The 35 Rules of gambling that all Investors should know

Red joker rules

The 35 Rules of gambling that all Investors should know

Pat Holland

Part 1 :Parlays

The parlay is a gambling term used to describe the practice of putting some, or all , of your winnings back into the pot

Rule 1. Start early

It is important to pile up your winnings - but much, much, much more important to limit your losses

Rule 2.Never offer an unlimited parlay

Rule 3. Keep a reserve tank

Ring fence a certain amount of the stake to take advantage of special situations. In the investing situation, it is necessary to keep part of your overall investment in funds that can be easily converted to cash. The advice, then is to keep not less than 20% of what you can invest in deposit accounts, bonds, Post Office savings accounts, or anywhere that permits you to access the full amount at short notice

Rule 4. Never chase your losses

Take your losses. And start, modestly, all over again.

Rule 5. Stay in your league

You have no business trading in futures, or commodities, or spreads, if your funds are so low that a bad day can wipe you out. You cannot live for long beyond your means, and nowhere is that more true than in the worlds of financial risk, be it at the poker table or at the stock exchange.

Rule 6. Gamble your early winnings

Hobby gamblers or inexperienced gamblers are tempted to walk away from the game when they get slightly ahead. Resist the temptation to take a profit early on.

Rule 7. Don't get addicted

Real life addictions impinge so heavily on the process of investments that your chances are poor unless you can beat them.

Rule 8. Bid boldly, play safe

First, there is no payoff in placing a low bid on ambition. Every possible aspect of the proposed investment must be studied and quantified. Until you know everything about the proposed investment, you must play safe.

Part 2: Pitfalls

Rule 9. Never bet too big

The trouble for a gambler who loses a big bet is that it drastically reduces his stake. It takes him a long time to build it up again. And when the bet comes up - it still causes problems. His zest for smaller bets is gone. They're suddenly boring. He is tempted to another big bet on lesser evidence than before. Many professionals draft a rule for themselves that they will never risk more than 10% of their stake on an individual event. You must never have all your stake riding on a single horse.

Rule 10. ...And never bet too small

Very small investments cannot bring results.

Rule 11. Turn down proposition bets.

The proposition bet has consistent features. The propositioner will come to the gambler. He will seem most keen that a huge amount should be staked on some unusual event that seems like sure-fire winner. Invariably, the bet is won by carrying out the test in some strange, unexpected location or circumstances that suits the propositioner. You will not often fall for the Proposition Bet if you apply all your usual rigorous checks. And accept that any investments that promises great returns, without spelling out how they will be realized, has to be iffy.

Rule 12. Visit the parade ring

The professional horse gambler may go to see the horses on parade before placing his bets. For more general investment, watch what your hand is doing when shopping

Rule 13. Don't get in hock to the bookies.

Do not leverage yourself in so deeply that you can never get out

Rule 14. Keep emotion out of it

Two great big emotions, Greed and Fear, will lose both in the short and long term. If you are emotionally involved, stop. Walk away for a while.

Rule 15. Never listen to tips

Most tips are wrong. An even when they seem reliable, tips should never be acted upon. The first reason, that you will inevitably bet more than usual. The second reason is that the very fact that "everyone knows" will drive down the odds and make the bed unprofitable even when it wins.

Rule 16. Watch the dealer

A serious player will never take his eyes, and ears, off the dealer's hands. The broker, dealer, auctioneer or agent who converts your investments from wish to reality occupies the same chair as the card dealer.

Rule 17. Don't bluff to bluff

Once you set the final price in your head, mean it. Walk away from the deal rather than exceed that final price. There is always another hand, and another investment, coming along in a minute.

Rule 18. Do not cheat

An investor cheats, in my book, when he invests his money in an area of business that he would not enter in everyday life. An area that he feels to be wrong.

Rule 19. Engage mathematics as your servant, not your master

In the world of investment, when a large group of investors become aware of a promising model and begin to use it en masse - their very presence in the market distorts it and makes the model invalid. You will do very well to familiarize yourself with as much game theory as you can stand. But you must constantly re-evaluate them in the light of changing circumstances. And, of course, never use a system you can't understand

Rule 20. Sessions are not seasons

You must not panic and sell when the value drops slightly, and you must not feverishly sell when the value rises slightly. You must not risk all on a single session. And when the session is over, you must rise from the table, you must leave the track, calmly accepting that whatever has happened is all part of the overall season.

Rule 21. Seasons are not sessions

It doesn't matter if you gain or lose sharply during a session. In a season it does.

Rule 22. Don't think of gains or losses as spending money until the game is over

Rule 23. Manage your money

Do not piddle away your chips. The strong point of professional gamblers was the ability to recognize when a particular horse in a particular race is on offer at odds that are greater than its empirical chances of winning. These might be just one such horse at a particular meeting or even in a particular month.

Rule 24. Set targets

A gambler is more likely to be successful if he knows from the outset how much money he wants to win. If nothing else, it will make him stop in time.

Rule 25. Reduce risks with time

As your target is in sight , it makes sense to move profits into safer vehicles

Rule 26. Look for a middle.

Middle is a situation you cannot lose

Rule 27. Study the form

Professional gamblers put a great deal of study into any gambling situation before they risk money.

Rule 28. Turn down most bets

Rule 29. Small percentages are big percentages

Always bring a percentage figure back to the real numbers involved to find what impact it really has.

Rule 30. Study your opponents

In the investment world, your opponents are those people who form the market. If shares have risen rapidly in value, you must ask yourself whether the rise is justified by the facts. It it is, buy as soon as possible. Similarly, if a fall in value has no convincing cause, it is time to buy.

Rule 31. Beware of long odds

Generally the promise of huge returns results in huge losses.

Rule 32. Never follow a springer to starting price

A stringer is a horse that starts out as an outsider and is bet down at the racecourse because the connections fancy its chances. if a new field of investment opens out, or a new market develops, you may well gain if you invest before it gains momentum. But once it is up and running, an the public see it as a golden opportunity, the price will become prohibitive. It is then a very bad idea to invest at all.

Rule 33. Never bet ante-post

Betting on a horse months before the race takes place makes it impossible to calculate the percentages. There are too many unknowns.

Rule 34. Get to know the trainer

Your chance of selecting winners improve if you have a chance in creating the race, and your chances of a successful investment improve if you can personally influence the outcome in someway.

Rule 35. The Ultimate rule

Find the right horse at the right race at the right price. The right investment is the one that suits you personally in terms of your means, your existing portfolio, your temperament and the stage you have reached in your investment career.