My father was a “professional” gambler.

I say “professional” because he spent the last few decades of his life gambling — though not very successfully. He mostly just spent down his veteran disability checks.

To be honest, I wasn't that interested in gambling myself. I always felt like I was taking enough risks with my trading profession.

But I was interested in the math involved, and I learned a lot about gambling through my father.

Of course, there are plenty of parallels to draw between gambling and investing.

The big difference, however, is that you are not at a mathematical disadvantage when you invest.

At least, not if you maintain your discipline and stick to three simple rules.

How to Manage Your Trading Bankroll

I’ve always enjoyed blackjack because it has one of the smallest house advantages and involves math.

When I walk up to the blackjack table, I make two decisions ahead of time.

First, I decide how long I want to play. It could be an hour, or sometimes two or three.

Second, I decide how much money I’m willing to gamble. I set a limit and buy a certain amount of chips, let’s say $5,000.

I’m willing to lose whatever amount I decide beforehand. But I will NEVER buy more chips than my initial stake.

Once I start playing, several different outcomes can happen. Sometimes I make money quickly.

My rule is that if I double my money, I put two-thirds of my (now larger) stake in my pocket and then play out the remaining third until I reach my time goal.

This guarantees me a profit, and I get to enjoy myself.

Sometimes I lose money quickly. When that happens, I simply walk away — go to the sportsbook and watch a game or go for a run.

Most of the time, the result is somewhere in between. I win some and lose some, playing out the time I allotted.

Now, here’s how these same rules I use playing blackjack can apply to trading.

Rule #1: Never risk more than you can afford to lose.

Decide on your stake for a trade that makes sense for you financially. Don’t invest money you need for rent or other expenses. And size the stake to the risk you are willing to take.

Rule #2: Stick to your bankroll.

After you decide how much you’re willing to bet, stay disciplined. The most dangerous situation for traders is when a trade goes against them and becomes an “investment.” Always stick to your plan.

Rule #3: Have an exit strategy.

Decide beforehand how much you want to make (or are willing to lose) before exiting the trade. Both gains and losses can come fast, so having an exit strategy will help you maintain your discipline.

This approach has treated me well on the blackjack tables — and in the stock market — over the last 20 years.

If you stay disciplined and apply these rules, I’m confident they’ll work for you, too.