dropping to a stop loss " ---- SAME as all the above gamblers how well you do will be determined by your attitude to ODDS .

As far as being a business , S/Traders who are looking at making their major income from trading would do themselves a favour by looking at how Professonal Punters used to operate ---  these guys only had two days a week to make their profits !


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## tech/a (5 July 2006)

> Professonal Punters used to operate




Care to elaborate on how they operate? or used to.

Calculating the odds of a horse against others in a field is simply a singular opinion which obviously if offered by the bookie at odds better than those the Pro Punter came up with demonstrates my point---wont guarentee a win the bookie gets it right just as often.

Just as a fundamental UNDERVALUATION of a company wont guarentee profit if you buy it! Its just one opinion.

Again this is the nuts and bolts of the gambler tools of trade and plan of action----and if thats all he is doing then he is simply GAMBLING its not even close to a business.


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## nelly (5 July 2006)

Hi y'all....I'm not a mathematician by any means...not good at calculating big numbers..........but I've lived awhile.......and have come to realise _everything_ is a gamble......everything with people=emotion, in the equation is a gamble........no matter how much research/preparation/education you have done. 
Cheers..  :drink:


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## coyotte (5 July 2006)

tech/a said:
			
		

> Care to elaborate on how they operate? or used to.
> 
> Calculating the odds of a horse against others in a field is simply a singular opinion which obviously if offered by the bookie at odds better than those the Pro Punter came up with demonstrates my point---wont guarentee a win the bookie gets it right just as often.
> 
> ...





It may have not been close to a business in the sense that a well run business can ussually forcast future earnings .
But as wayneL points out that in his furniture factory , it was a gamble on new designs, materials etc , which comes back to that most small buisness purchases are bet that you are able to Sell @ Higher Prices.

Pro Punters in the main used to operate in the 70s & 80s when Bookies where in the process of changing over from the traditional method of "making a book" to the current method  (ratings) --- one could compare this to the stockmarkets where they have change from F/A to T/A


A Pro Punter would only operate on Sat Metro & Wed Metro/Prov Races and only in those races where the ability of the field was known.
Would  select about 3 races from a meeting --- and concerntrate on the top 4 contenders in each field , if any of these top 4 come up during the course of betting @ odds greater than calculated than a proportional bet was placed 
so as which ever selection won you was in a overall profit --- if the Rating Service you was using was good enough , then a overall 10% PTO was quite common  ---- But as with all gambling Money Managment was the KEY factor , because as sure as night follows day, the run of outs would allways follow the run of wins ---- as with any business , there is allways the quite cycles 



The point i was trying to get over is not in a business sense but the 1st law of gambling --To win long term you must allways have the odds on your side -
This is why casinoes allways win --long term  

In all respect , you can draw up all the business plans going for S/T but in the end it is a gamble --- ignore the 1st rule @ your peril


Cheers


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## IGO4IT (5 July 2006)

Sorry guys, I don't understand the concept of the comparison between trading & gambling!

Any business in my opinion is a gamble to some extent.

Considering that outcome &/or future income/loss from any investement is never guaranteed (Never here is really Never, as is 100% impossible) & considering that only constant in life is death so anything we do in life is a gamble in a sense that we don't know the outcome.

We try our hardest to use previous theories that worked & ways of implementing new ideas & at the end there's no one that can create an investment with a guaranteed outcome which by turn makes all investments gambles as there's no theory that has an insurance policy on it to succeed.

Did I go too far 

cheers,


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## flyhigher (5 July 2006)

In my opinion, trading is a business but a risky business.  Let us see how many fund managers and traditional businesses survive for last fifty years. Definitely traditional business. Warrant Buffet is exceptional. Long term capital managment, tigher fund, soros, the disaster list goes on and on. Even past performance can not be future indicator. For displined traders with trading plans, it is a business. For lots of retail investors (including me), it may be a gambling.


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## swingstar (5 July 2006)

To IGO4IT and flyhigher, statistics and the law of averages will say otherwise. If you test a system on a large population of historical data, it is reasonable to expect the mean longterm. Not exact and not even certain, but likely. You could have multiple systems for different markets to better your profits, as I doubt any mechanical system performs exactly the same in every type of market.


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## coyotte (5 July 2006)

swingstar said:
			
		

> To IGO4IT and flyhigher, statistics and the law of averages will say otherwise. If you test a system on a large population of historical data, it is reasonable to expect the mean longterm. Not exact and not even certain, but likely. You could have multiple systems for different markets to better your profits, as I doubt any mechanical system performs exactly the same in every type of market.




Ring a Casino and tell them you have a system !
They'll  send a Limo around


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## swingstar (5 July 2006)

coyotte said:
			
		

> Ring a Casino and tell them you have a system !
> They'll  send a Limo around




If there is a game that... 

* allows you to get out of a losing position
* allows unlimited profits on a winning position
* can be analysed (not just random)
* has fifty years of historical data

Tell me, and I'm in!


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## It's Snake Pliskin (6 July 2006)

Ig, 
Your name is difficult to remember.  



> Sorry guys, I don't understand the concept of the comparison between trading & gambling!




For the value of this thread it should relate to gambling as a trader not as a gambler in a casino. 



> Any business in my opinion is a gamble to some extent.
> 
> Considering that outcome &/or future income/loss from any investement is never guaranteed (Never here is really Never, as is 100% impossible) & considering that only constant in life is death so anything we do in life is a gamble in a sense that we don't know the outcome.




True. It`s the propensity to take the uncertain to extremes or beyond what most would call normal.




> We try our hardest to use previous theories that worked & ways of implementing new ideas & at the end there's no one that can create an investment with a guaranteed outcome which by turn makes all investments gambles as there's no theory that has an insurance policy on it to succeed.
> 
> Did I go too far




No you didn`t.


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## It's Snake Pliskin (6 July 2006)

Ah,



> For displined traders with trading plans, it is a business.




*Does just having a trading plan constitute a business plan? 

Are they one, or independent of each other?*

Maybe the trading gamblers only have trading plans, maybe. Though, I would think business traders have trading plans and business plans.
I use the term business trader to differentiate the two and don`t mean institutional traders.

Discipline is the psychological aspect so is irrelevent in answering the previous two questions.

It comes back to the question: What am I doing this for?


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## It's Snake Pliskin (6 July 2006)

> * Business Has structure * its structure is designed to make a profit.
> How you come to that profit--be it Trading,Playing Roulette or Blackjack or selling Upholstery goods is not important.
> 
> The structure of business---the how you derive profit---is the single most important key to all business.
> ...




Thanks for that Tech. 

Having a clear and realistic expectation for exiting a business before, and during the life of a business is paramount. 

When will I stop, and why?
I would think traders and investors should be aware this.


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## swingstar (6 July 2006)

I know why I'm doing it, and I'll stop or at least spend less time doing it when I achieve my goals.


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## tech/a (6 July 2006)

> Does just having a trading plan constitute a business plan?




A Trading plan is simply the way you are going to enter the market on an individual basis.The Trading business plan is what you do during the time in the market on an accumulation basis.



> Are they one, or independent of each other?




Individually they are quite seperate.
Cumulative they are one.





> I know why I'm doing it, and I'll stop or at least spend less time doing it when I achieve my goals.




And you may well reach your goals much sooner had you been more professional in your trading business.
It hit me fair between the eyes when I was 25.My business at the time turned over $300K and made me approx 10%
My Mentor had a larger business Turning over several Million and making him around 15%.
In a single year he made around 14 X more than I did.Wow 14 yrs of profit in one!Clearly to me at that time being a better business man had its rewards.



> We try our hardest to use previous theories that worked & ways of implementing new ideas & at the end there's no one that can create an investment with a guaranteed outcome which by turn makes all investments gambles as there's no theory that has an insurance policy on it to succeed.




*In Business I have to disagree.* There are business models which if followed you cannot fail. That doesnt mean that the application of those business models on EVERY business will guarentee success.
Seemingly this is a contradiction---infact some business ideas are flawed from the beginning and if this is the case then the Business models of which I speak will flush this out well before the business gets going on its road to failure-------Exactly the same for a Trading Plan prior to "Opening " Business.



> The point I was trying to get over is not in a business sense but the 1st law of gambling --To win long term you must allways have the odds on your side -
> This is why casinoes allways win --long term




I see the point you are making--Casinos KNOW that the odds are in their favour the average trader has no idea-----*My point EXACTLY*
Traders should do everything they can to be sure the way they trade has a positive expectancy.

That doesnt mean that you need to win more often that you lose.I win only 35% of the time and do very well.
There is much you can do to achieve positive expectancy.Youll need software and data.But as an Example I have tested 50000 portfolios over an 8 yrs period using the Formulas of T/T.Of those portfolios NOT 1 made a loss.
I have a blueprint from those 50000 portfolios and the current publically traded porfolio has remained within the parameters of that blueprint.

"The Business is profitable" and in times of drawdown I have been able to look at the Business blueprint to avoid disaster---had it traded outside of the parameters (which it could) I could shut the business down.



> Ring a Casino and tell them you have a system !
> They'll send a Limo around




If you had 10 million to play they probably would,but if you took $10 million off them then they would probably ban you.There are many many professional gamblers BANNED. If you dont think casinos can be beaten in a business sense then THINK AGAIN. *Swingstar * could well be one of those banned.
The law of BIG NUMBERS works for EVERYONE.

See money BIG money is made from OUTLIERS ,your in business to take advantage of these when they come. (Sure businesses can and are designed around small % deviation from a mean) But generally business profits most when we find outliers which we can take advantage of---for me in my Construction Business that is a 1 million $ project as my average project is $20-40K they come along a few times a year and when I get one then the bottomline goes nuts. I cant just do 1 million projects I still have to be in business doing the "Bread and Butter" work.
My business model ensures profit during those periods when the outliers are in hybernation-----Trading is no different.


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## RichKid (6 July 2006)

wayneL said:
			
		

> ...........
> I used to be in the furniture manufacturing (upholstery) game. The fabric merchants would come around and peddle their indent lines. Sometimes we would bite and indent a quantity of a particular fabric.
> 
> Will it sell? Will it sell on our furniture? Will it sell at a price we can make a profit on? If it didn't sell, not only did we not make a profit on the fabric, but also the underlying piece of furniture as well. Will I have to sell it at a loss to recoup some capital?..........




What's an 'indent' in this context Wayne? I'm not that familiar with the term.


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## tech/a (6 July 2006)

*'indent'*

Stock.


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## tech/a (6 July 2006)

*Perception* Some may have heard this one.

A shoe salesman was asked to go to China to investigate the export of their shoes into China.

When he returned he reported that opportunities for shoe sales were virtually non existant.When asked why by the CEO of the company he said--

*"They are all bare feet they have no need for shoes"!!*


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## rozella (6 July 2006)

> "They are all bare feet they have no need for shoes"!!



market wide open.....unlimited opportunity


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## tech/a (6 July 2006)

Excellent.You pass with honors.

Mind you there would be no market for shirts in INDIA as they all wear Kaftans.
OR trousers in Scotland--to many kilts.


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## lesm (6 July 2006)

rozella said:
			
		

> market wide open.....unlimited opportunity




We should appoint you Chairman of the Board after that observation.


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## swingstar (6 July 2006)

tech/a said:
			
		

> And you may well reach your goals much sooner had you been more professional in your trading business.
> It hit me fair between the eyes when I was 25.My business at the time turned over $300K and made me approx 10%
> My Mentor had a larger business Turning over several Million and making him around 15%.
> In a single year he made around 14 X more than I did.Wow 14 yrs of profit in one!Clearly to me at that time being a better business man had its rewards.




tech/a, very interested in further reading you can recommend. I'm all for being more 'professional' if you'll guide the way. I have a lot of theoretical knowledge on running a business, as that's what I was into before trading. However trading is just like a franchise in a way, you are tapping into something that's already there. Of course you can be somewhat creative, but the basis is there. Trading takes out a lot of other factors as well in your typical business, ie. marketing, customers, products, etc. That's probably why I've been able to stick with it and not the many businesses I attempted to start.


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## rozella (6 July 2006)

RichKid said:
			
		

> What's an 'indent' in this context Wayne? I'm not that familiar with the term.



Many decades ago, I used to indent container loads of wall & floor tiles.  I did not have the direct contact with the manufacturer , so I bought through a 3rd party ( the wholesaler in Australia)  I put up my own "letter of credits" & the wholesaler skimmed a small profit off the top.  At the time my business was not large enough to deal direct.  This was called indenting.


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## It's Snake Pliskin (6 July 2006)

> A Trading plan is simply the way you are going to enter the market on an individual basis.




I would think a trading plan has more: buying and selling strategies, and money management principles and parameters. A system, or tool to make profit with basically - trading methodology and management.



> The Trading business plan is what you do during the time in the market on an accumulation basis.




"In the market" is ambiguous. Does that mean one`s holding period or one`s business life?

The business plan, encompassing the trading plan, would be all else and would answer the following questions: 
Why am I doing this? When will I stop doing this? What are my goals? How much time do I need to expect what I want to achieve? How much capital do I need? What overheads are there? Will I have a backup computer? Do I have access to my accounts by phone? Am I psychologically fit to carry out the business? etc.

More importantly  it would look at monitoring the business and have strategies for a: making profit (trading plan), b: strategies for monitoring performance, c: strategies for adapting the business due to performance or new opportunities.

Discipline is what makes it work though, so simply having the plans doesn`t constitute future success.



> Individually they are quite seperate.
> Cumulative they are one.




Yes.



> My business model ensures profit during those periods when the outliers are in hybernation-----Trading is no different



.

Good point here. This is what I see makes the difference between a gambling trader, as the word gambler is normally interpreted, and a trader in business to make profit off the markets. 

Snake


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## RichKid (6 July 2006)

rozella said:
			
		

> Many decades ago, I used to indent container loads of wall & floor tiles.  I did not have the direct contact with the manufacturer , so I bought through a 3rd party ( the wholesaler in Australia)  I put up my own "letter of credits" & the wholesaler skimmed a small profit off the top.  At the time my business was not large enough to deal direct.  This was called indenting.




Thanks Tech & Rozella,
So basically it means buying/stocking things via an intermediary/agent because it's impossible or difficult to source it direct.


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## rozella (6 July 2006)

RichKid said:
			
		

> Thanks Tech & Rozella,
> So basically it means buying/stocking things via an intermediary/agent because it's impossible or difficult to source it direct.



It may not be impossible to deal direct, however, it may be more convenient & less time consuming.  The intermediary/agent does the ordering & looks after shipping etc & we put up the security against the order.


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## tech/a (6 July 2006)

> I would think a trading plan has more: buying and selling strategies, and money management principles and parameters. A system, or tool to make profit with basically - trading methodology and management.




Correct------its the way you'll do business.
It in itself ISNT the business.
VERY important to define the difference.




> Does that mean one`s holding period or one`s business life?




Business life.



> Discipline is what makes it work though,




More than that--firstly it must be a proven profitable methodology,secondly it must be adaptable to market conditions if trading falls outside of the business blueprint. to be disciplined when the method is OUTSIDE the Blueprint could be a disaster.



> so simply having the plans doesn`t constitute future success.




I knew you had it!! see I was genuinely suprised!!

*Swingstar.*
Most business reading is designed for larger business,even medium sized business isnt directly catered for.
However Six Sigma for dummies.
Strategic Management---there are 100s of titles on this topic but suggest a no nonsense approach from John Viljoen.The book is titled Strategic Management.
I have some titles at home so will post a few tonight.

You need to take out snippets which you can associate with.

Most Uni's have Business Management Programmes as part of their MBA,s

They can be a few K (5K I paid) but believe me its money worth spending!!.

If traders had a grounding in business there would be more successful traders out there.


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## RichKid (6 July 2006)

rozella said:
			
		

> It may not be impossible to deal direct, however, it may be more convenient & less time consuming.  The intermediary/agent does the ordering & looks after shipping etc & we put up the security against the order.




so the agent takes on the credit risk and passes it on as part of the increased costs....sounds very normal now that you explain it so clearly. Thanks Rozella.


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## IGO4IT (6 July 2006)

swingstar said:
			
		

> To IGO4IT and flyhigher, statistics and the law of averages will say otherwise. If you test a system on a large population of historical data, it is reasonable to expect the mean longterm. Not exact and not even certain, but likely. You could have multiple systems for different markets to better your profits, as I doubt any mechanical system performs exactly the same in every type of market.




Swingstar,

Trading mechanical system imo is defenitely testing previous success stories & betting on them repeating previous preformance & being successful in future (considering all constants are same for past & future, e.g. market sentiment,world events, media focus on a certain industry..etc).

I don't accept the fact that yesterday's trading could had ever have the same constants as today or now as 1 hour ago. the difference is the extra info the market has that I as a person may not notice but many already know.

which makes the idea of trading probabilities a success but never to guarantee its outcome, which is by turn is a gamble. The risk here is hidden under your confidence from witnessing previous success but its still there & bigger than what you think.

business operations in general had totally changed fundementally in its core processes, email/call centres/internet/IP telephony/globalisation had changed business & what it used to be in the past & it KEEPS changing it today but by smaller portions, we don't realise the change in business processes because we live it but the change is happening now. 

if depending on previous history in mechanical systems was successful as profits were higher than losses then imo in near future it can't be as successful as before, because the constants of the market & backgrounds are changing very fast now, the rate of change is a lot faster than 2 or 3 years ago & world events affect the market in seconds & others come along & do the same thing.

The recent correction was all about fear of inflation of US, it took int'l markets down while USA had a lot bigger issues in last 10 years that should've had the same effect but back then it didn't!

History is beneficial to those who can learn from it & use it today on today's environment, using history as a guide to future may not be the best option as we don't know what's the next 1 hour news that could make or break the market!

The risk of "anything happening" that could come in next minute that could affect int'l market is higher than what you think & it makes all trades gambles. 

We feel safe because history shown that major issues that could crash markets are few but they still exist & I guess no one could ever think that sept 11 could ever happen or ever suggest when!!

I still believe we're betting in our trades that using previous theories will work again with same result, Same as proffessional gamblers who go to casino & play blackjack by the rules, they can win but never shocked when they lose...because they're at the casino 

cheers,


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## tech/a (6 July 2006)

> I still believe we're betting in our trades that using previous theories will work again with same result



.

Could be argued that this is true of all business.
In trading provided the previous "theories" are proven profitable then its up to the business owner to stay within the proven parameters and find ways of improving his business that are also proven to be profitable adjustments.

What business owners (The good ones) do is *Quantify their risk * to the best of their abilities.
Gamblers in the purest sence quantify their risk as 100% loss or gain of X by odds available.
Vast difference.


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## swingstar (7 July 2006)

IGO4IT, definitely agree that single trades are basically gambling (or what I prefer to call risks), you don't know what is going to happen after you enter a trade, but you can weigh up the odds given past samples of data. 

There are really only a number of directions a stock can go after you enter a trade. Technical analysis is about looking at history and trading with the odds. If you repeat the same technique over and over again, math will argue that it is unlikely that the odds will change considerably. 

Of course a world event or speculation can affect a certain trade, and can affect a trade entered on any type of analysis, but that is where risk and money management comes in. Without those you are doomed no matter what analysis you use.


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## TraderPro (8 July 2006)

I had a whole different perspective on this issue... But I like Snake Pliskin's as well as tech/a's  and coyote's take as well... I might blog about it in future...

In May, at first I concluded that share trading  was not gambling... but a few days later I then switched my arguement, concluding that share trading is gambling.

In the end - it really is up to the individual trader to decide what to make of it. 

In the last post where I did conclude that trading was gambling, I noted that the more important issue was not to ever treat trading as gambling and have it rule your life as other gambling addicts have.


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## It's Snake Pliskin (8 July 2006)

TraderPro said:
			
		

> In the last post where I did conclude that trading was gambling, I noted that the more important issue was not to ever treat trading as gambling and have it rule your life as other gambling addicts have.




TPro,

Like the blog! check your spelling here: share trading is gambling.


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## coyotte (8 July 2006)

Would have thought the term " Share TRADING " was enough to give the game away !

Was under the impression that the term " Trader " , going back to the Silk Road implied someone who bought items , hoping to resell them @ a higher price --- with enough profit to cover overheads ---- what  a very ancient and proud profession we are in -- love it win or lose !


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## IGO4IT (9 July 2006)

swingstar said:
			
		

> IGO4IT, definitely agree that single trades are basically gambling (or what I prefer to call risks), you don't know what is going to happen after you enter a trade, but you can weigh up the odds given past samples of data.
> 
> There are really only a number of directions a stock can go after you enter a trade. Technical analysis is about looking at history and trading with the odds. If you repeat the same technique over and over again, math will argue that it is unlikely that the odds will change considerably.
> 
> Of course a world event or speculation can affect a certain trade, and can affect a trade entered on any type of analysis, but that is where risk and money management comes in. Without those you are doomed no matter what analysis you use.




Hi Swingstar,

if odds are 99.99% (99.99% being the max probability we can realistically forcast) in favour of a certain outcome...it still doesn't cancel the fact that there's 0.01% of having the opposite outcome.

even if risk is 0.000001% of an opposite outcome, it's still there & the more experience we have, the more we get less shocked if that small little probability exceeded the favourite outcome we're expecting.

I personally had a look at how many opposite outcomes achieved & realised that the odds of having an opposite outcome is a lot higher than the outcome which the market calculated because we simply ignore the "single" circumstances of each trade we make but we enjoy accumulating the overall risk of all trades which makes our risk lower than what it is "mathematically" but never realisitically. Other reason is that technical analysis tells the buying & selling figures based on each of the previous days circumstances of world events but it doesn't tell you if same outcome should be expected while for instance if gold had gone from $720 to $500 in 2 days!

The risk is there & higher than our calucated rates, same as having an accident while driving a brand new top brand car or being hit by a bus while crossing the road....its very minimum but it does happen...which makes all trades again a gamble!

cheers,


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## IGO4IT (9 July 2006)

tech/a said:
			
		

> . What business owners (The good ones) do is *Quantify their risk * to the best of their abilities.
> Gamblers in the purest sence quantify their risk as 100% loss or gain of X by odds available.
> Vast difference.




Do you mean that roulette player who puts bets on 3/4 of the numbers on the board didn't have good odds?

Do you mean that there's any business in the world that is 100% safe of competition? that could crash it?

the idea of losing part or all of your investment in any business comes back to "how long" will you last losing small amounts before you say it enough & pull your capital out! 

losing all or part of your capital imo has nothing to do with trades & gambles, all are gambles.

A 2%/month loss over 5 years could have the same effect as 10% loss/day for 10 days or 100%/hour in 1 hour...the question is where do you stop is what make you lose all or part of your investment, but all business losing are gambling that better outcome will be achieved tomorrow or next hour!

No ones likes to lose all their capital but waiting 5 years on 2%/month loss expecting a good outcome that will push your business higher is also a gamble. (you're not really sure if your business using the BEST used/invented modules will still get profits or not UNTIL the theory physically works).

Which makes trades & businesses all gambles.

cheers,


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## Sean K (9 July 2006)

Everyday life, including business, is a calculated risk. Or 'gamble'.


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## nizar (17 March 2009)

Good thread this one.


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## MS+Tradesim (17 March 2009)

What I wonder is how some of the old posters are going. Did they get flushed out of the game by the ongoing crisis?  How many turned 'trades' into 'long-term investments'? Has this filtered the wannabes from the going-to-bes? My guess is yes. They will probably arise again in 6-7 years when the next bull is raging, and take another gamble.


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## nunthewiser (17 March 2009)

MS+Tradesim said:


> What I wonder is how some of the old posters are going. Did they get flushed out of the game by the ongoing crisis?  How many turned 'trades' into 'long-term investments'? Has this filtered the wannabes from the going-to-bes? My guess is yes. They will probably arise again in 6-7 years when the next bull is raging, and take another gamble.




Certainly has in commsec chatrooms . a lot of the great typists seem to have dissapeared since the downturn ...funny that


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## Wysiwyg (17 March 2009)

Maybe only those remaining are the truly addicted.


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## nunthewiser (17 March 2009)

Wysiwyg said:


> Maybe only those remaining are the truly addicted.




LOL amen to that .... also this is about the only job that i can do  where it doesent matter if i have an "attitude problem "


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