Do You Think Trading is Gambling?

[BSAM]

Quote from JSSPMK:

Why do you keep beating the old drum about 1 trade, when OP's question refers to a line of events? Not a trade, but trading?

I'm not saying one can't have an edge.

If you made one trade today, you were trading.

If you made twenty trades today, you were trading.

But, one or twenty doesn't matter.

Each trade is an individual event and can go either direction.

Trade #1 is independent of trade #2. Trade #3 is independent of trade #2, etc. That's what a trader must understand and accept.

This is why many consider trading as gambling. Because the outcome of each independent trade is uncertain; hence, a gamble. If the outcome was certain to bring a profit, it wouldn't be a gamble.

 

[BSAM]

Quote from ct_nz:

Only in the short run, not long term.

Not necessarily; but I'd agree, under general circumstances.....probably.

 

[Jachyra]

Quote from BSAM:

Hello ETers---

If you put on a trade today, and you did not have inside information, you were taking a gamble on whether you would make a profit or take a loss.

Always remember, the outcome of a trade is unknown when you enter the market. Therefore, how could you deny that you were taking a "gamble" (or any of those "easier on the mind for some" synonyms others like to use) when you decided to take a risk in the market?

Happy trading to all my fellow gamblers, "statistical odds players, educated guessers, lucky participants, professionals, betters, game of chance players", or whatever term makes you feel good!

Again, this comment is based on a misguided notion.

Look at this scenario. If you and I were going to flip a coin for money, and you decided that you were always going to pick heads because heads was lucky for you... and unknown to either of us, as a prank, one of your friends substituted the fair coin we were going to use for a weighted coin that was guaranteed to come up heads every single flip.... would you be gambling? Not knowing that the coin was biased in your favor you might think that you were but in actuality you would not be gambling, because without even knowing it, you actually have gained the statistical edge.

Trading is similar. The markets are not governed by pure chance, they're governed by the laws of supply and demand. Its a known fact that if there are more buyers than sellers at any given time the market prices will go up, and if there are more sellers than buyers, the prices will go down. So even though you may not have any way of knowing in advance whether or not there are more buyers or sellers at any given time, it does not change the fact that given any moment where there are more buyers than sellers... anyone who is short is gambling while anyone who is long is not gambling. Conversely, at any given moment where there are more sellers than buyers... anyone who is short is not gambling and anyone who is long is gambling.

At best, all you can say is that it is impossible to determine whether or not you're gambling in advance. But how much or how little you know in advance will not dictate whether or not any given trade is or isn't a gamble.

 

[JSSPMK]

Last question If I may, bottom line as far as you are concerned any type of business activity that involves uncertain outcome is gambling?

Quote from BSAM:

I'm not saying one can't have an edge.

If you made one trade today, you were trading.

If you made twenty trades today, you were trading.

But, one or twenty doesn't matter.

Each trade is an individual event and can go either direction.

Trade #1 is independent of trade #2. Trade #3 is independent of trade #2, etc. That's what a trader must understand and accept.

This is why many consider trading as gambling. Because the outcome of each independent trade is uncertain; hence, a gamble. If the outcome was certain to bring a profit, it wouldn't be a gamble.

 

[ssss]

Each trade is an individual event and can go either direction.

Trade #1 is independent of trade #2. Trade #3 is independent of trade #2, etc. That's what a trader must understand and accept.
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Yes ,that is full right

 

[BSAM]

Quote from Jachyra:

.....At best, all you can say is that it is impossible to determine whether or not you're gambling in advance......

Bro, this is exactly why trading is gambling.

 

[ElCubano]

Quote from Jachyra:

So even though you may not have any way of knowing in advance whether or not there are more buyers or sellers at any given time, it does not change the fact that given any moment where there are more buyers than sellers... anyone who is short is gambling while anyone who is long is not gambling. Conversely, at any given moment where there are more sellers than buyers... anyone who is short is not gambling and anyone who is long is gambling.

how do you know when you are gambling or not??? after the fact??

 

[Jachyra]

Quote from BSAM:

Bro, this is exactly why trading is gambling.

Under this logic, if you took a bet where you were guaranteed to win $1 80% of the time and lose $1 20% of the time.... you'd be gambling. Despite the fact that after 1000 bets, you'd have collected $800 in wins and paid out $200 in losses -- netting you $600 for every 1000 bets you made. Just because you lose 20% of the time in and of itself does not make it gambling.

Essentially, you're ignoring one of the most important tenets of statistics, which the previous posters already pointed out, which is that each individual event/bet is completely independent of the other. You continue to focus on the single event, which nobody in trading or statistics does, with complete disregard to the effect of the "long run" which is predicated on having many many bets/trades/opportunities and having a significant sample size.

Statistics is meaningless unless you have a large enough sample size.... just like the concept of "luck" only exists in a small sample size, and ceases to exist as your sample size becomes large enough to accurately reflect the laws of averages.

 

[BSAM]

Quote from JSSPMK:

Last question If I may, bottom line as far as you are concerned any type of business activity that involves uncertain outcome is gambling?

Are you trying to get me to say what you want me to say, or what you expect me to say, or just what the plain facts are?

For example:

If you and I had bet 10 bucks on the Cardinals and the Steelers, there would be a risk that one of us would lose 10 dollars.

If we both went long SPY today at say, 10a.m., we would have been risking money on the trade.

If we go to the store and pick up a couple of lottery tickets, we might win, or we might not.

These are the types of risks that people generally associate with "gambling", via the "classic" definition.

However, look at the definition of gambling and this will answer your question, (if one is willing to look outside the box).

From dictionary.com: to take a chance on; venture; risk: I'm gambling that our new store will be a success.

Of course, the answer to your question is yes.

 

[BSAM]

Quote from Jachyra:

Under this logic, if you took a bet where you were guaranteed to win $1 80% of the time and lose $1 20% of the time.... you'd be gambling......

An "edge" which produces your 80/20 example would be great. What happens when your edge is gone? Does one lose all his gains and go negative? Does it become 20/80? Then, would the trader have "gambled" his money away because he thought he couldn't lose with what he used to use?

Nothing's guarenteed. No edge, no stats, etc. If each trade is a gamble (I think we agree on this), then what happens when, what a trader was doing doesn't work anymore? Wasn't he gambling that his edge would continue, because his stats told him so?

Ever hear of a great trader blowing out? Did these guys not believe exactly like you?