“Wiseguy” just sounds cool. Maybe I have been watching too many Martin Scorsese films. At first, you don’t know if I am talking about an Italian gangster, a person with a lot of smarts and sense or a savvy bettor who lives off their edge in the markets.
What is a Wiseguy?
A professional sports gambler said “A Wiseguy is just terminology for someone who bets with positive expectations. Wiseguys are called ‘Sharps.’ We’re called ‘professional bettors.’ The slang term is ‘Wiseguy’. It’s been floating around Vegas for who knows how long. The concept is that for Wiseguys, or shark bettors or professional bettors it’s not about the action, it’s about making positive expectation wagers. We have a positive ROI when we make them long term. And that is the single biggest difference between a square bettor or a ‘Joe’ or a recreational player (they all mean the same thing) versus the Wiseguys.”
So, whether you are a wiseguy, a sharp or for our purposes a master trader, being a savvy bettor is something we want to do.
In the financial markets, wiseguys have a similar positive expectancy system or methodology that allows for skewed risk:reward. Big winners and small losers. Over time, they exploit their edge and end up compounding their money-which is the goal of any investor/trader or gambler.
Qualities of a Wiseguy
-In the market, they place their bets (trades) and live with the results, never betting too much at one time (variance drain, risk of ruin).
-Never gets too high or too low (emotion).
- When you have an edge and positive expectancy there are times to go heavier on the throttle (In card counting game of Blackjack, when the count, or measure of probability for face cards is heavily in your favor).
-There are times to sit out the market (An advantage of the speculator vs. those professional money managers that always have to be invested).
-Constant tinkering and deep study of their craft.
-Objective analysis on past trades. What could I have done better?
-They don’t doubt their own abilities. Many say it’s impossible to obtain the types of returns they have achieved. Academics say it’s impossible. The Wiseguy sits back and laughs having confidence in his own methods.
Be a wiseguy. Study different methods that offer an edge: whether it’s Blackjack Card counting strategies, high frequency trading (making a lot of small bets and time arbitrage, exploiting technology by having better co-located equipment), Study methods like Gann, Elliot Wave Theory that can predict turning points in markets that offer hugely favorable reward:risk ratios, backtest ideas and look at new or proprietary indicators to gain an edge. Have a look at Trend Following across many non correlated instruments as a strategy to exploit directional volatility (Full Disclosure I used to work for a Trend Following Fund).
Most importantly, do your own research. Lots of people will tell you, “That method just doesn’t work,” or “Only a fool would try that.” The truth is that many of those opining just means that they were told that many years ago and dismissed the idea. Or they had a novice understanding and couldn’t make money for X period of time and they gave up.
Eventually you too will become the wiseguy the casinos fear.
The above quote came from this article from BI: