Is Trading Just Complete Bull**it???

[WhyAlwaysMe]

Before I start this is not just another vent from a losing trader . Currently I am not actively trading as my main focus is with traditional bookies and casinos. However I love the toy and am only a few shorts steps away form becoming a MickeyB lol. The Toy is great, this forum is most entertaining (especially now Custard's back ) and there are many great posters here.

The problem I have is with trading itself. Despite much reading I remain a sceptic. The evidence of people making a success of this is flimsy at best. Take Peter - is he a genius trader or distant relative of the heroin dealer? The guy never seems to have a loss. Is the reason he invented Bet Devil purely to provide raw matieral for his printing press or is he a modern day philanthropist? Clearly he is a very clever guy and always talks in the 'we' now so what chance have I of beating his team Devil and ten years of Betfair data stacked on his army of computers?

The whole contradiction that is Peter and Bet Devil is too silly for words. It's remarkable that his blog is allowed by the ASA. Imagine if Sporting Index ran a blog like his for example? Bet Devil seems to be a good product but you have to ask yourself why they choose to promote it in this way.

Perhaps I am being a bit mean on Peter because I do enjoy the blog and certainly he is not the only offender. If you go through all these trading blogs with the possible exception of Adam H they are almost always promoting a trading tool or product. And yes I have heard the arguments about Adam H also. After months of reading these blogs I have only ever found one that stacked up. It was a guy from Canada who was trading soccer pre match based on TA and he did have a good track record of success. However sadly he wound it up a few months back.

I got into this discussion on another forum and a knowledgeable poster there wrote:

"You have to remember that there is an enormous amount of variance involved. One out of every million gamblers on betfair is experiencing one-in-a-million positive flux. They could win hundreds of thousands through sheer dumb luck. Those people tend to get noticed-but they may have no special skill, they are just the ones that escape the cemetry of failed gamblers via chance."

Also:

"In a truly efficient market where the odds at betfair or the bookies represent the true odds (minus commission or vigorish) there is no possible way to make money in the long run. There are very powerful and fundamental laws of probability that dictate why this is the case.

The most comprehensive explanations of why this is the case are contained in Richard Epstein's "Theory Of Gambling And Statistical Logic" and Edward Thorp's "Mathematics Of Gambling". There are many, many other proofs contained in many other gambling texts, and also texts on the stock market such as Malkiel's "A Random Walk Down Wall Street". Aside from theory, it can and has been proven via computer simulation. The failure of numerous Wall St hedge funds is testament of proof in actual practice, not to mention further numerous betting syndicates."

Gloomy news indeed. This whole trading movement is so noose. Everybody has something to sell and nobody wants to address where the money is coming from in this zero sum game. Betfair is no longer expanding, the pro trader's are getting better so it's difficult to see where the fresh money is coming from.

I know many of you will cite 'Premium Charge' as evidence of the success of trading as a concept but until Betfair quantify how many customers pay it then it is not very meaningful. Anyway £250K is not a high threshold for a 10 year span taking into account their huge customer base.


The main reason for my scepticism over trading is the customer v customer model that is Betfair. They love to flatter our ego's with their punter v punter marketing talk but I think the reality is much different. Then there is their hideous commission and it all starts to look a poor opportunity. It's very hard to see how the trader's theoretical advantage can be generated under this model.

I understand this negative stance will annoy many and I do expect to be laughed at to an extent but in view of the Toy going to a pay format I think it's a good time to debate this. If you take casino advantage players they are either taking a bonus or playing games that are returning over 100%, occasionally both! Arbers are getting a guaranteed advantage and value bettors a theoretical ad. With both activities the maths will always stack up, yet this appears not to be the situation with trading. Instead it's all strategies to beat the mug punter. I can't see where the new money is coming into the system from. For every Temjumin there is an enormous quantity of losing punters and it becomes a race to the bottom for almost everyone, except Keefer, Psycoff, DB and a few other forum god's.

In a nutshell I am saying that except for the very gifted few there are much better ways to make money from gambling than trading. Trading is very over hyped IMO and there is little evidence to support the big profits we all want.

[bazbaz]

Trading isn't complete bullshit (as the charity p+l thread demonstrated) but it is very hard work and you do need certain personal qualities that it seems most people do not have. Nothing different really from financial trading in terms of the fact that most don't make it and when you put a bunch of (apparantly talented) new people into the trading pit most don't come up to scratch. The peer to peer model, along with the ability to set prices rather than take them gives the possibility of a tiny advantage for one to grind and make use of.

Personally I see trading as a much more realistic way to make money as opposed to traditional gambling, given the efficiency of the gambling markets. However I wouldn't recommend to most people to spend too long trying to learn it as it seems most people aren't built the right way, for whatever reason. Some of us can though and what it can give us can be pretty amazing really compared to a traditional job.

[Johnny Cage]

I have to disagree with your view that trading is bullshit and that gambling is a better way to make money. Trading and gambling is the same in that in order to win in the long run you have to make positive expectation bets or trades.
However trading also is about risk and money management and getting disciplined so that you can preserve your capital by maximising the winning bets and minimising the losers.

The fact that there are traders who are making consistent profits over a long time shows that it is not dumb luck. I dont know how long you have been trading but you need to change your viewpoints and keep practising if you ever wanna make any money at this.

Also am curious to know what forms of gambling are easier to make money from then trading?

[LuckyYou]

Gambling isn't hard either as long as you understand that there is absolutely no matter who will kick the ball better, as long as you understand that its all about the odds you take and nothing different. When you are against the bookie or other player you are handicapped with the odds you take, as long you are taking low odds you will lose. As sooner as you start take better odds than the real outcome even with very small value - the sooner you will become profitable in long term. Its as easy as it sounds because obviosly 95% could not understand that simple true.
Trading is the same! You are just betting both sides and close the vast variation you will get if you get only one of the sides... and again 95% can't realise it.
Like BazBaz said I wouldn't recommend trading for a long time. For some reason that I can't explain to myself most of the people just can't win over the long term...
Me for example - well I said it tousand time and will say it again: I started to win from the very start of using trading sofware! Before I knew that such a software exist I just traded on Betfair website with simple trading calculator. When I started with the software it just gave me what I need: very fast refreshing and the ability to enter and close the positions fast...

[1/4 of a millionaire fund]

In a nutshell I am saying that except for the very gifted few there are much better ways to make money from gambling than trading. Trading is very over hyped IMO and there is little evidence to support the big profits we all want.

Dunno if I'd agree with the 'gifted few' view, alot of the succesful traders I know aren't exactly gifted but are generally wise enough to realise when they're onto a good thing. They're usually people who've spotted certain things and fear of having to do a real job stops them from making the usual rookie mistakes.

I'd agree there are easier ways to make money gambling but the way the exchange systems set up with comms etc, and the variance you get in the pnl with gambling, it makes trading a bit more attractive for people wanting a more consistent and predictable income.

As for trading being over hyped? It's a tricky one cos in general the only people hyping trading are generally looking to make money off the back of trading rather than actually trading themselves You'll find most winning traders probably under hype it and other than the odd bit of advice, which is usually commonsense, they keep their golden goose well under wraps.

[kawasaki]

maybe one thing that is ''overhyped'' are statements that odds at betfair are trully efficient

[WhyAlwaysMe]

Bazbaz makes a good point when he says it is the few who have the temperament to succeed and also they tend to be hard working and full-time. Personally my take on what is going on is there are a few earning big sums and everyone underneath is either scratching around or losing money. The flaw with the peer to peer model is that Betfair are creaming everybody and there isn't new money coming into the market. The model can't support more than a handful of successful traders.

If you compare it to the casino model there is a big difference. With the latter you either get new entrants to the marketplace or profitable firms wanting to retain their customers. It is easy to see that casinos will tolerate unprofitable players if they are clever with their play because they find them hard to spot and they are desperate to retain their big revenue earners. Also many casinos in the past have been happy to trade profits for growing their customer base in order to squeeze competitors. And with the industry expanding rapidly there were good opportunities for players.

It is not quite the same situation with bookmakers but there are a lot of them and after sign up bonuses it is possible to make a good amount from arbs.

The point is with casinos it is very easy to work out your theoretical advantage from playing a particular bonus. Or if you are backing a horse at 8 for £100 and it goes off at 7.2 you can measure the theoretical gain. But with trading it's a lot harder to see where the advantage is. Perhaps it barely exists atall?

Really I am trying to bring good news. If your goal is to make £10K then I promise you it will be hugely easier to make that through sportsbetting and a few casino offers. You will get there a lot quicker than by trading assuming a £1K starting bank. However I will say if you are talented enough to turn £1K into £10k by trading then you would be in the frame to make a lot more. But very few of us will make it and for nearly all it would make sense to choose the other route.

[DrunkPanda]

The reason there are some people who make tremendous amount of money is pure randomness. Same reason why a few make big bucks in the casino.. there is nothing about "hard work" here, although many would like to believe so.

The betfair model is primarily similar to a normal bookmaker. It takes 5% of the profits, which makes the odds go back down to the ladbrookes or 888bet levels... if u bother to recalculate the implied probability...

What betfair WANTS people to believe is that u are trading with your fellow peers. That is true, but primarily you are trading against betfair because it wants to make markets and get that 5% commission. Betfair has sophisticated mathematical algorithms which will increase LIQUIDITY. (heck, even i could design it with a 5% edge) The more bets that are matched, the higher chance they go in play and they get a guaranteed commission

However, there are some individuals who ALSO make markets with betfair. This is possible using algorithms as you can take all the odds in a game and divide it by 1/odds to get the total probability. You will realize the bid is less than a 100% and the ask is more than a 100%. The edge is the difference between 100% and the implied probability on the bid. How these traders make money is they get in and out of positions whilst making markets and never take a position when it reaches in play. Hence, they are very profitable and "stealing" from betfairs market making model. Therefore, the tax.

The real edge will be if you can do a high frequency model (in the microseconds) to take advantage of trading opportunities which present themselves. Looking at Geek's Toy (whilst a great product), I doubt you can outperform the market making bet fair propitiatory models (assuming you want to trade this guaranteed edge)

Cheers

[bazbaz]

The 'full time' part of it is bound to make a big difference, I mean if you are just trying to make a few quid part time with a couple of hours practice a week then you are at a massive disadvantage compared to the people you are competing with who are doing this for many hours a week.

I'd just advise people to find what they're good at and really go for that, rather than maybe spend a lot of time on something that they'd like to be good at. Everyone is good at something. Of course it takes some time to find out whether or not you're suited to this though. But stuboness (along with a certain amount of self awareness to ensure you dont just keep losing) is one of the charictaristics that get people to suceed.

[DrunkPanda]

The 'full time' part of it is bound to make a big difference, I mean if you are just trying to make a few quid part time with a couple of hours practice a week then you are at a massive disadvantage compared to the people you are competing with who are doing this for many hours a week.

I'd just advise people to find what they're good at and really go for that, rather than maybe spend a lot of time on something that they'd like to be good at. Everyone is good at something. Of course it takes some time to find out whether or not you're suited to this though. But stuboness (along with a certain amount of self awareness to ensure you dont just keep losing) is one of the charictaristics that get people to suceed.

better off working at mcdonalds with a guaranteed "profit" every hr... you can be stubborn and work many hours at it too!

[Portman]

The variance can make the difference in a period of one week or one month but not in the long term (except if you are trading 1000/1 horses).
For me the difference between traders is made by the sum of their merits and defects.
BF fees are clearly the biggest impediment to reach the profit, but i'm optimistic and i think that the average error in the odds (in %) are greater than the fee to pay.
For example look at the favourite odd five minutes before the start: often it oscillates from a -10% to a +10%

[custard]

I have fond memories of a contributor to this forum. His answer to the original poster may well have been to refer him to the following :

Bullshit

[bazbaz]

better off working at mcdonalds with a guaranteed "profit" every hr... you can be stubborn and work many hours at it too!

Part of being a trader is being self reliant enough not to need a guaranteed profit per hour but to rely on and challenge yourself to make the most of what you can out of the day and of your life. Every day you choose to trade is a new challenge. Working from practically anywhere you want to in the world. Without a boss treating you like crap. And as much money in one day as what the boss may have made in a week. Without having to ask 'do you want fries with that?' every minute

PS no offense to anyone earning a crust at mcdonalds(why is that always held up as the example of a crap job?), I can think of much worse jobs!

[WhyAlwaysMe]

For example look at the favourite odd five minutes before the start: often it oscillates from a -10% to a +10%

Yes that's the one thing that gives me some hope, the occillation.

Never expected to entice a Panda out of hibernation today .

[LuckyYou]

Part of being a trader is being self reliant enough not to need a guaranteed profit per hour but to rely on and challenge yourself to make the most of what you can out of the day and of your life. Every day you choose to trade is a new challenge. Working from practically anywhere you want to in the world. Without a boss treating you like crap. And as much money in one day as what the boss may have made in a week. Without having to ask 'do you want fries with that?' every minute

PS no offense to anyone earning a crust at mcdonalds(why is that always held up as the example of a crap job?), I can think of much worse jobs!

Yep. I prefer to earn some money and buy a part of mcdonalds Or to open a shop and I become the boss!