The 'One Chip' Rule: Managing Your Market Risk

Back in the early 1970s, I met one of my mentors.  His name was Jimmy, and back then, he had been a professional gambler for more than 30 years. One night over cocktails, I asked him, “Hey Jim, how is it you have been able to live as a professional gambler for three decades?” His response was, “I adhere to the one chip rule.” “What’s that?” I questioned. “Well, I learned very early in the gambling business that every time I won 10 ‘chips,’ I needed to put one of those chips in my pocket... aka, the one chip rule.”