Traders are often surprised at how close trading is to games of skill such as poker and blackjack where players exploit small skill advantages and a ruthless understanding of money management to be successful.
Cates earned his stake by grinding, the term used to describe the process of pressing a skill advantage over an extended period of time.
Unfortunately, large numbers of traders particularly those who are new to the game think that trading is equivalent ot the lottery. That is you do it for awhile and then win a vast fortune. I have received emails from people bitching about the fact that they have traded fro three weeks and are yet to make a fortune. Im not making this up – you should see some of the stupid emails I receive. If you ever have doubts about running out of idiots to take money off just ask me and I will send you some of their emails.
The key to all these endevours be they card games such as poker or trading obscure derivatives lies in money management and simply grinding away. The notion of money management first appeared as an academic concept it was referred to as bet sizing and took its inspiration from gambling. Traders would be well advised to look up the work of Edward Thorp who rose to prominence when he published Beat the Dealer which was the first book to look at the notion of edges and to prove their existence mathematically.
PS Edward Thorp should not be confused with Van K Tharp who popularised some of money managements more basic concepts but did not invent it