Understanding casinos making money in the market
This article is about how I make money as a professional trader. When I say that stock market trading is my source of income, people often laugh and say that I am a gamer. This is too risky, everything depends on luck. My answer is that you are partially correct because trading is similar to gambling. The stock market can be compared to a big casino. If we are in the casino now, who will lose? Do you have money? Players, of course. Sometimes you can win and be on a winning streak, but in the end, the player will lose.
So who will make money? the casino
You may have heard that the casino will win no matter what, or that the casino always wins. The casino can host large parties, provide free drinks or donate food. They do this to attract attention and attract more people to participate. Because more people means more money. More money to buy a house. How can casinos always win money? Gambling is a game of chance, so why does the money end up in the hands of casino management? package? Read more. I will share my secrets about the casino and how to become a casino with money in your hands. In order to profit from the game, the casino fakes the game to gain a statistical advantage in the market or has positive expectations while the player’s expectations are negative. I will illustrate this with an example of a classic game called roulette. Ferris wheel in this game. There are numbers on this wheel, and then the rotating device. At a certain moment after a certain rotation, the ball will only fall on one number. As a player, your job is to place bets on the ball. Is it a red or black number? Maybe odd or even? You choose to bet on the black numbers. You think your chance of winning is 50%. This is your fault. You and the casino will not share the 50/50 odds.
Let me explain why it is not 50/50. The game was manipulated. There are indeed 18 black numbers and 18 red numbers, but what you may not know or overlook is that there are two additional green numbers, so 0 and a double 0. This is a somewhat secret green, a color that will change the whole situation. If you bet on a black number, your probability is 18 because these are several common black numbers. Remember, there are 38 spaces in total: 18 red, 18 black, and 2 green. Therefore, the casino gets 20 of the 38 chances to win because the green numbers also belong to the casino. Let’s take a look at the percentage. The probability of a player winning is approximately 47.23%. The casino has 52.77%. Now count and subtract 47.23 of 52,77,
5.54% of the advantage is the casino’s advantage over the player. This is how they make money. What does this 5.54% mean? Well, this shows that for every dollar spent on long-term games, the casino makes 5.54% of the money, which is about 5 cents. If you look at the big picture, it will be very little money. The casino has $1 million and won more than $55,000, so they want more people to place bets. For the time being, suppose you have a thousand bets and each bet is one thousand dollars, giving you one million. According to statistics, the casino received 52.77% of the total. The player gets 47.23%. 52.77% means US$527,700.47.23%-$472,300 Let’s count again. The first amount minus the second result is $55,400. This is a victory for the casino. Now I want to show you how to recreate such a successful model in the stock market. I can tell you that if they behave like casino players, most people will lose. I would say 90% will lose. There is only one reason: these people have no plan. Many people just rely on luck, listening to suggestions from strangers, listening to rumors, trading without a strategy, and their own emotions to enter the market. This is not the best way.
CASINO vs THE MARKET
People who come by chance have a certain chance of winning. You might think this is 50/50. Well, this is how the casino works: you bet a dollar, lose a dollar or win. However, the market is often different. People tend to lose more when they are wrong and gain less when they are right. For example, many traders buy a stock for $10, expecting it to be a profitable transaction. Trading is based on luck and belief. But, you know, this is not the best way to do business. The market price may fall. Traders want to make up for their losses, so they buyback. Hope to be the best again. Lost again. If this cycle continues, the final loss will be huge. On the other hand, sellers who make a small number of profitable transactions may want
Such a loop can go on indefinitely, and the loss, in the end, is huge. On the other hand, traders who have successfully made a small number of transactions may want to profit from the market. If you win, you are afraid of losing in other operations. Immediate gratification leads to little success. Fear that losing a small amount will lead to a big loss. This will not increase the funds in the account. Now there is a big problem. Do professionals make big money?
This is due to the implementation of the casino business model
This level is called the support level. But when the price hits a support level. Because when the price hits the line and is retraced, we will notice a pattern. You may be wondering if you are 100% sure that the price will rise after reaching a support level. The transaction will never be 100%. Anything can happen; for example, the market will be affected by the news. But because of this repetitive pattern, we have increased our chances of winning by a small percentage. Maybe the odds of winning rise to 60%, winning 60%, and losing 40%. According to statistics, your profit is 20%. Even better than a casino! Another thing is that in a casino, players bet $1 to win or lose $1; in trading, we invest $1 to earn more. This is provided by taking profit and stop loss. You determine the amount of profit you want to earn and the loss you may suffer. Suppose there is an upward trend, and then the price reaches some level. This does not happen every day, but judge based on what you observe. I know that in this case, the price will change and eventually rise again. Of course, this is never 100%. But this is more than 50%, which is quite satisfactory.
TAKE RISK, WIN REWARD
But I lost one game and I won two games. Let’s do some more calculations. If I bet $1 and lose 40 times, I will win $40.60 out of $120. $120 minus $40 is $80. that’s good. Of course, this is all long-term. In the short term, I can have winning streaks and losing streaks. After all, the transaction is not guaranteed and it is easy to lose money. But if I add it all up, I successfully complete it. Now you understand why trading is like a game. It is never 100%, but the game is designed to increase your chances of winning. In this way, you will gradually get huge profits.
“WISHING YOU A FRUITFUL TRADING”