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Do You Think Trading is Gambling?
- Thread starter nysestocks
- Start date
Quote from Dr.Greenback:
Hey, riddle me this...What separates a losing trader from a losing gambler?
Correct me where I'm wrong, but.... When Trading, one doesn't need to be "right" about a given outcome, but with Gambling, how can you be wrong about the outcome, but win the bet?
No difference. Both are losing.
Trading requires a plan to succeed, just as with any business. Gambling takes luck, or card counting. Either way, without planning, you're going to lose, so it has to do with whether there's a plan. No plan means you are gambling. If you have a plan and compare yourself to benchmarks, you'll do fine. It's when you get stupid and overleverage yourself causing you to nuke your account that makes trading the same as gambling. As long as you understand this and have taken enough years to find your edge, yes, years, then you'll do fine trading.
Investing has positive expectancy, and gambling has negative expectancy, and this is the main difference. While most traders do lose, it is because they have no plan. Taking the time to develop one will keep it from "seeming like" gambling. Again, this takes at least two years, three and you'll start to be long term profitable.
Investing has positive expectancy, and gambling has negative expectancy, and this is the main difference. While most traders do lose, it is because they have no plan. Taking the time to develop one will keep it from "seeming like" gambling. Again, this takes at least two years, three and you'll start to be long term profitable.
"Speculation [trading] is often misunderstood as being the same as gambling, when in fact it is the opposite of gambling. What gambling involves, whether in games of chance or in actions like playing Russian roulette, is creating a risk that would not exist, in order either to profit or to exhibit one's skill or lack of fear. What economic speculation [trading] involves is coping with an inherent risk in such a way as to minimize it and to leave it to be borne by whoever is best equipped to bear it."
-Thomas Sowell, Basic Economics-a common sense guide to the economy
-Thomas Sowell, Basic Economics-a common sense guide to the economy
nysestocks
Guest
Quote from dsss27:
"Speculation [trading] is often misunderstood as being the same as gambling, when in fact it is the opposite of gambling. What gambling involves, whether in games of chance or in actions like playing Russian roulette, is creating a risk that would not exist, in order either to profit or to exhibit one's skill or lack of fear. What economic speculation [trading] involves is coping with an inherent risk in such a way as to minimize it and to leave it to be borne by whoever is best equipped to bear it."
-Thomas Sowell, Basic Economics-a common sense guide to the economy
Ring up any of the people who "invested" their money with Mr Madoff, and see what answer they will give!!
There is only 1 effective way to correctly cope with "inherent risk", and you will not find it from the mouths of others!
Yip...just like blackjack.
Quote from Dr.Greenback:
Hey, riddle me this...What separates a losing trader from a losing gambler?
Correct me where I'm wrong, but.... When Trading, one doesn't need to be "right" about a given outcome, but with Gambling, how can you be wrong about the outcome, but win the bet?
It happens all the time. Losing gamblers/traders nearly always take bad prices at bad times, and therefore are making poor trades. However, even a poor trade has a chance of profit. Same applies for gambling.
You could also look at the reverse situation - how could we be right about the outcome, but lose the bet? Any half-decent trader will say they lose many they often lose with good trades, that is that the initial situation was good for trading and the trade just didn't work out that time.
I forgot to state that by "outcome", I'm talking about the right side to take before the game/trade, not the result itself. If we're talking about the result itself, then a gambler can't be wrong about the income and win the bet, since in gambling you either win or lose the stake completely.
Quote from Mr J:
I forgot to state that by "outcome", I'm talking about the right side to take before the game/trade, not the result itself. If we're talking about the result itself, then a gambler can't be wrong about the income and win the bet, since in gambling you either win or lose the stake completely.
Part of the problem of course is semantics. Everyone is applying "their" definition to "gambling" such as the statement above. While I understand what you mean, you also limited your definition of "gambling" to total win or lose wagers. This is not so in live in-game wagering. In fact, live in-game wagering is very much like the options market with a compressed time-frame. I use the same methodoly to invest/wager (pick one) in both.
Joe.