Wall Street Craps – 2012 Global Ebook Finance Award-Winner

KNOW THY SELF & ADJUST YOUR PLAY ACCORDINGLY: People have deeply ingrained core values that are centered on the issue of money. Your ability to win consistently at Wall Street Craps is largely controlled by these underlying core values. So “Know Thyself” and play accordingly.

The famous Greek maxim “Gnothi se auton” (“Know Thyself”) is inscribed at the Temple of Apollo at Delphi. For centuries, people seeking advice from the oracle at Delphi would read the inscription and throughout the years philosophers offered this same advice to their students — and I’m doing the same thing here. If you’re a person who has deep issues with self-esteem, impatience, fear, indecision, doubt, insecurity, or worry, then trading the stock market will probably not be a good fit for you. That’s because your natural habits or patterns of thinking will likely resurface under the stress of trading funds in your account.

A good lesson that one can learn about their own nature is summed up in the following line: “The way you do anything is the way you do everything.” So if you’re lazy and undisciplined in one area of your life, it’s highly likely that you will be lazy and undisciplined in your stock market trading. And in the latter case, your chances of succeeding in a challenging game like the stock market are very slim.

Once you understand more about your own natural behavior, it is perfectly okay to either: (1) take a healthy break from stock market trading, (2) quit playing the game all together, or (3) continue dabbling in the stock market with only small amounts of money, simply for the love of the game.

*************

“The worship of money and the condemnation of money exist side by side, sometimes even within the same individual.”

Herb Goldberg and Robert T. Lewis ~ Authors of Money Madness (2000)

NOTICE WHAT THE GAME MAKES OF YOU: Playing the stock market at a serious level is not for everyone. If you find that playing the stock market game is bringing out the worst in you, then perhaps you should dial down the pressure so you can return to the kind of person that you want to be.

A few signs that the game is getting out of control for you include: (1) you’re spending too much time alone watching or obsessing about the market, (2) your losing positions in the stock market are ruining your weekends or family outings, and (3) you’re becoming noticeably more negative, less tolerant, and unbearably moody. Some simple suggestions for playing at a less stressful level include: (1) make smaller bets, (2) trade less frequently, (3) hold for a short time period, (4) eliminate the use of leverage, and (5) stop buying individual stocks or Exchange-Traded Funds.

For more extreme cases, you should consider confining most, if not all, of your stock market activities to buying or selling traditional broad-based no-load indexed mutual funds for the longer term. That way, you can participate in the overall growth of equities in a passive, yet intelligent, low-cost, low-risk manner.

Comment: The stock market can be a stressful activity that causes people to behave in ways that reveal internal emotional or character flaws. And the chances of success will be greatly limited by those emotional problems that show up when a person’s investments go in the wrong direction. So for those investors who possess these kinds of problems, it is better to step aside from the market and resolve your personal issues before returning to action.

*************
“True financial freedom doesn’t depend on how much money you have. Financial freedom is when you have power over your fears adn anxieties instead of the other way around.”

Suze Orman ~ Internationally Acclaimed Personal Finance Expert

SEPARATE THE WINNERS FROM THE LOSERS: Winners will only continue to play at games that they consistently win. Losers continue to play games that they consistently lose. If you find yourself a consistent loser at playing the stock market, change your approach or find another game.

Realistically, not everyone will experience success in trading the shorter-term trend of the stock market. The stock market game involves inherent risks, challenges your emotions, and tests your ability to manage money effectively. It’s entirely possible that this game or style of play is just not your cup of tea and, therefore, should be avoided.

If you love the stock market but have trouble trading the shorter-term movements, then consider eliminating the play money or speculative portion of your asset allocation plan. Place all of that money into the less volatile growth funds part of your allocation strategy, to invest in the intermediate term instead. (Note: An example of this would be to align your asset allocation so that it reads: 80% security assets for the long term, 20% growth funds for the intermediate term, and 0% play money for the short term.)

Comment: While the stock market seems to capture the attention of most public investors, the bond market is a much bigger investment arena to the institutional investor. With the advent of Exchange-Traded Funds, it is now possible to buy highly-liquid and actively-traded bond funds on the regular stock exchanges. A simple strategy of buying a portion of your funds in high quality long-term Treasury bond funds (example: TLT and IEF) and lower grade high-yield corporate bond funds (example: JNK) can give many investors a consistent return that exceeds stock market players with less risk and stress.

*************
“The ability to make a decision is another characteristic of a winner in money matters. I have found over and over again that those who succeed in making large sums of money reach decisions very promptly and change them, if at all, very slowly. I have also found that people who fail to make money reach decisions very slowly, if at all, and change them frequently and quickly.”

Venita VanCaspel ~ Author of The Power of Money Dynamics (1982)

TALLY YOUR RESULTS: If your wins are consistently small and your losses are consistently big, then quit trading or continue to play small for the love of the game. Leave your serious money in low-risk stable investments for the long-term.

It’s always wise to take a periodic inventory of your investment results. If there’s a consistent pattern of losing, you may have a hidden flaw in the way you play the game. In many cases, emotional self-sabotage can prevent even smart investors from winning — regardless of the actual strategies they may employ.

Until you find and fix the flaws in your game, it makes no sense to increase or continue your current level of play in the stock market. A lack of consistent positive results means that there is something wrong in either your thinking, feeling, and/or actions regarding your stock market investments.

Comment: If you are getting angry, frustrated, disappointed, bitter, or depressed about how stock market trading or investing, it simply means that there is something that you don’t fully understand…. understand about the stock market, understand about your investing tactics, or understand about yourself.

*************
“Most new investors try various markets, lose money, and finally acquire some knowledge through bitter experience. This is roughly analogous to learning how to drive by having a series of accidents.”

Samuel Case ~ Author of The First Book of Investing (1999)

DON’T RETURN TO PLAY THE MARKET IN THE SAME MONTH: The stock market requires time to realign itself for its next move up. The market rarely gives a major sell signal and a major buy signal during the same month.

Major shifts in investor psychology require time to develop. The public almost never goes from greed to fear in less than 31 days. If you sell out of your stock positions in an intelligent manner, it makes perfect sense to go away for at least a month without any fear of missing out on a low-risk intermediate-term buying opportunity. A careful study of previous stock market declines will reveal that a large number of major corrections exhibit at least two legs down in price and duration.

Comment: “Two legs down” means that you can expect two separate trends during the course of several weeks where the general stock market moves in an overall downward direction. Each “down leg” will reach a lower level of stock prices before reaching a point where prices temporarily stabilize. This means that there will be a space of time between the two down legs where prices level off before resuming their downward march towards a potential major bottom and low-risk buying opportunity.

*************
“I try to wait until things set up just right before I take a trade. Then, when I’m ready to take the trade, I slowly count to ten before I pick up the phone. It’s better to have the wrong idea and good timing than the right idea and bad timing.”

Linda Bradford Raschke ~ Professional trader

THE CASINO IS ALWAYS OPEN: Figure out precisely what you did wrong, as well as what you did right after each losing trade. Always forgive yourself for your mistakes and realize that opportunities for improvement often come disguised as misfortune or temporary defeat.

Resist the urge to get back into the market right after you have cashed out. Remember that the stock market will always be there for you to play in, and that it’s not important for you to participate in every minor rally. Have the patience and understanding to wait instead for the next big opportunity, which will present itself on its own time table and not yours.

The great thing about the stock market is that every bottom is followed by a top. And every top is followed by a bottom. It’s been that way throughout history and you can expect this pattern to keep reoccurring well into the foreseeable future.

Comment: Realize that some opportunities to trade for profit are going to escape your grasp. Resist the urge to play the “what if” game and don’t concern yourself with minor stock market moves. Instead, let the market set itself up for a more clearly defined up move.

*************
“It would be foolish to overlook the human vice of greed. The successful trader must be able to recognize and control his greed. If you get a buzz from profits and depressed by losses, you belong in Las Vegas, not the markets.”

Mark Richie ~ Professional commodity trader

challenge:

1. a demanding task that calls for extraordinary effort, intense concentration, and refined skill in order to succeed.
2. an opportunity that tests one’s ability to perform well under pressure.
3. the essential gift that games of competition provides enlightened players, including those savvy independent investors who choose to play Wall Street Craps for fun and profit.

*****

“To the extent that a person is obsessed with the possession and accumulation of money to the exclusion of how money is acquired – when the satisfaction in having money submerges the satisfaction derived from the process of making money – then it can be said that the person has an unhealthy attachment to money.”

Herb Goldberg and Robert T. Lewis ~ Authors of Money Madness

PLAY BIGGER WITH THE HOUSE’S MONEY: Continue to play small until you have gained enough experience to make consistent money. Don’t play with bigger sums of money unless you have accumulated a tall stack of the house’s money to bet with confidence.

One of the biggest mistakes that amateur stock players can make is to increase the size of their bets in order to make up for prior losses and lost time. On the other hand, it’s also a strategic mistake to keep betting small when you’re way ahead in the game. So the savvy thing to do is to increase the size of your bets when, and only when, you have been on an extended winning streak.

**********

Comment: What is true in the game of casino craps is also true with stock market trading: you must send out the troops when you get on a roll. And this is done with the house’s money and not yours. You’ll find that with the house’s money (your profits), you’ll be able to bet or trade without the same degree of fear of loss as you would have your own scarce funds. So if your intention is to win big, then you must bet big. And one of the conditions for doing this is when you have the house’s money to play with.

**********

“The happiest time in any man’s life is when he is red-hot pursuit of a dollar with a reasonable prospect of overtaking it.”

Henry Wheeler Shaw

A Savvy Investing Take: There are many ways to play the stock market, depending on the time-frame which best suits your needs and desires. The daily and hour-to-hour time-frames are usually too volatile and stressful for most non-professional investors to play well in. On the other hand, many investors don’t want to confine themselves exclusively to long-term investments in the yearly time frame.

For those who want to trade part of their investment funds in the more opportunistic weekly-to-monthly time frame, the Wall Street Craps approach offers investors a way to come out a winner. But more importantly, remember to resist the temptation of relying too heavily on clever strategies, innovated tactics, and sophisticated systems in order to achieve stock-market success. Understand that what ultimately separates the winners from the losers in any approach to the stock market is the inner ability to make wise decisions about money management and correct disciplined actions.

In the final analysis, the only consistent way to end up in the stock market winner’s circle is by acquiring the habit of thinking the right thoughts that naturally lead to success at investing, trading, money, and life.

**********

The stock market is a challenging game that can be played for both fun and profit. When properly understood, it provides investors at all levels a fair chance to test their skills and emotions in an ever-changing arena. Once you learn how to allocate your assets appropriately and invest at a level that suits your own emotional temperament, you will be in the right position to begin playing the game correctly. Then it’s just a matter of improving your methods, enjoying your moments, and staying in the game until you complete your own winner’s journey to investment success.

**********

“ Money was never a big motivation for me, except as a way to keep score. The real excitement is playing the game.”

Donald Trump ~ American business magnate