Trade Like A Casino

This is the second book from Richard L. Weissman... The first book was fantastic. In fact, it is one of the selected books that will remain on my book shelf for a long time. The second book..... well, not as good as the previous book. As usual, repetition is the main issue. It becomes so obvious especially when I just finished his first book and everything still remains fresh in my mind. So, end up, my fault; not the author's fault, LOL.

One major differences compares to the first book is... this second book tends to focus more on theories. As such, please do not expect to see tons of technical stuff. In fact, one of my expectations on this book is to have tons of technical studies like what I read in the previous book. Obviously, the author chooses to focus more on psychological aspects (especially the last part of the book). It is perhaps beneficial for someone who has never seen any of these topics. For me, it just sounds too familiar...

Another small flaw is on the charts presented... As mentioned above, the author seems to focus more on theories. As such, charts presented do not help at all. In fact, the page length of each topic tells the whole story. In my humble opinion, the necessity is simply not there.

Like I mentioned above; relatively, under certain comparison, this second book does not seem to be as good as previous one. However, this book is still not a bad book. Rating wise, I am giving a 9/10. The single point deducted are purely due to repetition and some minor flaws as mentioned above. Other than that, this book still qualifies as one of the book that I rated highly. End up, we all are familiar with casino and we are fully aware on how they grab our money. So, if we cannot beat them, let us be one of them our self, LOL...

Some nice quotes:

You have a greater possibility of being on the right side of the event if you are trading in the direction of the long-term - one to six month - trend, and a greater likelihood of being on the wrong side if you employ a mean reversion model.

If by trader intuition we mean finding and excuse to abandon a rule-based positive expectancy model or rules of risk management, then such intuition must be avoided at all costs. 

Stop orders are the key to risk management methodologies and stop limit orders are not. Stop limit orders are for offense and stop orders are for defense. Stop limit orders are for position entry since they offer the ability to enter into breakouts from sideway markets or trend reversals without obligating us to enter at the next available price.

There is only one acceptable reason for abandoning a positive expectancy trading model, namely, its replacement with an even more robust model.

If I were to give you the most robust model ever developed, it might not help because, in order for you to implement that model, it has to match your trading personality.

The casino never abandons its rules of risk management regardless of winning streaks, losing streaks, the types of player entering, the time of day, and so on. It is precisely because they do understand the business that they are psychologically okay with taking losses and continuing their disciplined adherence to rules of risk management. 

If you want excitement, take up skydiving or bungee jumping. Casinos do not operate for thrills or entertainment; they do it for profits. By contrast, it is the players - who have probabilities skewed against them - that go to casinos for entertainment. 

Casinos never let their overhead or lack of opportunities at 2 a.m on a Wednesday lead to closure of the casino, changing of the odds on their games, or abandonment of table limits. 

A final word of caution regarding the incorporation of volatility indicators into counter-trend trading models: Be careful. Despite the protective fail-safe criteria that were built into the high volatility mean reversion system, because these are counter-trend system, they are by far subject to fat tail event risk. When a market shifts, these systems are subject to risks, which could potentially overshadow rewards, sometimes dramatically.