A casino has only a slight edge so...

Discussion in 'Psychology' started by harrytrader, Apr 9, 2004.

  1. ... what make you think objectively that you have much more edge than a casino in Stock Market :D.

    Question to distract for this we to compensate bad news from the World.
  2. "They" make rules and are the house and dealers of the market.
  3. gms


    Casinos are traders in the market?
  4. H2O


    Rebates ....

    When entering and closing a trade and getting the rebates, you have a statistical edge.

    Example :
    Entry / Exit through INET ($2,- for adding liquidity)

    If I make $0.05 with 1000 shares, I make $50,- + $4,- = $54.-
    If I lose $0.05 with 1000 shares, I lose $50,- - $4,- = $46,-

    Ok, I know what you are going to say, you will most likely not close a losing trade while adding liquidity. So then it will look like this :

    If I lose $0.05 with 1000 shares, I lose %50,- + $1,- = $51,-

    This is calculated using INET fees ($2 for adding, $3 for taking) So I enter a trade getting the rebates and I exit a trade paying the fees.

    This still gives me an edge of at least $3,- (max $8,-) per 1000 shares traded. Of course you will have to deal with commissions and SEC fees as well....

    SEC just lowered their fees again, and if you are trading for small gains (losses) you should be trading lower priced stocks. A few cents can be made just as easy on a $10,- stock as a $ 50,- stock.

    Commission rates can be very low .... (You need to have a per trade fee, not per share)

    Hope this helps
  5. Casinos have a slight edge????? Last I heard slots had about a 25% edge. Blackjack if you play like the house does, which most suckers do, has about a 25% edge. There are some nearly even bets there but the majority do not play them.
  6. dchang0


    Easyrider's right. The probabilities/odds/expectations on casino games that are usually bandied about are the theoretical numbers, which assume a perfect player. But since most players allow psychology and human foibles (fear/greed--the same stuff that plagues traders) to interfere with following perfectly-computed strategies, the house/casino actually has an incredible edge over the players; in some games, you might as well just hand them your bankroll and save yourself the time and heartache!
  7. Depending on the house rules, a "mimic the dealer" blackjack strategy results in a house edge of about 5.5%. If the casinos had a 25% edge, there would be little or no repeat business.
  8. Sorry I've never play at a Blackjack game so I can't tell (in fact I've never played at any Casino game at all because I hate to gamble when I know I don't have superior edge) :D

    I'm rather referring to Casino's game everybody knows: Roulette while betting on red or black (at least I know that :D). There are 37 numbers for european roulette and 38 numbers for American roulette so that the probability of winning at each bet is
    p=18/37=48.65% for european roulette
    p=18/38=47.37% for american roulette
    so the edge of the casino is only
    q=50%-p=1.35% for european roulette
    q=50%-p=2.63% for american roulette

    Just remark that US casino roulette are nearly double more edged against a player than a European casino roulette :D still 2.63% is far from your 25% (btw are you sure it is 25% for Blackjack because I don't understand why people would be so stupid to chose something that is much more edged against them than roulette ? Or you use a definition of edge that is yours ?) !

  9. A probability edge by definition doesn't include the psychology :). Now if you want to take it into account, of course you can and then the question can be turned into:

    "A casino has only a slight edge what makes you think that you have much more edge than a casino in Stock Market especially if you are cyclothymic (psy term for someone who switch between happiness and despair ... like stock market in fact :D)"

  10. Thanks, I don't know much about Inet since I am only sticked with Futures :D.

    >This still gives me an edge of at least $3,- (max $8,-) per 1000 >shares traded. Of course you will have to deal with commissions >and SEC fees as well....
    How much % do you give to them ?

    #10     Apr 10, 2004