I've noticed that there are many strategies that when backtested, show an "edge". That is, winning trades of > 50% and average winning $ per trade > 1.5x the losing $ per trade, total winning $ > 1.5x losing $ over the trading period. With this being the case I'm fascinated as to why anyone with good card playing skills would not switch to trading (of course some have ) By the way, I'm still fascinated by the way my after the market close analysis of how my trades should have panned out, vs how my strategy says they should, diverge. It's incredibly difficult in real time, with the futures doing things to unsettle you, other traders yelling out rumors of this and that about Iraq, etc, etc. to take the trade that after the close you know should have taken according to your plan. Every day I kick myself for not sticking to plan and go in the next day and do the same again. Am I venting?
Unless the futures, rumors, and the opinions of other traders are part of your plan, ignore the futures, don't listen to the rumors and ignore the opinions of other traders. --Db
Card counting can give you a decent edge in blackjack. It is oficially forbidden and you can be expelled from a casino for doing it, but you can learn how to hide it. That's one of the reasons some still make money playing blackjack. Also it is not necessarilly in the best interest of any casino to ban card counters totally because they would lose more in that way than they could gain, so you need to strike a proper balance.
Blackjack would be more similar to the markets, as there is a parallel between the cards that have been dealt affecting odds of winning in rest of deck, and the fact that many use technical analysis (analysis of what has occured) to predict what will occur. For example, hit a large clump of small cards and chances are you will lose more often; however, your chance of winning in subsequent hands increases as the concentration of 10's becomes higher in the remaining decks. You could look at the markets (at least in the short term) as a game with dealer as bear and player as bull, using a shoe with a very large number of decks and the 10's and small cards equivalent to positive/negative sentiment. Or one could look at the entire economic cycle in this fashion -- most of the aces and tens have come out during the 90's, now we're left with a tough deck to beat. Luckily in the markets, you can bet with the dealer as well
That's what is called card ccounting. There is a whole literature on this topic that covers many strategies very well worked out mathematically.