Have you seen the movie Rainman?
It was released in 1988 and stars Tom Cruise (Charlie) and Dustin Hoffman (Raymond).
Raymond is an autistic savant with a photographic memory, so his brother Charlie decides to take him to Las Vegas and make some money using his skills to count cards, and they clean up!
Card counting is a strategy used primarily by blackjack players to keep track of the cards that have been dealt, to identify if the next hand is likely to give them a probable advantage or not. Once they’ve identified if the odds are in their favour (or against them), they can adjust their playing decisions, by betting bigger when the odds are more in their favour or smaller when the odds are against them.
It’s so effective, that casinos use all types of measures to detect card counters, so they can promptly eject them from the building and ban them from coming back.
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Casinos also employ other techniques that make it hard for card counters to operate effectively because they don’t want players reducing the edge the Casinos have.
So, what does this have to do with trading?
Are there techniques trades can use to identify times when probabilities are more in their favour, or even those times where probabilities are against them?
And if so, what type of impacts can that have on trading performance?
Over the past few years, I’ve been using a technique called D.P.S. in my Hedge Fund.
D.P.S identifies the times when trades have an even higher (or lower) probability of success BEFORE I take the trade.
And if you know when the odds are stacked more in his favour, you can use this to your advantage, like a blackjack player waiting for odds to turn his way before he bets big.
Yup, D.P.S is like “counting cards” for traders (and you don’t need to be a savant like Rainman to apply it.)
The results of using D.P.S can be profound – you can potentially double or even triple your profits on particular trades, significantly increasing your risk-adjusted returns.
They’re powerful and effective techniques, but quite simple to implement, if you know how to do it safely.
A few days ago, we released a new ebook that explains D.P.S in more detail, and how you can use it in your own strategies to potentially boost your risk-adjusted returns.
It’s completely free, so if you’d like to know more, you can grab your free copy here.
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