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I know of no easy formula for what to bet in other situations. If you could find a casino that would allow you to use a computer, the advantages would sometimes be huge towards the end of the shoe, especially on the tie. A minor reason is to foil card counters. However, instead of burning x cards, the dealer could move the cut card x cards forward, and achieve the same purpose. The major reason is game protection. For one, the player might catch a glimpse of the top card, and alter his bet and strategy, based on this information.

Such a tactic would not be cheating, I might add.

The top card is also vulnerable to lots of cheating schemes. It could be marked, the dealer could peek at it, or force a desired card to the top. If for any reason the dealer knew what the top card was, he could signal that information to a confederate player, giving him a huge advantage.


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Many baccarat tables also offer this bet. As I show in my baccarat page, the house edge is In either game, you would pretty much need to eliminate all cards of at least one rank to have an advantage. To know that, you would need to keep 13 different counts. In baccarat, this could be done, since you are allowed to take notes while you play. The house edge under the first set of rules is 1. The house edge of the second set of rules is 1. So the first version is the better bet. The house edge on the Player bet is 1. Charlie Rose: You have never known, in your entire life, a gambler who comes here and wins big and walks away?

I find this hard to believe. What are your thoughts? Andrew from Fort Wayne, IN. I personally know lots of professional gamblers up on the Wynn. I would imagine that only the super whales are granted an audience with him, and such whales are usually superstitious i. Most heavy recreational gamblers do lose over the long run. However, if Mr. Wynn believes that nobody is up on him, I would invite him to repeat the triple-points promotion he ran Labor Day weekend Even if the promotion loses money, surely the foolish players will give it back eventually.

Assuming eight decks, the house edge is 4. For more information, visit my page on baccarat side bets. Limits can be raised upon request by known customers. This question was raised and discussed in the forum of my companion site Wizard of Vegas. The house edge ranges from a low of 6. I show the probability of winning and expected return for all ten bets on my baccarat page. The math works out more easily if he bet on the Player. I work out a similar problem in roulette at my mathproblems. So in the case of the Player bet the equation values are:. So the answer is 0. That would result in the distinct possibility of the player overshooting his goal.

I found two sources online that address your question. The first is a quote from an article I found: But Edward Thorp and his computer are not done with Nevada yet. The classiest gambling game of all — just ask James Bond — is that enticing thing called baccarat, or chemin de fer. Its rules prevent a fast shuffle, and there is very little opportunity for hanky-panky. Thorp has now come up with a system to beat it, and the system seems to work. It has also been spotted and barred from play in two casinos. Could it be bye-bye to baccarat, too? Thorp also addresses the vulnerability of baccarat to card counters in his book The Mathematics of Gambling.

The link goes to a free online copy. Thorp concludes by saying: Practical card counting strategies are at best marginal, and at best precarious, for they are easily eliminated by shuffling the deck with 26 cards remaining. Interestingly, Thorp also says the tie bet pays 9 to 1.

Perhaps that rule was more common in , when the book was published. My own analysis points to the same conclusion, although I studied the tie bet with an 8 to 1 win. I find the pair bets that some casinos now offer have the greatest vulnerability, but are still not a practical advantage play. Don said that he believed that Thorp did indeed have a team trying to exploit the tie bet. That is likely a weighted average of all four types of bets on the table. Most of the money is bet on the Player and Banker, with a house edge of 1. However, the Tie and Pair bets carry much higher house edges of Players apparently are betting a little on this to increase the overall win percentage to 2.

The table below shows a hypothetical mix of bets that arrive at the overall Macau Win Percentage, ignoring the issue of Dead Chips. Remember these numbers: 8, 27, 47, Here is what they mean. If the Banker's total is 3, and the Player draws anything except an 8, then Banker draws. If Banker's total is 4, then the Banker draws against a Player third card of 2 to 7.

If Banker's total is 5, then the Banker draws against a Player third card of 4 to 7. If Banker's total is 6, then the Banker draws against a Player third card of 6 to 7. I hope you're happy; I just created a quarter million of them. Better to find out your system will fail eventually, which they all do, for free than with real money in the casino.

This question is discussed in my forum at Wizard of Vegas. According to your review of Gamesys N. You note the player advantage is 0. Keep playing, betting the same amount every time, until you are up any amount of money. Then quit, wait 24 hours, and repeat. To be specific, the advantage per bet is 0.

There may be other equally good strategies but if anyone has a superior strategy, I'm all ears. Enter your email address to receive our newsletter and other special announcements. Wizard of Odds uses cookies, this enables us to provide you with a personalised experience. More Info Got It! Enter your email address below to subscribe to our weekly newsletter along with other special announcements from The Wizard of Odds! The Wizard of Odds. The Wizard of Odds Search. Share this. Baccarat - FAQ I was playing baccarat online and out of 75 hands the banker won 52 and the player This is a difference of 29, what is the probability of that happening?

First of all, thanks for providing reliable gambling info. You are one of only about four or five sites on the net doing so. In your opinion, is it possible that a mathematically sound method card counting etc. There has recently been some speculation and wild claims on the bj21 and other gambling forums. Gavin P. I know this would have some effect on the 1. Michael from Sand Springs, Oklahoma. I have a thick, and I mean thick, friend who is intoxicated with having won a fair amount betting Player only in baccarat.

How can I find solid mathematical evidence to try to convince him to stop? Dear Mike, in baccarat the odds for Banker, Player and Tie are Can you please clarify on how you arrive at 1. Steven from Miri, Malaysia. Mike, On my last trip to Vegas, a dealer I've come to know said he was "toying with the idea" of standing on a 16 against a dealer's 7 because only 5 of the 8 cards give the dealer an automatic win. How does this strategy play out? Chris from Gaithersburg, Maryland.

Dear Mr. Wizard, thank you for your very informative website. My question is about baccarat. What are the good cards for the Player and what are the good cards for the Banker. Kindly give them in their order of strength. Thank you, and more power to you.

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Herman from Manila, Philippines. I was playing baccarat at OasisCasino. However, there is no indication of the end of the shoe, hence you can play endlessly without knowing where the shoe starts and where it ends. My question is. How many hands are in a six-deck shoe? Also, how many hands should I play until I start recording the plays hands as a new game?

Gil from Fullteron, California. My question concerns baccarat, is a 1,2,3,5,8,13,21,etc. I add the previous two bets and bet the sum on a loss and subtract one level of the progression on a win. Any two wins in a row and I go back to 1 unit. I've tried this online in several casinos as well as your site's baccarat game , and it has worked great. Is it flawed? Brantley from Waycross, Georgia. Enjoy your site more than any other gambling site.

I am curious about how realistic the randomness of your Java baccarat game is. I've played it for many hours and have been using a strategy that appears to win every time now. I am fearful to try my strategy at a casino though, because I'm unsure of how random your game is. Michael from Fort Worth, Texas. I am thinking of taking the following strategies to play mini baccarat. I only bet after either the Banker or Player has appeared four times in a roll.

I double my money if I don't win the first time. However, if the second time I don't win, I stop betting for the time being until the next four continuous appearance coming again. Once I win, I also stop betting until the next 4 continuous appearance coming. Please evaluate my strategy. Thank you! Mandy from Gold Coast, Australia.

I agree with you that there are no system that can beat a negative expectation game. Anyway, I take a look at the cancellation system and keep wondering In which extension would the commission payed to the house erode your gains in the long run? I apologize for my shady English.

Marcio from Sau Paulo, Brazil. In baccarat , you address the question of counting to zero the house edge. Where is that point? Richard from Glendora, USA. Player Bet Count Removed Player 0 1 2 3 4 5 6 7 8 9 In his analysis of a baccarat count system in order to get true count he divided the running count by the number of cards remaining rather then the number of decks remaining.

Is that correct? Thanks for your attention. What is the best game to use a match play coupon on? What table game has the best odds for winning and is user friendly for a novice gambler? Thanks in advance. Dave from Port St. In an 8 deck baccarat, what is the probability of getting an Ace and an 8 of Diamonds for both the player and the banker in a same deal?

Emi from Manila, Philippines. Is there a progressive wagering system for baccarat? Is there a specific site for this? There are lots of them, and they are all worthless. I read your topic in Roulette on the Martingale method. Because black came up 8 times in a row. Do you think this method would work in a casino? Like I said black came up 8 times in a row. But do you think that the player hand would win 8 times in a row? Plus this game is good because a tie is a push, where in roulette 0, or 00, is a loss. Andrew from Maitland, Canada.

I have two friends that have a bet on which game craps or baccarat have the best odds for the player. Could you help me settle this. They are both casino workers and are sure they are right. Charline from Las Vegas. We have a casino here offer zero commission for the baccarat game. Clint from Singapore. The house edge on the banker bet is 4. Are the on line casino baccarat games like a slot machine with the payout set at How would you be able to check that out?

Is there a casino you are sure uses a random chip? Great site!!! Ive learned a lot from you! Had I not learned the math behind the casino games, I probably would be a compulsive gambler by now. I used to gamble to win, but after learning that one cannot beat the house, I learned how to play for fun. Its a commissionless baccarat that pays on a winning 6. What is the house edge for banker and player on this? Thefamousv from Manila. Can you show the mathematics of it.

Thank you. Your site is amazing. Does match play change basic strategy at all? My non-math-based instincts tell my that surrender becomes a bad idea, that is if you have to surrender your coupon. Can you recommend a free baccarat game for the Mac? Hello, wiz. Really great site. Thanks for all the valuable information that saves us readers countless money on sucker bets.

The society needs more people like you to educate us common folks. Win: Hi, wiz. Love your site, please keep it up. I have 2 questions would like to ask. There is a story today about a British man who will bet his life savings on one roulette roll. A black bar indicates a downward price movement for the day, and a white bar is used for upward-moving price trends.

Figure shows the features of a candlestick bar. The candlestick chart looks somewhat different than the more familiar OHLC. Referring back to Figure , which was an OHLC chart, the same chart using candlesticks looks like the version shown in Figure You can tell at a glance where trends have evolved with the candlestick chart. A series of black rectangles represents a downtrend, and a series of white or clear rectangles points the way to an uptrend. For this visual advantage, candlestick charts are popular for futures charting as well as for stocks.

The next chapter moves beyond the methods for accessing price, and explores the broader question of risk. Every investor and trader should be interested in defining various kinds of risk before placing money into a market. Futures risk is not the same as the risks in stocks or other markets. Investors who analyze risk know that: 1. There is an important difference between investing and trading. The investor tends to buy stocks and other products with the idea of holding those positions open for some period of time. That may be weeks or months, but more likely it is years. Some value investment experts suggest buying such stocks and then forgetting about them for many years.

Investors tend to be more conservative than traders. If you are a trader, you are likely to work with options or highly volatile stocks, or to trade futures directly. Traders accept higher levels of risk. A good balance between investing and trading is found in ETFs and indices, where it is possible to invest long-term, even in traditionally short-term products like futures contracts. Risk and opportunity are two sides of one coin. It is true that when playing poker, you can occasionally bluff and win a pot with a terrible hand; in trading, this is much less likely.

Risk comes in many forms. It is easy to think of risk as a singular attribute of a company or product. But in fact, there are many different forms of risk. The best known of these is market risk, which is simply the risk that the market value of an investment will decline. But as this chapter demonstrates, risk is varied and multifaceted. Knowledge risk is most often overlooked, especially in complex markets such as futures or options.

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In the futures market, one type of risk that does not affect other markets as seriously is systematic risk, also called political risk. Political unrest in Asia may affect rice production and, as a result, futures prices; and similar systematic risks in many parts of the world can also affect coffee prices.

This special kind of risk is more likely to affect futures contracts than many stocks, mutual funds, or real estate investments. First is that between risk and opportunity. The greater the opportunity, the greater the risk, and the smaller the opportunity, the smaller the risk. Rather than chasing double-digit returns in some very volatile markets, you need to select very safe but low-yielding alternatives.

For example, you can get an insured certificate of deposit yielding very low rates, but with virtual certainty that your money will be protected. The problem with low yields is that the combined effects of inflation and taxes may result in an after-tax lower value. The second way to compare risks is to compare your personal risk tolerance with your financial objectives.

Risk tolerance simply means the amount of risk that you can afford to take. If you cannot afford to lose any money from your portfolio, you should have your money in very safe investments. But if you can afford to take chances, then more volatile markets offering potentially greater rates of return could be appropriate for you. Your financial objectives also come into play, and that involves many considerations: income, available capital, age, knowledge of the markets, and number of years until your planned retirement.

Risk is widely misunderstood and mischaracterized in the markets. In some market conditions, people have convinced themselves that it is impossible to lose money investing in real estate. This false premise contributed largely to the problems in many housing markets beginning in 56 Knowing Your Market All of these contributed to the speculative abuses in real estate, proving that in fact, this market has a lot of risk. You can get a guaranteed rate of return in an insured account in a savings institution, but is that investment actually safe? If both inflation and taxes reduce your gross return to the point that you do not break even on an after-tax basis, you are losing.

To calculate your breakeven return, divide the current rate of inflation by your after-tax annual income. Your after-tax rate of return is your income after deducting the effective tax rate for both federal and state income. This is the percentage of tax you are assessed based on your taxable income. You need to earn 4. Figure shows the formula for calculating the required breakeven rate. Table shows a summary of rates you must earn to break even—assuming various rates of inflation and combined federal and state tax rates. This would not be an exceptionally high tax rate, when you consider the levels of tax in many states.

State taxes can be high as well, with Utah the highest at 9. Other high tax states include California 9. A listing of state income tax rates is at www. This reality also points out the flaw in seeking low-yielding, highly safe investments. So risk cannot be isolated from opportunity. This is the reality you face in all types of markets. The solution for most people is to figure out a way to create acceptable risk levels in their portfolios, in order to generate needed rates of return.

For many, simply preserving the net purchasing power of their money is good enough; for others, investing is a way to earn more and even to get rich. The speculator hopes to beat the averages by exceeding the averages, and a lot of energy is put into trying to find the right system.


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Whether that even exists is debatable. This involves analysis of risk levels as well as personal risk tolerance and investing objectives. A lot of energy is expended in this effort, often by financial planners and advisors trying to create programs for clients. Realistically, many planners are simply commission-based salespeople who use the financial planning process as a sales tool.

In the final analysis, each person is responsible for developing these definitions. A qualified financial professional can be helpful by asking the right questions; but ultimately, you have to keep in mind several qualifications: 1. Defining your risk profile is useful only if it leads to specific investing limits and alternatives.

You can and should work on your own personal risk profile. You need to develop a list of investment alternatives that fit or do not fit your profile. For example, a very cautious person may want to avoid options or directly owned futures, focusing on blue-chip stocks yielding good dividends, or employing mutual funds and ETFs. Within the ETF or index fund world, it may be appropriate to focus on commodities or a specific market sector.

The risk profile has to be followed and respected to be effective. When they lose money, they are puzzled. But the reason is clear. If a person does not adhere to a well-defined risk profile, there is no discipline within the portfolio, and no program of progressive investing can be expected. In a well-defined risk profile, profit or loss occurs at expected levels and at acceptable levels. Risk profiles change continually, so you need to review and update as your life changes. The major events in your life affect and alter your risk profile. The most obvious change is improved knowledge and experience as an investor, because expanded information tends to broaden your potential markets, but this is only one aspect of a life change.

Each of these changes creates an entirely new risk profile. That means that investment plans you had a few years ago probably do not work any longer, not only because your knowledge and experience have grown but also because your financial and personal circumstances have changed as well. These changes require adjustments to insurance life, health, disability, auto, homeowners as well as to the mix of investments you hold in your portfolio.

A young single person can afford to speculate and even to take losses, but a head of household on a tight budget has to select investments 60 Knowing Your Market that are not going to lose. The overall portfolio, including a family home, savings, and retirement plans, and a portfolio involving stocks, bonds, and potentially futures, can be structured in many ways. For those who are most conservative, pooled investments like mutual funds, index funds, and ETFs are quite appealing. For the more experienced investor or for conservative investors willing to diversify their portfolios into individual issues some direct ownership is appropriate as well.

It is not the same for everyone; designing a portfolio has to be based on a specific current risk profile, b personal risk tolerance, and c knowledge about each market under consideration. The risk profile and risk tolerance levels are not the whole story. In addition to defining yourself in terms of experience, knowledge, capability, and personal preferences, you also need to assess markets and market conditions.

All markets are in a neverending state of change. This means that all products—stocks, futures contracts, real estate—are in a constant state of movement. So even after you have defined appropriate markets and products, you also need to study and track specific markets. So risk is never going to remain the same in every condition. First of all, buying a futures ETF is not as risky as buying a specific futures contract, based on diversification. In addition, markets are changing constantly. At some times, agricultural futures are weak and energy futures are strong. These situations may evolve and reverse status over time.

Stocks may also be strong or weak, and specific stock sectors change as well. In , the energy sector was the strongest and financial and housing sectors were the weakest. In past years and surely in future years , those weak sectors were market leaders. To set your portfolio properly, you need to define your personal risk profile and review it continuously, and also to evaluate current market conditions for the various markets that interest you. If one is weak today, just wait a few months. The cycles never stop moving.

The market was created to transfer Risk Levels of Futures 61 risk between producers and buyers, providing some assurances and certainty on both sides. The buyer uses futures contracts to guarantee a market and a price for a commodity. And the buyer also benefits. If there is a poor crop and scarce commodities one year, prices will soar. But owning a futures contract fixes the price so that the buyer also has certainty. Because the market price trend can go either way, both sides benefit from this basic form of risk transference.

The concept applies to other markets as well. Futures contracts are used to protect one position against another. For example, financial institutions are very sensitive to changes in interest rates, and if rates go up so does the cost of lending money. Likewise, if rates go down, existing mortgages and other loans will be replaced with lower-rate debt. So as interest rates the price of money are uncertain, financial institutions can use interest futures to protect their markets in the coming year.

Hedging between stocks and commodities is also common. For example, a speculator might be long on the energy sector while going short on energy futures, or vice versa. One position offsets the other, so that an unexpectedly large price swing will help avoid large losses. The majority of hedging activity of this type is going to occur in the futures market, meaning trading in the contract. In comparison, some use the cash market as a hedge. This refers to actual commodities apart from the futures market. Whereas the futures contract involves a contractual right, the cash market involves buying and selling of agricultural products, precious metals, livestock, or financial products.

So hedging in one respect refers to fixing future prices in the cash market. A jeweler wants to buy a quantity of gold, or a grower needs corn; so the contract is used to fix the price in the immediate future. For most investors not interested in getting 40, pounds of anything, hedging is going to occur strictly in the contract itself.

Exchange members transact futures contract trades, as opposed to actual producers and users in the cash market. This futures exchange market is accessed through a series of clearinghouses, indices, or ETFs used by traders. Hedging within the futures market enables individuals to apply significant leverage. You can control a large amount of a commod- 62 Knowing Your Market ity for relatively low risks and, if you trade through a pooled investment, for relatively little risk. Hedging may be long involving the purchase of contracts when you expect prices to rise or short when you sell futures contracts expecting prices to fall.

Successful hedging must involve an understanding of how markets interact and perform. At the same time, the underlying commodity is going to react to price competition and supply and demand. For example, energy futures contracts are going to rise or fall based on levels of the Strategic Petroleum Reserve, OPC policies and changes, and political sensitivities.

The point is, futures prices are going to be highly reactive to political events or so-called systematic risk. Figure summarizes the two-day record of oil prices, reflected on December 27 and 28, , in the February contract for light crude oil CLG.

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This is typical of a short-term reaction to systematic news. Even short-term price movement does not always work efficiently. Hedgers recognize the fact that futures and cash prices do not always change to the same degree. This opens up the potential for making hedge transactions.

But this is only appropriate for speculators or for those who understand the nature of the futures market versus the cash market. A hedge of this type may easily be unbalanced, because you cannot divide a futures contract. Thus, the cash position and futures position will not always be unified; you may need to underhedge or overhedge your positions. It is also possible to hedge between commodities.

For example, palm oil and soybean oil can be hedged against one another. If you appreciate the interaction between two different commodities, many hedging opportunities can be identified. However, you also need to ensure that you know the risks involved in offsetting long and short positions. A ratio hedge is another version. When the cash and futures price are relatively far apart, loading up one side of the hedge can make sense, anticipating that the gap is going to close as delivery date approaches.

You can use futures in many of the same ways that stock traders use options, and the ratio hedge can be very similar to the stock-based options ratio write. In that transaction, a ratio may be higher or lower than the number of lot shares. For example, if you own shares and write five calls against the position, it creates a ratio write. It can be viewed as four covered calls and one 64 Knowing Your Market naked, or as a 5-to-4 ratio write.

In futures contracts, a similar hedging occurs between cash and futures prices, and the risks are similar. But the relationship between cash and futures prices may be more difficult to understand than the relationship between stock price and option premium levels. If you do not understand how futures hedging works, you are not alone. It makes no sense, though, to expect yourself to place capital at risk without thoroughly understanding the mechanics of the trade and the level of risk involved. The two-part risk of knowledge and familiarity work together to target specific markets and strategies that can work for you.

For example, you might be very familiar with real estate because you own a house. Thus, you know all about mortgage amortization, fire insurance, and maintenance. This does not mean you will also be familiar with the investment aspects or risks of becoming a landlord. The intricacies of working with tenants, qualifying for mortgages for nonoccupied homes, and managing investment property cash flow are entirely apart from your knowledge as a homeowner. Taking this comparison to another level, even if you are knowledgeable about and familiar with residential investment property, that does not mean you also understand the market for commercial, industrial, or lodging investments.

In the stock market, you are probably very well versed in mutual funds and many different market sectors. But familiarity with retail, energy, and financial sectors does not mean you also have familiarity or knowledge concerning biotech or defense sectors. In fact, it is reasonable to point out that not all stocks are the same since each sector contains its own unique and different risks.

Many people assume that knowledge about fundamental and technical analysis is enough to pick stocks. Merely applying a few criteria Risk Levels of Futures 65 indicate strength and weakness, safety and risk, and profit or loss. However, given the market cycles for each sector, this is not always true. You need both knowledge and familiarity on many levels to avoid the risk of making mistakes. The levels include broad markets with their special trading rules, jargon, and limitations; market sectors and their economic cycles; and individual companies, issuers, or commodities with their own market positions and interactions.

You may want to invest in the company that dominates its industry. In futures contracts, the same rules apply. Consider the interaction between corn and ethanol, or between interest rate futures and currency exchange rate futures. These are directly related due to economic cause and effect in the markets. You should never study or evaluate one futures contract, or stock or bond, or other investment product in isolation. So rising energy prices ultimately also mean higher prices at the golden arches, or lower sales volume, or both.

For the astute trader observing the interaction of these different markets, some opportunities become apparent. However, before you are prepared to take advantage of the economic and cyclical trends, you need to be completely knowledgeable about how those markets work; and familiar with the risks and potential rewards they entail. Simply put, this is the risk that price will move in an opposite direction than what you desire.

In this example, an investor has ignored market risk. Because a sell order is an opening phase, the short seller expects price to fall. If this is not the case, price will rise and the short position loses out. This is true in stocks as well as in futures contracts. If you track the futures price trend, you see that most of the action occurs in the contract one out from the next delivery date. Price estimates of futures traders are continually in flux, and the further out, the more uncertainty in price levels. If you take a short position in a futures contract, you can always roll forward to a later delivery date.

But what happens if the price of the underlying commodity just continues to rise? At some point, you can no longer sustain your short position. So in this instance, ignoring the market risk could cause a considerable net loss in the position, not to mention tying up margin account levels for the indefinite future. Even if you short through indices or ETFs, you should not ignore market risk because it exists for every long and short position. Until you understand how markets move to the point where risks can be fully appreciated, short positions whether through direct or pooled venues can be quite risky.

Just as a novice stock investor is discouraged from shorting stock due to risk levels involved, a newcomer to the futures market needs to spend time becoming familiar with the markets as a first step. Market risk applies to all markets and even to fully diversified portfolios. In stocks as well as in commodities, general economic trends tend to affect entire markets. As prices rise due to inflation or a weakened U.

You cannot study or analyze any commodity in isolation from the overall market or from the broader, longer-term economic trend. Stock market investors have known this for a long time. A historically consistent growth in prices have pampered real estate investors, so when prices stop growing or fall, there is a tendency to think the entire economy will come crashing down. But demonstrated that even when a major sector like the financial sector is soft, even when housing is weak and banks and brokerages are losing price value, the overall economy can remain strong and in an upward trend. In the futures market, the interaction between Risk Levels of Futures 67 commodities and stocks is obvious and can be witnessed by comparing sector ETFs or index funds with commodity prices.

But on a more permanent level, futures trends increasingly reflect trends in the global market as well. In the past, distinctions were made between domestic and import markets. Today, while balance of trade continues to be used as one of many economic indicators, the economy has become truly global and futures prices are no longer distinguished by country or by region. Thus, market risk has also become global in nature, a reality that affects how futures trading takes place today and in the future.

Even the U. While domestic agriculture is very productive, the United States imports some agricultural products and exports others. And many basic materials are imported as well, such as coffee, for example. Global systematic risk, mostly beyond the control of an exchange, an individual company, or any one government, definitely affects futures price levels. World political events, especially disasters or volatility in another country, have immediate impact on futures prices.

This reality is both a negative and a potentially positive reality. It is negative because such political events are beyond our control and many commodities come from areas that are very unstable. The Middle East, where a large portion of oil is generated, has been unstable for many decades without signs of improvement.

In fact, conditions there have only worsened in recent years. But this can be positive as well. Prices reflect instability and the potential for drastic price changes. Recognizing this, even the most systematically sensitive commodity is likely to trade with great volatility. For the futures speculator willing to take on the risks, this realization points the way to profit potential.

The risk of political uncertainty represents an equally volatile opportunity. This means that uncer- 68 Knowing Your Market tainty may discount the futures contract in a specific area due to this unknown systematic risk, but at the same time it presents an opportunity for great profits due to the same influences. Closely related to systematic risk is another variety, known as lost opportunity risk. In terms of the futures market, this refers to the backward-looking realization that some event or series of events led up to price movement. If only you had been hedged into a position in a commodity, you would have made a profit if and when the events unfolded.

Lost opportunity also refers to the problem of having capital completely committed to a series of positions, meaning it is impossible to take action when new opportunities present themselves. This has relevance in the futures market in respect to margin limits, so a trader who is fully leveraged cannot jump when presented with a newly emerging trend. Another version of lost opportunity arises when a portfolio is overdiversified or overallocated. For example, if you take a large portion of your capital and use it for a down payment on an investment property, you have a series of advantages: cash flow from an income stream, tax benefits, and traditionally growing market values.

But what if the market slows, stops, or falls? In that case, your capital is tied up in an asset that is not growing. Meanwhile, other investments and other markets might be moving very rapidly forward, but because you committed your capital to an illiquid asset like real estate, you cannot take action. This is also a lost opportunity. Even futures traders who hedge positions can overextend their margin leverage, creating a different version of lost opportunity. If such a trader realizes—too late—that the hedge position involving offsetting long and short positions led to missed chances to do more in other markets or in different configurations of futures contracts, then the strategy could prove to be misguided.

Lost opportunity risk is expensive even when a specific strategy is successful. If you recognize that other choices would have been more profitable or better leveraged, the existing position suffers from lost opportunity risk. Traders need to be aware of leveraging limitations and margin requirements before tying up capital for too long a period.

In the fast-moving futures market, lost opportunity Risk Levels of Futures 69 can translate to lost profits as well as to future uncertainty; if you do not want to fall into the same trap in future trades, it is all too easy to hesitate and pass on otherwise sound strategic choices. But many investors forget to also make a distinction between investing and speculating. Risk and opportunity are clearly associated and, in fact, attributes of the same reality.

They are simply two sides of product volatility. Speculators are invariably short-term traders. In comparison, investors usually think in longer time frames, and select investments with months or years in mind. So in studying the fundamental strength or weakness of a company, stock takes on relative value in the mind of the investor. The speculator is concerned only with how price is likely to change in the immediate future—days or even hours.

When the speculative approach is applied to futures trading, it is easy to see why this fast-moving market is so appealing. Many would-be futures traders stay out of this market for several reasons, but would gladly partake if these inhibiting factors could be overcome. Among the reasons that stock speculators do not always trade in futures, are: 1. The market is not as easy to enter and exit.

The stock investor can open an online brokerage account for no cost and fund the account with a few hundred dollars. The futures market is not as widely available. To buy and sell futures contracts directly, you need to work through a clearinghouse or commodities broker, and all trades have to go through an exchange member. When you compare the futures market to the stock market, you immediately realize that rules for the futures ex- 70 Knowing Your Market changes are many years behind the liberated access that stock investors enjoy.

Stocks are widely well understood, but futures are more complex. Most people with money to invest understand how stocks work, and also what factors influence value. The market supply and demand movement is easily anticipated, and events like earnings reports, mergers, and changes in credit rating are seen immediately in the effect on stock prices. The futures market is more complex, with the factors influencing price often based on worldwide economic and political factors, or on price trends not as apparent to most observers.

Market tracking for stocks is a form of instant gratification, but in the futures market, short-term volatility occurs but it is more likely that change is going to be based on subtle, longer-term trends. Factors affecting value are not the same as stock market factors. Current price volatility further quantifies risk.

But in the futures market, there are many indirect influences affecting price and interactions that are difficult to gauge. For example, the emerging demand for ethanol has not only created a new commodity. It has also affected agricultural prices as corn has become more than a source of food and feed. It will also affect the range of energy futures based on market anticipation of ethanol as a replacement fuel in coming years.

Whether any of this has a long-term effect or not remains to be seen; but today, the potential ramifications of this new energy resource has complicated many related futures prices as well. Stocks can be held long-term, but futures contracts rarely exist for more than a few months. The stock investor can act as both long-term investor and short-term speculator. This choice provides one of many forms of potential diversification. But in the futures market, there is no long-term investment.

Traders are involved with a contract that has a delivery date coming up quite soon, usually within a year or less. The only way to maintain a position in the market beyond that is to roll contracts forward to avoid delivery Risk Levels of Futures 71 dates, which is exactly what pooled investors do. You can also buy shares in pooled investments like futures ETFs, so that your shares of the fund are permanent. But even with this approach, the actual holdings in the fund are rolled continuously.

Speculators—including anyone who buys or sells futures contracts through a clearinghouse or commodities broker—are shortterm strategists. But they operate in the same way that stock market speculators do. In fact, chart patterns for futures trading are analyzed in very much the same way as they are for stocks. It is important to remember the major distinction between investing and speculating.

When you act as an investor, you are usually willing to wait out a price trend, and you are likely to select investments based on fundamental trends and indicators. When you act as a speculator, it is more likely that you will focus on price as a primary selection criterion, and track price trends through chart analysis. Speculation is short-term, meaning positions are going to be kept open for only a few days. Some speculators like to move in and out of open positions over a period of hours only; so the range of speculation based on time can involve a very short time horizon.

It is often characterized as a sidebar to a portfolio system, or as some type of automatic process apart from other considerations. However, if used properly, diversification actually serves as a risk management tool. This is where futures trading as a hedge and as a form of diversification becomes so valuable. Going 72 Knowing Your Market beyond this, however, diversification may also involve hedging, and two specific markets are obvious choices: options and futures. In the options market, options can be used to insure paper profits long puts , take advantage of short-term price declines long calls , or to create additional income covered calls.

In the futures market, contracts can be used to offset and hedge positions in specific sectors. For example, a long position in energy sector stocks can be hedged with a short position in energy futures contracts. There are also ETFs on the market designed specifically to short stock or futures markets. Beyond diversification, the process of allocation involves investment in separate markets. The usual ones involved are stocks, debt instruments bonds or money market , and real estate.

A conflicting opinion states an approach completely different: Each investor should allocate the items in his or her portfolio based on perceptions of markets, risk profile, and risk tolerance. This is a more difficult interpretation of asset allocation, but also a more logical one. There also is a natural conflict between investing and speculating, so thinking about futures as an aspect of a permanent portfolio is contrary to the nature of the instrument.

However, if you trade through a futures ETF or index, it is conceivably possible to keep shares indefinitely and to treat a futures package as an investment. Another approach is to divide a total portfolio between investment assets and speculative assets. You may apply a relatively small portion of the total to speculative moves, such as buying of options or futures contracts; trading in volatile stocks; or buying hard assets gold, for example in the belief that prices are going to rise.

However, two specific kinds of diversification-related risk are possible. If the Selection does not play or take part in the event, the bet stands as a non-winner. Also sometimes referred to as "Money Line Odds". In this example you would calculate your payout by also adding your initial stake wager. After successfully placing a bet, you will receive a receipt which will give you a unique Ticket ID.

If you do not receive a bet receipt then your bet is not confirmed. The area containing your picks and where to enter your wager amount s before confirming your bet s. In Soccer, the term to indicate that a player has been given a yellow or red card by a referee. A player is said to have been "booked" after receiving a yellow or red card. A Canadian consists of 26 bets on 5 picks in different events 10 Doubles, 10 Trebles, five 4-Fold parlay and one 5-Fold parlay Two or more picks must be correct for a winning bet.

Similar to Sports Action Combo Play - Go for 2, 10 two game combos , Go for 3 10 three game combos , Go for 4 5 four game combos and "go for all". The card index refers to the amount of cards shown by the referee in a football game. A yellow card is worth ten points, a red card is worth 25 points and two yellows leading to a red is worth 35 points. A combination forecast is betting on all the possible forecasts between three or more selections.

If two of your selections finish first and second in any order then the bet is a winner. A Dead Heat refers to an outcome where two or more competitors are tied for the same winning position according to terms of your bet. In this instance your bet is settled under the 'dead heat reduction rules' for that event. A Dead Heat Reduction is calculated by dividing the wager amount proportionally between the number of winners in the event. So, in a two-way dead heat 2 winners for example, your return will be half of what was originally projected.

The odds expressed as a decimal number. Total odds are determined by multiplying the value odds of each selection, and then multiplying by the wager amount. Example: With decimal odds for a two event parlay with 2. A Double parlay is one bet on 2 picks in different events. Both picks in a Double must be correct for a winning bet. A "Double Chance" bet requires choosing one of the three selections offered. With a Double Chance bet, you are hedging your bet by betting on TWO of the three possible outcomes in one bet.

Double Result rules vary based on sport. Refer to the specific sports rules for full details regarding settlement. For Hockey betting- Pick the result at the end of the first period combined with the result at the end of regulation 60 minutes. A bet where the Player backs both the Win and the Draw so that they profit from a Win and break even from the Draw result.

The outcome that is most likely to occur. The selection within an offer that features the lowest odds shortest price. Fractional odds: Display is shown as a fraction, where numerator represents amount to win from wager amount shown in denominator. Profit is calculated as: wager amount multiplied by the fractional odds. A Full Cover Bet is a bet which consists of various combinations of parlays available from all picks on the Bet Slip e. Trixie, Patent, Yankee, etc. An 'embedded parlay' comprised of multiple events wagered on the outcome of a season, tournament, championship or other special event.

Most Futures bets are offered as a single bet. Also known as 'Match'. A contest in which people or teams compete against each other in a particular sport. A Goliath consists of bets on 8 picks in different events 28 doubles, 56 trebles, seventy 4-Folds, fifty-six 5-Folds, twenty-eight 6-Folds, eight 7-Fold and one 8-Folds. Two or more picks must be correct for a winning bet. Also known as "Double Result". A bet placed on the result at BOTH half time and full time. For soccer matches, it includes a total of 9 outcomes, as compared to 3 outcomes in standard Match betting. Subsequently, odds are significantly higher, especially for outcomes with one team to win at half time and other team to win at full time.

For example, if the result of the match Vancouver vs. A Heinz consists of 57 bets on 6 picks in different events 15 Doubles, 20 Trebles, fifteen 4-Folds, six 5-Folds and one 6-Folds. Similar to Sports Action Combo Play - Go for 2, 15 two game combos , Go for 3 20 three game combos , Go for 4 15 four game combos , Go for 5 6 five game combos and "go for all". Usually offered to two or three places as posted on each offer , Insurebet means that your selection is paid out if it wins, but if it finishes 2nd or 3rd you will get your wager back.

Bets offered on an event, match, or race while it is currently in progress. Also known as 'Game'. If a Money Back Special applies to an event, you could get your bet refunded, even if it's not a winner. Complete details and conditions for any Money Back Special offer will be as posted. Some restrictions apply. See our Promotions tab for complete details of any current Specials. Odds strictly on the straight-up game outcome with no consideration for a point spread.

In order for a comparable potential winning bet, more money must be risked to bet the favoured team; less money on the weaker team. This is a type of golf bet which allows you to bet between 2 or 3 golfers who are not in direct competition. When applied to a bet, if your Pick doesn't participate in the Event, then the selection is void and the wager will be returned. Non-Starter Deduction Rule means the deduction applied to a winning bet on an event offered on a 'Non-Starter No Bet' basis where a different competitor not the one selected by the Player as part of the winning bet is for any reason withdrawn, suspended or disqualified in that event.

The number that expresses probability of an event to occur, as offered by BCLC. Used to calculate amount of potential return on a wager. Selection offered in many bets in conjunction with Under to predict that a goal, point or any increment will be above or higher then the set line. An own goal occurs in goal-scoring games when a player scores a goal that is registered against his or her own team.

A parlay is a single bet that links together two or more individual Picks and is dependent on all of those Picks being correct for a winning outcome. A Patent consists of 7 bets on three picks in different events. Similar to a Trixie but also has singles. One or more picks must be correct for a winning bet. A Point Spread bet helps even the odds of any particular sporting event by subtracting points from the favoured competitor and subsequently adding the same amount of points to the weaker competitor.

Each team has points either added or subtracted from the final score, to then determine if the bet is a winner. For example, if you bet the Point Spread on Vancouver at -1 , and Vancouver won the match , then the Point Spread result would actually be a Draw. A single bet featuring multiple outcomes and increased odds value. All event results within the Power Pick must be correct for a winning bet. A bet requiring the prediction of both the player to score first AND correct score in the game or match for example, Messi to score first AND Barcelona to win The odds of both outcomes are combined into one offer single.

We do not fully void a Scorecast if the player does not partake in the game instead the bet is settled as a Correct Score single bet. The first goalscorer part of the bet is governed by the same rules as first goalscorer single bets - own goals do not count and if your player either comes on before the first goal is scored or goes off without scoring, the entire bet is deemed as a non-winner. A Single is a selection that can be wagered on without requiring to parlay with another Pick. For example, a 'Correct Score' bet can be offered as a 'single', as you must successfully predict both the correct score of BOTH teams or players in order to successfully win your bet.

Futures bets are also included as single bets. All Single bets are highlighted with "single" icon next to the offer. A Super Heinz consists of bets on 7 picks in different events 21 Doubles, 35 Trebles, thirty-five 4-Fold parlays, twenty-one 5-Fold parlays, seven 6-Fold parlays, and one 7-Fold parlay. A bet offered for a Team to win both the first half AND the second half. In the event that the result exactly matches the line in a bet e. The line on a Total Goals bet is 5 - and the final Result is 5, then both Over and Under bets on that line would be void. A Treble parlay is one bet on 3 picks in different events.

All 3 picks must be correct for a winning bet.

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A tricast is a bet on three selections to finish first, second and third in a race in a particular order. A Trixie consists of 4 bets on 3 picks in different events 3 Doubles and 1 Treble. Selection offered in many bets in conjunction with Over to predict that a goal, point or any increment will be below or lower then the set line. A bet which is neither won nor lost. If a bet is deemed void, the Player will get their wager back if on a single bet, and odds are deemed to be 1.

All rules on Void bets are located in the Betting Rules. A Yankee consists of 11 bets on 4 picks in different events 6 Doubles, 4 Trebles and one 4-Fold parlay Two or more picks must be correct for a winning bet. A 4-Fold parlay is one bet on 4 picks in different events. All 4 picks must be correct for a winning bet. A 5-Fold parlay is one bet on 5 picks in different events. All 5 picks must be correct for a winning bet. A 6-Fold parlay is one bet on 6 picks in different events. All 6 picks must be correct for a winning bet. A 7-Fold parlay is one bet on 7 picks in different events.

All 7 picks must be correct for a winning bet. An 8-Fold parlay is one bet on 8 picks in different events. All 8 picks must be correct for a winning bet. A 9-Fold parlay is one bet on 9 picks in different events. All 9 picks must be correct for a winning bet. A Fold parlay is one bet on 10 picks in different events. All 10 picks must be correct for a winning bet. An Fold parlay is one bet on 11 picks in different events. All 11 picks must be correct for a winning bet. A Fold parlay is one bet on 12 picks in different events. All 12 picks must be correct for a winning bet.

A Fold parlay is one bet on 13 picks in different events. All 13 picks must be correct for a winning bet. A Fold parlay is one bet on 14 picks in different events. All 14 picks must be correct for a winning bet. A Fold parlay is one bet on 15 picks in different events. All 15 picks must be correct for a winning bet. A Fold parlay is one bet on 16 picks in different events. All 16 picks must be correct for a winning bet. A Fold parlay is one bet on 17 picks in different events. All 17 picks must be correct for a winning bet. An Fold parlay is one bet on 18 picks in different events.

All 18 picks must be correct for a winning bet. A Fold parlay is one bet on 19 picks in different events. All 19 picks must be correct for a winning bet. A Fold parlay is one bet on 20 picks in different events. All 20 picks must be correct for a winning bet. All Single bets are highlighted with an icon next to the offer. PlayNow does not accept bets where the outcome of one event contributes wholly or partly to the outcome of another. The odds associated with the pick may have changed and is no longer available, or the event may have now started, or liability limits may have been reached.

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PlayNow's odds are dynamic and can change in real time dependent on numerous factors. As an event nears starting time, begins or is already in play, the odds and bets associated with that event can change, suspend, or be taken off site without prior notice. Sports Action and PlayNow Sports currently provide sports bettors with the 'best of both worlds', providing two unique sports betting options to all B. While events and types of bets available for Sports Action are often similar to events also offered on PlayNow Sports aside from Toto , each are distinct and thereby each feature their own unique set of rules and regulations.

Below are some of the common questions Players often ask regarding some of the similarities and differences. Sports Action launched in B. The PlayNow sportsbook now offers more sports, more leagues, tournaments and more types of bets than ever before. New parlay options, single bets, Futures and Outrights, Bet-Back Bonuses and other promotions, immediate settlement and payment on winning bets and betting on LIVE games while they're in-play are some of the most significant enhancements.

Along with all of the new offers on PlayNow, also come new betting rules and conditions different than Sports Action. Be sure to familiarize yourself with the betting rules for the sports you bet on - as whether your bets win or lose your bets will be determined accordingly. Sports Action is available through lottery retailers in convenience stores, major grocery stores, drug stores, gas stations, BCLC branded lottery kiosks and through bars and pubs throughout the province.

Odds on Sports Action games cannot be changed after they are posted and a risk premium slightly lower odds is therefore, applied to account for the added advantage provided to the bettor. Because PlayNow Sports is offered online and through a different system than Sports Action, PlayNow has additional dynamic liability controls in place. PlayNow Sports is offered through a different system than Sports Action, allowing for dynamic, or changing, odds.

Odds on PlayNow may often shift based on numerous factors affecting an event prior to starting i. Unlike PlayNow odds, Sports Action odds cannot be adjusted once they have been posted.