Trade The Journey

Trade The Journey

Odds – Keeping New Money with Old Habits?

Upon entering the Casino, I noticed the lights, the posters that emphasized the odds were in your favor, and the atm machines.

There were no windows or clocks, and people from all walks of life flooded the lobby eager to try their luck.

The casino created a system that engaged its patrons immediately. For the patrons, they offered a membership card that tracked your usage and added points to your membership for prizes based on your usage. For some, the casino was the event of the day, and for the others, it was one of the many local attractions they planned to visit.

 

From the regulars to the reluctant visitors, each had a system for winning whether it was based on superstitions, luck or a well-thought-out numbers system.

 

Each person had a system for gambling success, whether they were of conscious of it or not. I heard most of the systems while trying to implement my own. It often came in the form of advice about the odds of a machine being a winner twice in a row. Or the chances of picking the right numbers based on a random distribution of numbers.

 

I’m scared to gamble due to its addictive nature. With every spin and hand, a win seems likely with each turn usually after a loss. Every time I placed a quarter in the machine, I thought about my odds. What are the chances that this quarter could return over a $1,000?

It did happen for me once while on a family trip. To win $1,000, I had to pay the maximum amount to increase my odds. The coin-operated slot machine charged you more to increase your odds. So a machine that initially cost a penny to play could end up costing your over $2 per spin.

 

Let’s think about this. The casino knows that it has to allow some of its patrons to win. To win the maximum prize, the slot machine requires you to pay the maximum, which is $2. There are over 1,000 people that play this machine 20 times consecutively and risk the maximum at least five times, for example.

So the maximum amount of plays this slot machine receives at the maximum play amount is 5,000 (1,000 people play the max at least five times). At $2, this machine in two hours has just made $10,000.

If no one won in the two hours, the casino has reaped the rewards without having to return any of it. Even if the maximum amount a patron can win is $10,000, the casino will break even. And in the unlikely event that two patrons won in two hours, the casino would recoup the $20,000 by the end of the day. Imagine how much the casino makes if it allows its patrons to win at least 25% of the time.

 

This is real investing/trading – planning your risks, and forecasting your probability of receiving revenue.

 

The casino bets on the odds. All of the variables like buffets, posters of big winners, and membership prizes are to increase their odds of you staying playing a game of odds.

 

Imagine if you could create a system for trading or investing based on the probabilistic thinking the casino applies instead of the gambling thinking its patrons use.

 

As I develop my trading system, I think about the variables in my favor that can increase of my odds of winning. I’m pretty sure that Van Tharp’s book on Financial Freedom will increase my odds.

The only resting souls were the patrons who either lost their money, weren’t interested in gambling or the tired.

 


To win the $1,000 at a time in my life when I needed equaled perfect timing. I thought that with that money, I’d be likely to attract more. Within the first thirty minutes, I had about 20 ideas on how to spend the money.

I could buy a big-screen television and still have eight-hundred left. As the thought of extravagance entered it soon passed due to my somewhat frugal nature. Without a definite plan, I begin to spend. Spending without a plan always ensured I had something left over for the next day but not next month.

Just as a small leak will eventually sink a ship, small expenses will deplete a large account. I didn’t make any large purchases, but I didn’t save anything either. So, in the end, I was left at the starting point.

 

Needing a little more to last until the next payday or waiting patiently for the goddess of luck. Waiting for her can prove to last a lifetime.

I gambled and won. I gambled again and lost.

 

Without a plan, I was betting on the future and the chances that a fortunate money surprise would be in my future. That may or may not happen.

New habits for new money is the point of this post. To keep the new money, I need better money habits if the habits I have now aren’t working.


 

Smokey the Bear famously said, “Only you can prevent forest fires.”

I believe that only you can find a money management system that will work for you.

Self-discovery is wealth discovery.

 

Thoughts? Questions? Corrections?

Suggested Reading based on the Post:

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