Knowing When to Break the Rules
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As a general rule, I am pretty strict with my discipline in all forms of gambling. However, even in the famous book, Market Wizards, you see wildly successful billionaires note that there are occasions when it is not only acceptable to break your rules, but when you should actually feel compelled to do so. Far too often, though, overly aggressive traders use that loophole as a convenient excuse for reckless gambles and, in the end, breaking your rules that frequently will cost you too much money. A classic example of this happening is when it comes to your position sizing.
A few years ago while in Las Vegas, I found myself in an interesting $80/$160 Texas Limit Hold ’em game at the Bellagio. The game was pretty good (weak players, but a lot of action), and I was playing my usual tight aggressive style. At one point, a seat opened up to my right and in came a well-dressed guy who could have been a stunt double for Dr. Christian Troy from Nip/Tuck. He had two attractive blonde ladies with him, and he was wearing a white golf glove. He sat down next to me, and started chatting me up. He told me that he had just flown in on a private jet from California after playing golf all day. He had alcohol on his breath, but said he hadn’t had a drink in a few hours. The women he was with wore a lot of jewelry and had expensive handbags. Basically, this is exactly the type of person that I want to play poker with in an upper limit game–Flashy, wealthy, pretentious, probably just looking to have fun and doesn’t mind if he loses some money. He played every hand he was dealt for the first 15 minutes at the table, and hardly ever folded thereafter.
The cocktail waitress came over and took our orders. Most of the pros at the table ordered green tea, coffee or water. Mr. Golfer looked confused. “No one is drinking here? Cmon, guys! We’re supposed to be having fun!” He shouted at the table so loudly that players at other tables in the room shot annoyed glanced over our way. Of course, a few of the losing “pros” at my table were losing badly and were too frustrated to even play nice with Mr. Golfer, which is a huge mistake. You always have to be affable with the mark in the game.
Now, as a pretty strict rule, I never, ever, drink at the casino when I am playing for any kind of serious money. If I am out with some friends playing $1/$2 Hold ’em, then maybe I will have a drink. But, not a chance for the upper limits. However, in this situation I knew that if Mr. Golfer didn’t feel like he could have fun at the table, then he might very well get up and leave. At the very least, he would probably focus on playing better poker, which is exactly what I did not want to see happen.
So, in this specific situation, I broke the rules. I told him I’d be happy to drink with him, and I let him order a few shots of tequila for us. Right on cue, he unwound and started throwing money around the table some more, allowing me to win a few big pots off of him. While the phrase, “rules are made to be broken,” is too extreme for trading and poker, it is important to have the discipline to know exactly when you should break the rules…and when you are just fooling yourself.
Comments »Squeezing into Overhead Supply Compartments
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This market continues to impress with the very brief time it spends at key reference points. As an example, we only spent a few sessions coming to terms with the 1300 zone on the S&P 500, before blasting through it. Today, after two just days, we plowed through the 1330-1332 level. Once again, the bottom line is that the underlying bid to this market continues to be extremely persistent and omnipresent. With that said, playing only the best individual setups remains crucial.
Looking ahead, we have 52-week highs up at 1344 in sight, especially with a close today above 1332. Overhead supply has been a factor here, but only for a blink of an eye. Remember, these key reference points are not areas where you automatically call a top to the market and start shorting. Rather, they often serve as excellent litmus tests to discern just how strong the bulls are. In this case, we seem to have a pretty clear answer that to question.
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Shameless Friday Morning Brag
[youtube:http://www.youtube.com/watch?v=Z-FPimCmbX8 550 412]
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Many members of The 12631 Trading Service inside The PPT are celebrating today, with a nice 10% jump in SRX based on this takeover. Indeed, sometimes “chatter” actually proves to be true. With that said, profits have been taken by the ChessMaster. Happy Friday!
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