Blackjack is the only gambling game that is not determined by chance alone. The shrewd player can influence the outcome by counting the cards and using a system. The fact that most casino visitors unconsciously aim at losing or play for the thrill creates chances for the rational gambler, the one who sits down at the blackjack table well-prepared and poised to win. The key is to have the odds on your side and bet properly. The same goes for trading. A former student of Richard Dennis once said:
When you are invested properly, money management is relatively simple. [We] adjust trading size for profits and losses using Richard Dennis’ model for volatility. No trader can control volatility completely, but you can improve your odds.
Improving those odds and getting at the probabilities is central to any trend following trading system. Pierre Simon knew and wrote about this concept in his book, Theorie Analytique des Probabilites, back in 1812:
It is remarkable that a science which began with the consideration of games of chance should have become the most important object of human knowledge. The most important questions of life are, for the most part, really only problems of probability.
Simon wrote those words more than two centuries ago. The insight remains as sharp as ever. Trading, like blackjack, is fundamentally a problem of probability management. The question is never whether you will be right on any given trade. The question is whether, across hundreds of trades, the structure of your approach gives you an edge that compounds over time. Card counters and trend followers have both answered that question the same way: by building systems that put the odds in their favor and then executing those systems with discipline, regardless of short-term results.
What Winning Blackjack Players and Great Trend Followers Have in Common
What else do winning blackjack players and great trend followers have in common? More than you think.
1. They are in business. Successful blackjack players and great traders pursue their goals as a business, not as a leisurely pursuit. From blackjack to trading, making serious money demands they get serious. As a result, the winners take a completely different approach towards betting from people who play for the action, the excitement and, of course, the dream of winning big.
The distinction between playing for action and playing to win is the same distinction that separates a discretionary trader chasing excitement from a systematic trader following rules. The casino is full of people who want to feel the rush of a big bet. The card counter at the corner of the table wants none of that. They want every decision to be correct relative to their system, and they want to do it as many times as possible. Trend following operates on exactly the same premise. The mechanical system is the business. Execution is the job.
2. They keep records. People who are successful at either trading or gambling keep detailed records. Keeping records builds confidence and discipline. You are keeping a journal of your decision-making of when, where, why and how much you bet on each trade or wager. The idea is to reach a comfort zone for yourself and stay within that zone whenever you are tempted to leave it, which will happen, we assure you. Keeping records is a part of managing your money, and if you are not disciplined in your money management, you are going to lose your entire bankroll.
Records are the feedback loop that separates systematic operators from gamblers. Without records, every loss feels like bad luck and every win feels like skill. With records, patterns emerge: which conditions produce better outcomes, where position sizing was too large or too small, which rules were followed and which were overridden. The trading log is not just bookkeeping. It is the evidence base on which the system is evaluated and improved over time. More on risk management and position sizing discipline here.
3. They are calm, cool and collected. To become even-tempered about money takes practice. You must force yourself to detach. You want to create an abstract money world where profits and losses are viewed in terms of abstract dollars. In this abstract world you don’t get excited about profits and you don’t get down about losses. You don’t want your emotions to go up and down with your account equity. If you can’t control greed, fear and hope, trading might not be for you.
The professional card counter who wins $50,000 in a session and loses $30,000 the next does not experience those outcomes as dramatic life events. They are data points in a long series. The same detachment is required in trend following. A drawdown is not a crisis. It is a statistical expectation that was always part of the system’s design. A large winning trade is not a reason to celebrate or increase risk beyond the rules. Both are just the system operating as intended. The trader who can maintain that emotional detachment consistently is the one who will still be running the system five years from now.
4. They are running a marathon. Successful gambling, like long-term trend following, is a marathon. If you try to sprint, you’re going to lose the race. It’s just business.
The card counter who sits down for two hours and loses is not a failure. The trend follower who has a losing month is not running a broken system. Both are participants in a long-run probabilistic process that only reveals its edge over hundreds of sessions and thousands of trades. Trying to sprint, to force returns, to trade more aggressively after a loss to recover faster, is how the marathon runner turns an ankle at mile three. The rules were designed for the full distance. Run them at the pace they require.
The Downsides of Bad Gambling (and Trading)
The following questions are courtesy of The Massachusetts Department of Public Health. We could not help but see their relevance for the legions of losing day traders out there. Just replace the word gambling with trading:
- Have you often gambled longer than you had planned?
- Have you often gambled until your last dollar was gone?
- Have thoughts of gambling caused you to lose sleep?
- Have you used your income or savings to gamble while letting bills go unpaid?
- Have you made repeated, unsuccessful attempts to stop gambling?
- Have you broken the law or considered breaking the law to pay for your gambling?
- Have you borrowed money to pay for your gambling?
- Have you felt depressed or suicidal because of your gambling losses?
- Have you been remorseful after gambling?
- Have you ever gambled to get money to meet your financial obligations?
Read through that list with trading substituted for gambling and the picture it paints is uncomfortable for a reason. Undisciplined trading and problem gambling share the same behavioral fingerprints: chasing losses, trading beyond a plan, letting trading anxiety contaminate the rest of life, and treating the market as a source of financial rescue rather than a probabilistic business. The card counter and the trend follower never see themselves in that list. Their activity is defined by rules, records, detachment, and long-term thinking. Without those four elements, the difference between trading and gambling is thinner than most market participants would like to believe.
Trend Following and Blackjack
Review trend following and Mike Aponte of MIT.
Mike Aponte was a member of the famous MIT blackjack team that beat Las Vegas casinos using card counting and strict team discipline. The parallels to how the original TurtleTraders were trained and operated are direct: a system designed through rigorous analysis, applied with strict rules, executed by people who understood the probabilities and trusted the process through the inevitable losing streaks. For the full story of how that training produced results, see the TurtleTrader story.
Frequently Asked Questions
What do blackjack card counters and trend followers have in common?
Both treat their activity as a business rather than entertainment. Both keep detailed records. Both maintain emotional detachment from short-term wins and losses. Both operate with a long-term probabilistic mindset, understanding that the edge only reveals itself over hundreds of sessions or trades. Both have built systems that put the odds in their favor and execute those systems with discipline regardless of short-term results.
How is trend following similar to card counting?
Both involve identifying a structural edge through rigorous analysis and then exploiting it systematically. Card counters know that the probability of winning shifts as certain cards are removed from the deck. Trend followers know that price movements exhibit trending behavior that can be captured with correctly designed rules. In both cases the edge is statistical, applied across many instances, not a guarantee on any single event.
Why do most traders behave like gamblers rather than card counters?
Because they trade for excitement rather than edge, do not keep records, allow emotions to drive decisions, and think in terms of individual trades rather than long-run statistical outcomes. The Massachusetts Department of Public Health checklist for problem gambling maps almost exactly onto the behavior of undisciplined discretionary traders. The solution is the same: treat it as a business with rules, records, and a long-term time horizon.
What does Pierre Simon’s probability theory have to do with trading?
Simon recognized that the science of probability, which began with games of chance, became the framework for understanding the most important questions in human life. Trading is fundamentally a problem of probability management: building a system with a positive expected value, sizing positions correctly relative to the odds, and executing the system consistently over time. That is exactly what card counters and trend followers both do.
What is the role of records in systematic trading?
Records are the feedback loop that separates a systematic operation from undisciplined speculation. They reveal whether rules are being followed, where position sizing is being applied correctly, and what the actual win rate and average win/loss ratio are across real trades. Without records, performance cannot be evaluated objectively, and the system cannot be improved. Keeping records builds the confidence and discipline required to stay within the system during the losing periods that test every trader.
Trend Following Systems
Want to learn more and start trading trend following systems? Start here.
