M3 Academy Traders Group

What one needs to be proficient is the abilities to:

1. Understand the situation;
2. Discover the opportunities;
3. Identify the risks;
4. Formulate strategy/ies;&
5. Control the overall situation.

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LONG ARTICLE coming up: All your comments please ;)

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TRADING IS GAMBLING.
So is going to a 9-to-5 job OR marrying your spouse –
OUR WHOLE LIFE IS A GAMBLE!

Traders always want to tell themselves that what they are doing is not gambling and that, because you can have an edge, trading is a ‘safer’ way to make a living. Is this really true? Actually, it doesn’t really matter.

The term gambling just describes an activity where one places a bet on an action (or deliberate inaction) with an uncertain outcome, wagering something of value. If trading doesn’t fit this definition 100%, what does?

Wikipedia definition:
Gambling is the wagering of money or something of value (referred to as “the stakes”) on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods.

Dictionary definition:
The act or practice of risking the loss of something important by taking a chance.

As a trader, you risk money (where the exact amount isn’t even predefined at the start – unlike other games of chance like roulette) on an event (the movement of a financial instrument which has unlimited uncertain outcomes) with the goal to make more money (how much you don’t even know beforehand).

What is an edge?
An edge is something, a skill or a method, that allows you to tip the odds in your favor – usually just by a tiny bit. An edge makes trading, potentially, less risky because the expectancy is improved.

Being able to read price to time and manage trades can be a part of an edge; emotional stability, discipline and having a long-term mindset, understanding how to manage risk and deal with variance, being able to work extremely hard, and being passionate are all parts of an edge as well. However, even the best edge will not completely remove all the risk and the uncertainty.

In trading, having an edge will not guarantee anything. Even worse, unlike other games of chance where the possible outcomes are predefined – there are only so many numbers in a roulette wheel or cards in a deck – in trading, we are exposed to ‘black swan events’ which hit completely unexpectedly with outcomes that usually no one can foresee, and the ways and possibilities how financial assets can move are limitless.

Although an edge is important to have, it doesn’t make trading less of a gambling activity.

Our whole life is a gamble
The good news is that gambling is totally ok and you should not get too hung up on this term or the negative connotations that come with it.

All our lives, WE ARE gambling – not always by directly wagering money initially, but usually by betting something of value, often our time, for something that we hope will put us in a better situation later on.

When we pick our subjects in college, we exchange a few years of our lives and forgo lots of other opportunities and possibilities in the future just because we think that these subjects will lead to a profession that we will enjoy and bring us enough income to live a good life. Not everyone who leaves college or university will like their job though, let alone find a good job in the first place. We exchange many years of our lives for studies where we don’t even know the odds of a favorable outcome. So how do we find our "edge"? By consulting friends and family, googling for college rankings, seeking advice from alumni, and even listening to ourselves.

When we choose a job, we again, exchange our time and we say no to other job offers and opportunities. We then hope that the company we choose will exist long enough, provide us with a good salary, fair promotion prospects, decent retirement plans and friendly bosses and co-workers. But we have no way of knowing that and although living the 9-5 job is always seen as the ‘safe’ way, nothing is guaranteed and we are acting on hopes and with a lot of uncertainty.

Entrepreneurs and shop owners are also gambling and they provide a service, where they sell their time and resources, or offer a product/service, where they have to invest money first and wage it, and hope that potential customers, which they often don’t have yet, value it so much that they can turn a profit. However, the outcome is uncertain and the wager is time, effort and/or money (mostly all of the above). The edge? Research, personal skills, planning, implementing, executing & hard work, perseverance, endurance and the need for good sales and marketing expertise, among others

When we buy a house and take a credit, we gamble that our job will allow us to pay off the mortgage, we decide not to buy other things with the money instead, we hope that our marriage holds, that children will follow to fill the house and that the city and environment will stay nice. Can we know any of that? Of course not, but we still gamble on it and take the risks because we believe that the odds are good enough and the upside is worth it.

When we choose a mate, we hope that the relationship will last for a long time, allow us to reproduce our genes, have a companion that we can grow old with and support us during hardships and old age. With a marriage, we are also invested financially in a big way. Seeing the high divorce rate and the people who aren’t fully happy, this seems like a high-risk bet but many people still make it.

Gambling in trading
I could probably go on forever but I think you get the point. We gamble all our lives, even if we don’t call it that, and we have to accept that trading is one of the countless forms of gambling.

You have to accept that you are in an activity where the odds are not necessarily in your favor at all times and that the unique characteristics of trading make it essential that you have good protection and risk control mechanisms.

Good vs bad bets
Ok, let me conclude by saying that taking risks and gambling is not something you need to avoid and if the upside seems good enough for you so that you can live with the negative outcome as well, go for it by all means. Of course, there are things and bets where the odds will always be against us, or where the downside is so huge that it can’t make up for the upside. So here you need some common sense.

When it comes to trading, here are reasons for “bad bets” and “bad gambling” where the odds are not in your favor and a favorable outcome is unlikely or impossible:
- A trader who keeps changing his trading system frequently
- A trader without a structure, not knowing when to trade and when to sit out
- A trader who does not adhere to risk management principles
- A trader who cuts his winners too short and lets losses run
- An impulsive trader who doesn’t have discipline

Taking (calculated) risks is what makes life fun and interesting and it is what makes trading, potentially, profitable. However, most traders are only dabbling around, engaging in bets and trades where they have no edge.

The quote “not taking any risks is the greatest risk” is so true and even if you don’t realize it and you might think that you are going the ‘safe’ way, there are always opportunity costs and you might be wagering your time – which, after all, is our most precious asset.”

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If you have read until here, well done! CONGRATULATIONS!
Now, YOUR COMMENTS PLEASE!
Let's hear from you. ;)

Yet another "currency" - this time by FACEBOOK - LIBRA.
Well, it is NOT a crypto currency, but a "digital" currency.
As Shakespeare would say, "What's in a name?"... Manure, by any other name, still smell as bad.

Ben Swann ON: Facebook's New Crypto "Libra" is Controlled by "Legion of Doom" Ben Swann explains how Facebook's new cryptocurrency Libra is not actually decentralized and has been established with a 10 Million dollar "pay to play" sche...

Will this deny tourists, from countries which do not allow crypto, from visiting Sweden?
;)

Sweden Officially Backs a CryptoCurrency and Establishes it as their Official Coin. It’s finally happened. A major worldwide government has just bestowed a huge vote of confidence and legitimacy onto the world of cryptocurrencies. Sweden, in an unprecedented move, just announced that they are officially adopting a certain cryptocurrency as Sweden’s official coin!

Foreign investors have been reducing their Malaysian government bond positions...

Getting dropped from the FTSE gauge may lead to outflows of almost $8 billion (more than RM30B), based on the nation’s weighting of 0.39 percent and IMF’s estimate that $2 trillion track the index, Morgan Stanley said.

Round 2 of USD/MYR fixing?

Asia’s Worst Currency Staggers After Two Blows to Performance It was a one-two punch that’s turned the Malaysian ringgit into Asia’s worst performer this month.

"Malaysia will likely disappoint over the next year because since the new government came in power in May 2018, it has been lowering public debt with fiscal tightening," said Alan Richardson, a regional fund manager at Samsung Asset in Hong Kong. "This will be the theme from May 2018 to May 2020".

Foreign investors have dumped Malaysian shares worth more than a net US$500 million (RM2.05B - at current exchange rate) so far in 2019, according to Bloomberg-compiled data.

Mr Richardson said he is bearish on Malaysia stocks not because there is a downside risk, but "just that there is nothing to be positive about over the next 12 months". --- BLOOMBERG

Weakening currency, declining investment value...
Haizzz... :(

Malaysia stock market is worst performer to date this year [SINGAPORE] Hopes of luring back global investors to a battered stock market are dimming by the day for Malaysia's government. Read more at The Business Times.

Wonder what's in the pipeline... ;)

Malaysia to host talks among palm oil producing countries PUTRAJAYA, Jan 28 — The federal government will be chairing the sixth ministerial meeting of the Council of Palm Oil Producing Countries (CPOPC) in Jakarta, Indonesia, scheduled on February 28....

The "belief" set or system is fundamental to the well-being of the trader, regardless of the methodology he employs. Whether one is "feeling"-based or "statistics"-based, one has to turn "feelings" into measurable facts. Statistics is one excellent way to achieve this.

Statistics describe the market conditions that cause one to feel the way one feels about the "opportunities".

"Feelings" is never about a tikam-tikam" or "lucky draw" to trade the markets: it is based on past patterns; based on past statistics.

There is a deep connection between a statistics-based view of the market and a decision-making process that strikes a healthy balance between "thinking" and "feeling". One needs both orientations in order to perform well, especially in short-term trading.

Any postmortem and trade reviews are done objectively and must never be on a "what if" hindsight!

There is a difference between wishful-thinking and hope! 😎