I used advantage gambling to help put myself through grad school during the first online casino boom. There were so many casinos vying for players, that many offered a bonus -- say $500 extra to play with if you deposit $500. Of course that $500 had a playthrough requirement -- you may have to wager a total of 20x that to withdraw -- so $10,000. Now you simply find a casino that has a game with odds that beat the playthough. So, for example, if a game has a 1% house edge, you're expected to lose about $100 wagering that $10000, leaving you a theoretical $400 in profit.
Eventually, the casinos wised up and changed it so the wagering had to be done on slots, which have terrible odds. However, we figured out early on (I was in an advantage gambler forum) that there were "double or nothing" games in the slot machine, that let you go double-or-nothing between 5 and 10 times. These counted towards wagering, and were essentially perfect 50/50 odds (no house edge) - so by always going double or nothing until the end, you could rack up most of your wagers at 50/50 even though the initial slot roll was at a much higher house edge.
I think I started with $100 deposit into a casino and probably made > $50k in the two years after that. About $40k of that went to bills and $10k became my initial poker bankroll while I taught myself to play poker professionally, which I did for the rest of grad school after the casino bonus gambling winded down (they eventually wised up to the slot machine thing too) -- and if you player poker at a high enough level and you use judicious table selection, you can always advantage gamble (because you are gambling with each other, not the house, though the house gets their cut with the rake -- so you have to win at a high enough level that you know you are beating the rake)
I was a "small time" person, just doing it on the side to earn spending money -- there were certainly other people who had many many computers, VPNs, shill addresses, etc who took those casinos for hundreds of thousands a year for those couple years.
I learned a lot about probability theory, estimated value, and the mathematics of gambling in general, gained the emotional strength to deal with high variance (the best description of playing poker professionally that I ever heard was that it was like playing a game of chess for $1, then flipping a coin for $100. In the long run that chess game is the only thing that matters, but in the short run those coin flips can be brutal). Good times.
I also started playing poker a lot in college for "fun money", and was looking to step up my game.
I went a different route, though. I did the math and realized that even at a very good hourly take, I would never make very much money, and that by going up to higher stakes tables if anything I would do worse. I didn't have much hope for tournaments either.
A few years before this I had worked at a day trading firm. I don't recommend technical trading (I never could find an edge there), but then it finally "clicked" and I realized the obvious connection between the stock market and poker: you are trying to find mismatched bets where the odds are tilted in your favor.
Once I made this connection I promptly switched to the stock market and never looked back (this was over 12 years ago). It took me a while to figure out a "system" (what kind of bets to look for, how do you figure "odds" with stocks, etc.) but it has been quite profitable, even counting the Great Recession, and now I do it full-time.
So anyways, if you think you really "get" poker and are willing to put in the time it takes to get good, you may be better off switching to a game that pays much better, assuming you have an interest in business.
Depends on your definition of money I guess. At my peak before I moved to heads-up I was playing about 4-8 tables of 10/20 shorthanded at a time and averaging about 1.5 BB/100 hands after the rake. 4-8 tables online is about 400 hands an hour so that's a take of approximately $120/hour. Granted they were grueling hours and no way could you really do 8 in a day. I could make more contracting programming now I guess, but at the time it was an unreasonable amount of money for someone in grad school to be a social worker.
I know a lot of people that went the poker - day trading route, some who love it and make money. I'm not much interested in business enough to learn anything beyond P/E, and I'm still not 100% convinced that people who make money trading are doing anything but ending up on the good side of the random walk, but I accept that it's possible ;)
I also know some people that went from poker -> day trading -> fantasy sports because there's a lot more casual sports fan playing fantasy sports and making bad bets than there are traders making bad bets.
Yeah, I figured the best I would ever do was around $100k / year, and with a huge time commitment.
I would not recommend day trading either. A long time ago you could find arbitrage opportunities, but those have been essentially squashed out for quite some time. I have seen technical traders who claim to have a read on things, but to be honest I don't see it. (There are a number of long-term successful commodity traders, but there are not many day traders in stocks who last)
I actually do longer-term fundamental-based investing (my average holding period is probably around 2-3 years). Initially it was way less money than poker, but had the huge advantage that it scales up pretty well (at least to numbers people actually care about) versus poker where I would've been stuck making the same amount. It also has the advantage that I can do it anywhere.
Curious if you can share any more about your approach to fundamental investing. What stage/size companies do you focus on and how do you find an edge?
I looked into fundamental investing for a while but came away with the impression that you're trying to guess what the consensus of the market will be rather than finding some "right" answer. ie you can think the price should be x but if nobody else will buy/sell at x then you're wrong.
I've instead been subscribing to the notion that price movement can be thought of as random and selling option premium accordingly (the whole tastytrade mantra) but haven't been super successful and would be interested in hearing other approaches.
Sure. I agree that in the short-term (daily, weekly, even monthly) it's largely random, or at least effectively random, as in its no use trying to predict it.
My starting point is what I call the Fundamental Theory of Value Investing, the well-known belief that price eventually reflects value. Or, rather, they tend to move in tandem. You can't really prove this, but it has been observed empirically. Really internalizing this is important for sleeping well during volatile times. :)
So that means you need to find places where price doesn't currently reflect value. There's the usual list of places to look where the big players can't go, including micro and nano cap companies, low-priced companies, companies not followed by analysts, troubled companies, 52-week low companies, spin-offs, etc.
As far as fundamentals, I like reliable FCF, or better yet, what Buffett calls "owner's earnings" (slight difference from FCF). "Reliable" being a key word, and where experience and clear thinking are important. I spend 90% of my research time looking for things that will threaten cash flows.
I stay away from growth companies. The market just bids them up way too high. FB may be a wonderful company, but the current price is priced for perfection; any slip-up and down it'll go. Everybody is chasing growth, and institutional investors want to tell their LPs that they are in on the hot thing, so they buy in at any price.
You can't know the exact probabilities and odds, so the most reliable way to make money is to buy good earnings for cheap, check your downside very carefully, and let the upside take care of itself. Obviously there's a million variations on this, but they all generally require going against some consensus, which can require testicular/ovarian fortitude. For me, the most common thesis is of the form, "this too shall pass". Some sort of temporary disruption that doesn't permanently harm the business. Sometimes the dust settles in a quarter, sometimes 3 years. If I start getting a clue that I was wrong in my analysis, I get out.
I can go in more detail if you want but maybe should take it offline as people here to read about casino betting may not want their thread cluttered with this stuff. :)
I'd be very interested in reading it if you decide to post it somewhere. I'm working on honing my own skills by reading a lot of books, through my main portfolio, and various paper portfolios.
Do you primarily manage your own money?
How difficult is it to achieve long term advantages over indexing?
Definitely interested in continuing the discussion. My email is in my profile, otherwise I'm not sure where you want to take it offline (just realized HN doesn't have private messaging).
That's what Edward O. Thorp[0], the inventor of the modern Blackjack counting system, did. He devised a way to beat the dealer, tested it on a computer at MIT, went to Reno and made a bunch of cash. But instead of following that path, he wrote a book which was boon to the gambling industry, and started a hedge fund.
> the best description of playing poker professionally that I ever heard was that it was like playing a game of chess for $1, then flipping a coin for $100. In the long run that chess game is the only thing that matters, but in the short run those coin flips can be brutal
Great quote! What books or online resources would you recommend for getting better at poker? Not looking to play professional but do enjoy the game and always looking to improve.
It's been a long time now since I've studied intensely (haven't played much poker outside of the occasional home game with friends for 10 years), but I imagine the 2+2 forums are still the best forums around for discussion of strategy, hand reviews, theory, etc.
David Sklanksy and Harrington and Ed Miller's books are probably the best around still in terms of a comprehensive overview of the various games, especially Hold Em and Stud, the games of course change as people change styles, but the basics are there.
If you are mathematically minded or just interested in a whirlwind tour through game theory and gambling theory, I highly recommend The Mathematics of Poker by Chen and Ankenman -- but it's a pretty heavy lift https://www.amazon.com/Mathematics-Poker-Bill-Chen/dp/188607...
I've also heard good things about Applications of No-Limit Holdem by Matthew Janda but it came out after I pretty much quit playing regularly so I haven't read it.
If watching people play is more your thing there are tons of good sites out there now were good players record themselves playing and give a running commentary on their thought process as they play. It can be quite an eye opener to listen to what a good player thinks about when they make their decisions.
Daniel Negreanu is always fun to watch, and he has some great streams on Twitch when he's out of the country: https://www.twitch.tv/dnegspoker (He often plays Hearthstone when he's home in Vegas, and that's fun to watch too.)
Pretty good recommendations. I'd add that if the Chen/Ankenmann book is too abstract, then possibly the Intelligent Poker Poker by Phil Newall is a better choice - it's kind of the more applied game theory book. MoP is an excellent book for those with a math background, but as you say, it's a bit tough for those without it.
There are very few books that are up to date on the current meta game of poker. You are much better off watching training videos done by professionals.
I recommend UpswingPoker [1], created by debateably the best heads up no limit player in the world. It will give you a very solid foundation for understanding poker in a short time. The training videos are not free, if you want something for free you can watch them on Twitch [2].
Professional poker players streaming on Twitch is rising in popularity. You can learn quite a bit about the game by simply tuning in on a regular basis. There are people who play small stakes ($10-$100) and people who have streamed tournaments where they've won >$100k for a 1st place finish.
There were also plenty of shady operations in those days. I seem to remember some online gaming authorities were particularly bad about not vetting their casino operators. One time we found a casino that had a game (I forget what it was, maybe a video poker variant?) that had a HUGE (5% or so?) player edge when played optimally because of an incorrect payout structure. That casino was blasted with players betting huge amounts of money -- they must have figured something was going on but they couldn't figure out what. They were probably bankrupted within a day or so. Not only did they lock everyone's winnings that had played the game, but they kept their initial deposits as well and shut down the site...
Sounds like a pretty great scam to me. Open a casino with a "broken" game in an easy regulatory jurisdiction (lots of these, most of them are in places with beaches, too), wait for the vultures to descend with their millions in illegal deposits routed from the US via various dodgy places and then just disappear knowing there is virtually no legal recourse for the people who lost money.
This sounds a lot like my story, only with less money involved. I casino whored about a 4k bankroll, and then started playing poker with it. I played recreationally until I quit my job for other reasonse--by then I had a 5-digit bankroll and then I played professionally for a few years, specializing in HUSNGs.
I should have done more casino whoring in the beginning, it was just free money.
I ended up specializing in heads-up limit cash games...until the bots came in...heads-up poker is a special game I think - meta-play can get really high with two skilled players. Definitely the hardest I've ever has to think at a high-level for hour after hour, used to end a session absolutely wiped out mentally and emotionally.
I too did this during college. I remember specifically deciding to go for a SUPER HIGH VARIANCE playthrough and just did 3 max bets in a row, won all 3 and then Autobet a dollar at a time while i went to the beach to finish the rest. Made about $2k for laying on the beach. Gosh I miss those days.
Eventually, the casinos wised up and changed it so the wagering had to be done on slots, which have terrible odds. However, we figured out early on (I was in an advantage gambler forum) that there were "double or nothing" games in the slot machine, that let you go double-or-nothing between 5 and 10 times. These counted towards wagering, and were essentially perfect 50/50 odds (no house edge) - so by always going double or nothing until the end, you could rack up most of your wagers at 50/50 even though the initial slot roll was at a much higher house edge.
I think I started with $100 deposit into a casino and probably made > $50k in the two years after that. About $40k of that went to bills and $10k became my initial poker bankroll while I taught myself to play poker professionally, which I did for the rest of grad school after the casino bonus gambling winded down (they eventually wised up to the slot machine thing too) -- and if you player poker at a high enough level and you use judicious table selection, you can always advantage gamble (because you are gambling with each other, not the house, though the house gets their cut with the rake -- so you have to win at a high enough level that you know you are beating the rake)
I was a "small time" person, just doing it on the side to earn spending money -- there were certainly other people who had many many computers, VPNs, shill addresses, etc who took those casinos for hundreds of thousands a year for those couple years.
I learned a lot about probability theory, estimated value, and the mathematics of gambling in general, gained the emotional strength to deal with high variance (the best description of playing poker professionally that I ever heard was that it was like playing a game of chess for $1, then flipping a coin for $100. In the long run that chess game is the only thing that matters, but in the short run those coin flips can be brutal). Good times.