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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (147593)	1/31/2002 5:06:01 PM
From: patron_anejo_por_favor	Respond to of 436258

Agree completely...the number one skill that is transferrable from advantage gaming to trading is money management. Bet sizing and position sizing are quite similar conceptually. Most gamblers use stop loss concepts, at least when deciding when to end a session. The Kelly criteria for bet sizing can be converted for use in sizing positions. It dictates that risk of ruin is essentially 100% over time if excessively large bets/positions are taken, (given a specified expected value and variance). For most neophyte investors in the recent mania, the ones who got wiped out were the ones who were oblivious to these very basic essentials of investing. The same thing happens again and again in gambling when a counter doesn't understand the issues of variance and bet sizing. In a sense, the phrase "All Clowns Must be Destroyed" was speaking directly of this group of investor/gamblers.