Once you understand why in the long term the casino is a guaranteed winner, you’ll see it has nothing to do with gamblers having “bad luck” and everything to do with simple arithmetic. The idea then becomes to apply this arithmetic to your everyday trading so that you can become the casino and guarantee yourself longer term success.

The casino’s advantage over the gambler comes from always paying less than the true odds for a given occurrence. For example, in the game of dice there are 36 different number combinations and 6 ways to roll a 7, which means that the odds of hitting a 7 on any one roll of the dice are 6 to 1. However, when you make this bet and win, the casino will only pay you 4 to 1 odds. Let’s see what this means.

If the casino collects $10 per roll of the dice on this bet it will collect $60 for every 6 rolls. But it will only pay out $40 for the 1 time in 6 that the gambler wins, which means that for every 6 rolls of the dice (at $10 per roll), the casino is guaranteed to win $20 because it collects $60 and only pays out $40. Casinos love these kinds of “sucker bets” because over the long term, there’s a guaranteed profit built into them (which in this case is 33.3%).

Of course, a gambler could get lucky and hit several 7’s in a row. But over the long term, the casino is the guaranteed winner because it has this built in edge. Every game (and bets within a game) in the casino has a certain amount of built in “edge.”

If you think of forex trading, excluding breaking out even, there are only 2 outcomes; a currency goes up or it goes down. The random odds of winning a trade, in the long term, are 50% which means that over the longer term, you as a trader are going to average somewhere between 45% and 55% winners.

The bottom line here is that you have to find a way to make money at this level of winning percentage. You have to turn the odds in your favor so that you can be the casino and have a built in “edge” that’s guaranteed to make you a winner over the longer term.

What you have to do as a trader is to find a way to get paid MORE than the true odds of a “heads or tails”, 50/50 forex bet. In other words, using our dice game as an example, you have to find a way to get paid 8 to 1 odds (or more) for an occurrence whose odds are 6 to 1. You have to find a way to get paid $80 for every $60 you bet, not $40 for every $60.

The good news is that there way to do this is and it’s something I stress in my room constantly. And because you have to see this work in the longer term, I want to give you a free month in my trade room.

The regular cost of joining is my room is $99 per month but if you join now, you will receive the second month for free. This 60 day period is essential for seeing how I apply these concepts in the longer term.

So, I hope that you will join my room and learn how to turn your forex broker into your own personal “sucker.”

Related Posts:

  • Don’t Overlook The Importance of The Reward To Risk Ratio (Part 1)
  • Leverage, part 2 – Trading vs. Casino Gambling
  • What To Do When You Have A Losing Trade
  • Forex for a Living: Education vs. Experience
  • Live Trading Room Summary – August 16, 2007
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