No, I'm not going that far, but I certainly see similarities. Both professions rely heavily on statistics and the best of the best in each profession have something that goes beyond the numbers.
Do You Think Trading is Gambling?
- Thread starter nysestocks
- Start date
No, I'm not going that far, but I certainly see similarities. Both professions rely heavily on statistics and the best of the best in each profession have something that goes beyond the numbers.
Every decision in life is a gamble.
No. If a million people are trading, probability says some of them will make money for 10+ years. In fact, Efficient Market Hypothesis predicts that some people will outperform. But many of them are no smarter than lottery winners, and they convince themselves they are different.
Blind stock market investing has made money for the last 50 years just by buying and holding. The Dow was very tiny during the 1940s compared to now. And with stock spilts and dividends...
This is kind of the point, whether at the end you were lucky or skilled doesn't really matter. The result is the same, the market, lotteries, and the casino offer greater than 1:1 risk reward so someone will always go for it. The problem is money is somewhat relative or at least the perception of money, for some people it has great meaning and to others it means nothing. I believe in the asshole theory which is some people are assholes regardless of income, I have had the misfortune of knowing rich and poor assholes, so don't be an asshole!
http://www.youtube.com/watch?v=85gO8XLb4ug&feature=related
I used to work with a guy who would say, " scared money can't gamble and a jealous man can't work".
Is trading stocks a gamble? Of course it is. Anything with a risk is a gamble. There has never been a trading system that is 100% profitable without risk.
The trader must try and trade with a plan where the winning odds are in his favor. Short term odds are easier to calculate than longer term even though long term trends are more profitable. I am a scapler and trade intraday so my objective is making money short term. There is only one truism in the markets as Joe Kennedy replied to a question about what he thought the markets were going to do. He said 'fluctuate'. This is the only thing that can be predicted with 100% accuracy. The major problem has always been trying to predict the movement.
The professionals lives off of stops and greed of the average trader. Most losing traders would become profitable if they discontinued stops and learn how to control greed. You can not be afraid of losing money. When you enter a trade be prepared to stay the course and set a realistic profit goal. I know this is opposite from what the typical trader has been advised to do.
But you can not have a herd mentality and expect a different outcome than the majority.
To put the odds on your side, you need a trading plan to reduce risk. One of the plans I use for intraday trading is to log the trading spread of a stock from its open over a number of days.
You should know the normal trading range of the stocks you are trading. For example, CAT has traded at least 94.59% of the time at least ten cents above and below its opening price over the previous 75 days. If you are a scapler, the odds are in your favor 94.59% of the time to make a dime on buying or selling CAT from the open on a MOO. If you are the more risky type, then let the stock go in one direction from the open and then take an opposite position with a closing order ten cents from the open. Of course, I would suggest checking the pre-open markets and give a tendency of trading with the open indication if you are trading on the open. Anything to keep the odds in your favor. Stocks are constantly changing. You must keep a daily log of more favorable stocks for scapling. If a stock is like AEG, which has only a 68.9% up and 63.5% down from the open price of making ten cents over the past 75 days, should not be traded. The odds are not favorable.
Trading is a gamble but it can be an educated guess trying to put the odds in your favor. But Lady Luck is always a welcome friend.
Is trading stocks a gamble? Of course it is. Anything with a risk is a gamble. There has never been a trading system that is 100% profitable without risk.
The trader must try and trade with a plan where the winning odds are in his favor. Short term odds are easier to calculate than longer term even though long term trends are more profitable. I am a scapler and trade intraday so my objective is making money short term. There is only one truism in the markets as Joe Kennedy replied to a question about what he thought the markets were going to do. He said 'fluctuate'. This is the only thing that can be predicted with 100% accuracy. The major problem has always been trying to predict the movement.
The professionals lives off of stops and greed of the average trader. Most losing traders would become profitable if they discontinued stops and learn how to control greed. You can not be afraid of losing money. When you enter a trade be prepared to stay the course and set a realistic profit goal. I know this is opposite from what the typical trader has been advised to do.
But you can not have a herd mentality and expect a different outcome than the majority.
To put the odds on your side, you need a trading plan to reduce risk. One of the plans I use for intraday trading is to log the trading spread of a stock from its open over a number of days.
You should know the normal trading range of the stocks you are trading. For example, CAT has traded at least 94.59% of the time at least ten cents above and below its opening price over the previous 75 days. If you are a scapler, the odds are in your favor 94.59% of the time to make a dime on buying or selling CAT from the open on a MOO. If you are the more risky type, then let the stock go in one direction from the open and then take an opposite position with a closing order ten cents from the open. Of course, I would suggest checking the pre-open markets and give a tendency of trading with the open indication if you are trading on the open. Anything to keep the odds in your favor. Stocks are constantly changing. You must keep a daily log of more favorable stocks for scapling. If a stock is like AEG, which has only a 68.9% up and 63.5% down from the open price of making ten cents over the past 75 days, should not be traded. The odds are not favorable.
Trading is a gamble but it can be an educated guess trying to put the odds in your favor. But Lady Luck is always a welcome friend.
You either are a 50/50 crapshooter or a professional.
If the question is "Do you think trading is gambling?", I assume that the OP is asking, "Do you think trading is a 50/50 crapshoot?"
A successful trader is a professional one, a successful gambler is a professional one.
"Gambling", in my opinion defines the activity that the majority of people who shoot craps, play slots and roullette, and who suck at Blackjack engage in. The gambling fools!
I think the big misconception that most people have about trading being legal gambling is that they assume that every trade that is placed is a 50/50 coin toss and nothing more; a random and blind pull at the slots.
IMO learning to trade is learning NOT to put on a trade that seemingly could "go 50/50 either way". With experience comes the ability to recognize probability, at which point you can do a coin toss or wait for your best setup and have your loss prevention in place so that if your 80% to 90% probabilty errs on the side of rare loss, you're taken out with minimal loss.
If we're in this to be likened to professional gamblers, I guess that's okay as long as we emphasize the word PROFESSIONAL.
Really who cares what anyone says as long as you're happy, are out of the rat race and have enabled yourself the kind of freedom and flexibility that only a trader can have!
If the question is "Do you think trading is gambling?", I assume that the OP is asking, "Do you think trading is a 50/50 crapshoot?"
A successful trader is a professional one, a successful gambler is a professional one.
"Gambling", in my opinion defines the activity that the majority of people who shoot craps, play slots and roullette, and who suck at Blackjack engage in. The gambling fools!
I think the big misconception that most people have about trading being legal gambling is that they assume that every trade that is placed is a 50/50 coin toss and nothing more; a random and blind pull at the slots.
IMO learning to trade is learning NOT to put on a trade that seemingly could "go 50/50 either way". With experience comes the ability to recognize probability, at which point you can do a coin toss or wait for your best setup and have your loss prevention in place so that if your 80% to 90% probabilty errs on the side of rare loss, you're taken out with minimal loss.
If we're in this to be likened to professional gamblers, I guess that's okay as long as we emphasize the word PROFESSIONAL.
Really who cares what anyone says as long as you're happy, are out of the rat race and have enabled yourself the kind of freedom and flexibility that only a trader can have!
I post this a "Food for Thought"
Technically I donât have a dog in the hunt on this issue, but dave74 made a post last night that got me thinking
And in keeping with my rule â âI am always open to learning, and everyone has something they can teach meâ
I thought about his (dave74) response â and it makes the most sense to me
Hereâs why (and I fully admit I had a predominantly âprobabilityâ bias to trading until last night
Letâs take two traders, one has a âGamblerâ Bias, one has a âProbabilityâ bias â they both are looking at stock xyz
Gambler Bias
Price is going up
Day is an up day
He / She goes long â knowing itâs a gamble and the trade may or may not work out⦠So they fervently manage their risk
Probability Bias
Stock price is going up
Market is trending up
Day is an up day
T&S printing greed
Indicator de jour (is indicating a long)
He / She goes long â knowing itâs about probabilities and the trade may or may not work out⦠So they fervently manage their risk
Question â In either above scenario who is either â more or less â right or wrong?
Answer â Neither because they both ended up at the same conclusion, entered long, and are managing their risk.
Some Traders have a Gamblers Bias
Some Trades have a probability Bias
Some Trades (a select few) can see and appreciate both biases
Because / and with all the above being said I pose this rhetorical question;
Where is it âmostâ important that we always approach it from a;
1.) Completely Non bias (neither long or short, good or bad, â probability, gambler.. or whatever) stand point
2.) Completely open and receptive to what is being offered, and able to see all the potential possibilities that exist for each moment
3.) Completely with out ego
Answer â The Market
One of the things that frustrate me about this site is there are a lot of very intelligent people here⦠They like to voice their opinions, which is good,⦠but when someone else has an equally good counter opinion they just tune them out and try to force their opinion down the other person throat.
We are all unique⦠We will more than likely view the same thing a little differently â but it doesnât make it any more right, or wrong just different
In closing â I will also agree there are some who post â that just donât have a clue, and perpetually give out bad advice
Dave74 â Thank You Sir for teaching a Redneck a thing or two
Take Care
Redneck
Technically I donât have a dog in the hunt on this issue, but dave74 made a post last night that got me thinking
And in keeping with my rule â âI am always open to learning, and everyone has something they can teach meâ
I thought about his (dave74) response â and it makes the most sense to me
Hereâs why (and I fully admit I had a predominantly âprobabilityâ bias to trading until last night
Letâs take two traders, one has a âGamblerâ Bias, one has a âProbabilityâ bias â they both are looking at stock xyz
Gambler Bias
Price is going up
Day is an up day
He / She goes long â knowing itâs a gamble and the trade may or may not work out⦠So they fervently manage their risk
Probability Bias
Stock price is going up
Market is trending up
Day is an up day
T&S printing greed
Indicator de jour (is indicating a long)
He / She goes long â knowing itâs about probabilities and the trade may or may not work out⦠So they fervently manage their risk
Question â In either above scenario who is either â more or less â right or wrong?
Answer â Neither because they both ended up at the same conclusion, entered long, and are managing their risk.
Some Traders have a Gamblers Bias
Some Trades have a probability Bias
Some Trades (a select few) can see and appreciate both biases
Because / and with all the above being said I pose this rhetorical question;
Where is it âmostâ important that we always approach it from a;
1.) Completely Non bias (neither long or short, good or bad, â probability, gambler.. or whatever) stand point
2.) Completely open and receptive to what is being offered, and able to see all the potential possibilities that exist for each moment
3.) Completely with out ego
Answer â The Market
One of the things that frustrate me about this site is there are a lot of very intelligent people here⦠They like to voice their opinions, which is good,⦠but when someone else has an equally good counter opinion they just tune them out and try to force their opinion down the other person throat.
We are all unique⦠We will more than likely view the same thing a little differently â but it doesnât make it any more right, or wrong just different
In closing â I will also agree there are some who post â that just donât have a clue, and perpetually give out bad advice
Dave74 â Thank You Sir for teaching a Redneck a thing or two
Take Care
Redneck