# How to Beat Wall Street at Its Own Game

Conventional wisdom holds that Wall Street is rigged to favor the big traders, and that you’ll never win.

The implication, of course, is why even try?

I’ve never believed that, and you shouldn’t either.

In reality, there are plenty of savvy investors who beat Wall Street at its own game consistently, including Sir John Templeton, the legendary Jim Rogers, Stanley Druckenmiller, and Warren Buffett, just to name a few.

I want YOU to be one of ’em.

Here’s what you need to know – and how to profit.

### How the Markets Are Like a Casino

If you’ve never heard the term, you’re not alone.

Gambler’s Ruin is a mathematical principle that deals with the preservation of assets – or, more accurately – the probability that you’ll lose them over time.

Here’s how it works:

Imagine a game with two players.

Both players – let’s call them Player One and Player Two – each have a finite number of pennies, which they flip one at a time, calling “heads” or “tails.”

The rules are very simple – the player who calls the flip correctly gets to keep the penny. Since a penny has only two sides, it would seem on the surface that each player has a 50/50 probability of winning.

That’s the case for each flip, but here’s where you need to really pay attention.

If the process is repeated indefinitely, the probability that one of the two players will eventually lose all his or her pennies is 100%. Not 20%, 50% or even 75%…100%.

In mathematical terms, the chance that Player One and Player Two (P1 and P2, respectively) will be rendered penniless, is expressed as follows:

P1 = n2 / (n1 + n2)

P2 = n1 / (n1 + n2)

In plain English, what this formula tells you is that if you are one of the players, your chance of going bankrupt is equal to the ratio of pennies your opponent starts out with to the total number of pennies.

There are all sorts of wrinkles in the theory but we’ll leave those for another time, and for a more mathematically oriented discussion.

What you need to understand at the moment is that the player starting out with the smallest number of pennies has the greatest chance of going bankrupt.

In the stock market the player with the smallest number of pennies is you… and me…and any other individual investor, for that matter, who is up against the big boys pushing highly leveraged billion dollar portfolios.

Chances are you understand this at some level if you’ve ever played a table casino game in Las Vegas, Macau, or Monte Carlo. That’s because the longer you stay at the tables, the greater the probability that you will lose. The house simply has more money and better odds.

The financial markets work the same way.

The big banks, hedge funds and traders know that they have more pennies than their individual patrons (retail investors) so they can play the game longer. Not better… longer.

This means they come out ahead because the smaller players get wiped out or, as many are tempted to do right now, give up.

Gambler’s Ruin, you see, dictates you will give up your assets unless you have some method of protecting them. Whether that’s at the world’s great casinos, as part of a corner game of Three Card Monte, or in the stock markets, it makes no difference.

The only question is when… unless you change your behavior.

When I talk about this at presentations around the world I see lots of elbows and head-nodding in the audience as people begin to process what I’m sharing with you today.

Winning is actually very simple.

You just need to change your game up to take away the advantage Wall Street otherwise enjoys.

### When On Wall Street, Do As the Big Firms Do

The easiest way to do that is to line up your money with theirs instead of trying to fight it.

Here’s how.

Institutions are very “name driven,” but they are hampered by their size.

This means they can’t just waltz in and pick up shares of a company they want to buy any time they want. So, they have to engineer a big rally… to sell (to you)… and a big down day… to buy (when you’re selling in a panic).

This is why big traders are especially active at or near big bottoms or market tops, and you should be, too.

Second, traders are paid to win and hate losing money no matter how much of it they’ve got.

That why the big boys will often lock in stability and profits with one or two big-name investments backed by many of the same Unstoppable Trends we follow. For them, it beats trying to make 30-50 companies “work” by trading them into the ground the way individual investors do, especially when confronted with something like the Brexit or a protracted downturn and a paralyzed Fed, for instance.

That’s a good part of the thinking behind why I’ve consistently recommended you line up with big companies like Alphabet Inc. (NasdaqGS:GOOG) and short or avoid media darlings like Shake Shack Inc. (NYSE:SHAK), Twitter Inc. (NYSE:TWTR), Fitbit Inc. (NYSE:FIT) and GoPro Inc. (NasdaqGS:GPRO) as conditions deteriorate.

And finally, big traders tend to stick with their winners.

They may trade around them but most build a core portfolio, then guard it like a hawk, depending on their market expectations.

Individuals, on the other hand, seem obsessed with the thrill of the chase. It’s sexy, it’s fun to talk about at cocktail parties, and it makes for great dinner table conversation. That is until you get into a pissing match with a big trader determined to hammer you into submission and take your money at the same time. Then it’s downright unpleasant.

Institutions are under extreme pressure to trade actively. They can’t just step aside. They will offload their risk to unsuspecting individual investors every chance they get and in the process transfer your money to their pockets.

So don’t make the irrational decisions that give them the opportunity to do that.

No. 1. Confine Your Investments to the Same Unstoppable Trends They Do

Six “Unstoppable Trends” have made people wealthy for centuries and will continue to do so long into the future. Those trends (demographics, scarcity/allocation, medicine, energy, technology, and war, terrorism, and ugliness) are literally changing the world and are backed by trillions of dollars that will get spent no matter what the Fed does next. Wall Street can’t hijack them in its own interest, and Washington can’t derail them. That’s where you want to focus your investing dollars.

No. 2. Buy Only the Best, “Must-Have” Companies They Do

Confine your money to companies making "must-have products" that the world cannot live without. Usually, these are larger companies with globally recognized brands, growing earnings, and rock-solid balance sheets. They're also companies with what I call "margin expansion capacity," meaning they've got the power to expand margins even in the face of slowing global growth, out-of-control central bankers, and leaders who lack adult supervision in capitals around the world.

No. 3. Manage Risk Using Tactics Like Limits, Lowball Orders, and Free Trades, Like They Do

At the end of the day, the only thing standing between your portfolio and catastrophic loss is your own caution and proper risk management. Here are a few tactics you can start using immediately.

Limit Orders. Many investors, particularly those who are new to the stock market, are totally unaware that there are different order types. So they simply call up their broker and tell him that they want to buy a given stock, bond, or ETF.

The problem with that is unless you name a specific price, you’re giving your broker permission to fill your order at any price.

With a “limit order,” you specify a price. And then two things happen. First, the order is routed to the limit order book, so it’s known and everybody sees it. Second, the order is guaranteed to fill at a given price that’s defined in advance, so you’ll know exactly what price you’ll get.

Using limit orders takes away the advantage afforded to the much bigger traders who hold most investors at the mercy of the markets. It also removes the threat of being played by hedge funds, unscrupulous market makers, and institutional traders who would force you to buy your shares more expensively than you would otherwise.

Lowball Orders. “Lowball orders” are technically also limit orders. The point of a lowball order is to pay the price you want. Whether that happens today, tomorrow, or six months from now is moot. They help you prepare in advance for conditions that favor your money. Placing them doesn't cost you a thing, and you're not risking one red cent until the order executes.

With a lowball order, you select a stock that’s been beaten down or is otherwise out of line with long-term expectations, fundamentals, and earnings potential. Ideally, this isn’t just any old stock. It’s one that you’d buy if it ever went “on sale.” Great examples include Netflix Inc. (Nasdaq: NFLX) at \$60 or Apple Inc. (Nasdaq: AAPL) at \$75. Your list may differ, but my point is that you have a list… at all times.

The price you pick should match your individual risk tolerance, your investment objectives, and your belief about what the company is really worth. You place your order to buy “XYZ at \$___ per share or less, GTC” – meaning “good till canceled.”

Then, you sit back and wait for a price dip. Why and when really doesn’t matter. The markets can react to all sorts of things – bad news, headlines from China, a misguided Fed.

Lowball orders are very carefully planned "profit-traps" that are laid out in advance. You set them in place to take advantage of conditions that favor you as opposed to the institutional traders who normally dominate the markets and whose express goal is to separate you from your money.

The “Free Trade.” With this strategy, once you’re sitting on returns of at least 100% on a stock, you sell half your position and let the remaining shares run, simultaneously doing three things in the process: capturing profits of at least 100%, paying for your initial investment, and reducing the risk on your remaining position to almost nothing.

You see, nobody ever went broke taking profits, but plenty of people have gone broke taking losses. So it not only makes sense to concentrate your assets using appropriate risk management, but also to harvest your winners when the markets are strong. That way you’ll have opportunity at hand rather than being forced to run for the hills when the markets are weak.

It doesn’t matter whether you’ve got a lot of money or just a little, the principles are exactly the same: You want to capture profits every chance you get, and you want to take risk off the table at every opportunity (preferably, both at the same time).

Pro traders call this a “free trade,” because you not only get back your original investment, but you maintain all the upside you can handle, essentially “for free.” Even better, because you’ve now “paid” for your investment, you can stay in the game with not an additional dollar at risk… even if the stock you’ve just harvested has a sudden reversal in fortune and goes from hero to zero.

The three tactics I’ve just described will have you lined up for profits no matter what kind of day the markets are having, and no matter who’s trying to separate you from your money.

So, now that you know it can be done and how to do it, here are some of my best high-profit ideas to try your skills…

A Way to Beat the Markets 30-Fold: This simple two-step process has been responsible for 400 double- and triple-digit winners over the years, with peak gains like 629% on Celldex and 300% on Golar. This year alone, average gains of 30.26% have crushed the broader market. Find out how it works here…