How the casinos anticipate the worst and prepare for it (and you should too)

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According to a study by Cesilla Horváth and Richard Paap, they found that casinos’ revenue was correlated with economic growth.
This means during a recession, a casino’s business will be negatively affected as fewer people visit the casinos.
So, what do they do?
Well, they could…
Reduce the number of staff to reduce their expense since they have fewer customers to serve.
Offer free rooms to attract customers back to the gambling tables so they can increase their revenue.
Improve the efficiency of their operation so they can lower expense and still maintain or even increase revenue.
Now if a casino can anticipate the worst and have contingency plans ready, they are likely to survive whatever comes their way.
Now what about your trading business, do you have contingency plans for it?
Here are some real issues you must consider…

  • If you’re in a losing streak, can you still meet your day to day expenses?
  • What if your broker goes belly up, how will that affect you?
  • If your trading system goes into a draw down, how do you know if you should continue trading it or stop altogether?
  • If the markets suddenly collapse 10%, can you survive?
    If you can answer these questions, then you have a sound trading business.
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