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A School For Day Traders

Finance: Investing

A School for Day Traders

They roll the dice to hone their skills at a casino seminar

It's 9:30 on a Sunday morning at the Gold Strike casino in Tunica, Miss. In the casino ambience of perpetual night, waitresses clad in skimpy riverboat-style dresses are delivering Bloody Marys and screwdrivers to patrons. All the while, there's the buzzing and ringing of slot machines that sport names such as "Life of Luxury" and "Filthy Rich." In a few hours, the after-church crowd will start pouring into this and the nine other Tunica casinos, which are situated on the banks of the Mississippi River, smack-dab in the heart of the Bible Belt some 20 miles south of Memphis. "Sin City South," Tunica is sometimes called.

On this Sunday morning, six people from as far away as Alaska and California have gathered to learn how to make big money day-trading stocks and commodities by mastering the game of craps. Each has paid $1,500 (not including airfare, lodging, meals, or the required $1,000 in gambling money) to attend a four-day seminar called "Casino War Games" taught by Richard McCall, a Little Rock behavioral therapist, martial-arts master, professional trading coach, and casino gambler."OUT OF CONTROL." McCall's seminar is part of a larger trend--as the world of gambling cozies up to the world of investing. More and more classes designed to teach successful day trading are being held in gambling hot spots across the country. Bob Bright, a professional gambler and trader who heads up a Las Vegas day-trading firm, Bright Trading Inc., openly applies the tenets of casino games to trading in his seminars. And counselors who treat compulsive gamblers say they are seeing more and more day traders. All this is occurring as online investing makes it easier than ever for average investors to play the markets. The June Las Vegas "Money Show"--an extravaganza for average investors that featured such speakers as Louis Rukeyser and Elaine Garzarelli--was held at Bally's casino. Its theme, "Online Investing Goes Mainstream," attracted the largest crowd ever--with over 10,000 in attendance.

"If anything is telling that the day-trading fever is out of control, it's these casino seminars that purport to teach average investors how to trade," says Christopher Anderson, a psychotherapist and former stockbroker who now counsels gamblers.

McCall begs to differ. "At a casino, you can learn discipline. I don't teach people how to gamble. Gamble means you expect to lose. I teach gaming skills designed to help people win." He maintains that his craps system--which is based on an unorthodox blend of Zen mind-discipline techniques, killer instinct, keen timing, and a playing strategy that involves repeatedly betting on a certain set of numbers--will ultimately "edge out," or beat, the house. Typically, the overall house edge at a casino is 2% to 3%. That results in what's called "negative outcome," or losses, for gamblers.

Craps is the only casino game that allows for hedging--that is, the ability to take both long and short positions such as in the stock and commodities markets, experts say. "Craps is probably the most fair game to the player compared to other games. The house will still have an edge over you, but by using strategy, that edge can be considerably minimized," says Bryan D. Egger, a gaming analyst at brokerage Donaldson, Lufkin & Jenrette.

In craps, the house edge can be as small as one half of a percent. McCall maintains that players can overcome that edge. And what they learn in craps can be directly applied to day trading. McCall doesn't teach his students specific trading strategies such as technical analysis or market timing. "Those strategies are a dime a dozen. The hard part in trading is discipline," he says. He wants to save day traders from their worst enemies: themselves. "There are too many people getting into trading the markets who let their emotions rule the game. These are the folks you have to worry about," says the trading coach. He adds: "Craps is the fastest way to learn how to trade the markets right. It requires strategy, strict discipline, and impeccable timing."

Some of McCall's craps seminar rules: Play only four hours a day, broken up into eight 30-minute sessions, and limit those sessions to $100 each. "It's all about limiting your play and knowing that you can walk away," he says. McCall also requires his students to walk away if they are 50% down or if they're 50% to 100% up. And he disallows chip counting. "It breaks the flow," he says.VISUALIZATION. McCall teaches a five-part "action plan" for craps, which can also translate into day trading, with such mottoes as: "Accept all possible losses before playing!" and "Trust your chosen bet to be the right one!" He believes in visualization. "Imagine the number you want the dice to roll," he says. And McCall advocates "deep pelvic breathing" throughout the craps game--that is, breathing from your pelvis as opposed to your chest. "You have to trust that intuitive feeling you get in your gut," he says.

Three of the six attendees at the "Casino War Games" could be considered professional traders: Armen Donatossian, a thirtyish former gas station manager from Alaska who trades Standard & Poor's 500-stock index futures contracts; Ron Happe, a former management consultant in his forties who trades commodities; and Phil Lieberman, an accountant who recently moved to a South Carolina retirement center from his native Brooklyn. The remaining attendees are "wannabes": Phil's wife, Dorothea, a retired school administrator; Andrew Lee, a thirtyish Chinese postal worker from San Francisco; and Aram Donatossian, a manager at an electric utility and Armen's younger brother.

Truth be told, many professional markets traders have long played craps or blackjack for recreation. Some even incorporate gambling techniques into their trading. Edward O. Thorp, who is an infamous blackjack card counter and author of the best-selling gambling book Beat the Dealer, now manages about $300 million for wealthy investors. And Russell Sands, now an investment newsletter editor and money manager, is a champion blackjack player. Sands was one of the "turtle traders," a group of 20 commodities traders who posted stellar performances in the 1980s by undertaking risky trading strategies. "Trading pros have always gambled on the side. Their risk profile fits that of a typical gambler. They like the excitement, the split-second decision-making," says DLJ's Egger.FAMOUS STUDENTS. But the concern, say experts, is that while casino techniques may work for the professionals, who already have the strategy and discipline they need, seminars such as McCall's are being offered to average or semi-professional investors who have little of the same knowledge or sophistication. "A casino mentality means that they're more likely to take unwarranted risks," says Anderson.

McCall's casino seminar is an offshoot of his core seminar for traders called "Zen-Mind Challenge," which is based on a combination of Buddhist platitudes and martial arts. He says that well-known Wall Street trader Paul Tudor Jones, as well Peter Moon, a top gold trader, have taken his seminars. Bill Clinton, when governor of Arkansas, even took the Zen-Mind Challenge seminar at McCall's Little Rock "dojo," or formal training hall, to learn how to ward off general stress, McCall says.

At the end of the Sunday-morning seminar, the players are pumped. As they go off into the casino for their afternoon of play, McCall holds up a gold token that he had given to each student the day before and reads the inscription aloud: "Expect to win!"

But at the end of the five days, most of the players were not winners. Still, they may have gotten the best preparation of all for day-trading the market. Learning that it's hard as heck to beat the house.By Marcia Vickers in Tunica, Miss.Return to top

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