Is trading Gambling or not .."What say You" Vote here.

[jficquette]

Quote from ElectricSavant:

Did you vote in this poll?

Yes, voted no. People spend all there time looking at charts thinking they mean something. It is only coincidence when they work.

Tradeable instruments are proxies for money flows. Money flow is the market. Time spend on systems would be better spent understanding money flows.


That's my story and I am sticking to it.


John

 

[fletch2]

The fact still remains that only 1 in 200 people can and do make a living playing poker.

Well that's a different claim now ("can" vs "can and do"). Are you saying that 1 in 200 are professional poker players? Where are you getting this data from? I don't think it's correct.

As far as Uncle Sam saying they want to know if you win at craps, roulette, blackjack etc., I am sure 'he'd' love to have you report your lucky day playing craps, but don't expect him to say ok you won $5000 today playing craps so pay me my cut and then the next day you lose $10,000 and expect to write off the $10,000 in losses!

No, you can only deduct up to your winnings in losses. But you must report the $5k in income, and then you can elect to deduct up to $5k in losses.

I don't know why I bother repeating myself, I guess I have to accept the fact that you are a moron and cannot understand what I had said that there is a good reason why Uncle Sam wants to know ANY and ALL of your stock trades but does not want to know ANY and ALL of your gambling activities.

Name calling won't change the fact that your claim is wrong. What you said is, and I quote:

"When you go to the casino and play some craps, roulette or whatever, say you win some money, does Uncle Sam want to know about it?"

The answer is that YES, he does want to know about it, just as I claimed. Here's the relevant IRS document:

http://www.irs.gov/newsroom/article/0,,id=108277,00.html

and here's what it says:

"the IRS reminds people that they must report all gambling winnings as income on their tax return."

This does NOT mean that you must report the net balance of winnings minus losses. It specifically requires that you report all winnings ("per session", which generally means a sitting at a table). You can then deduct losses IF you itemize, but you may face serious tax consequences via the AMT, for example, so it is NOT equivalent to reporting net winnings.

The only exception to this is if you file as a professional gambler. If you meet the criteria for professional gambler (which the IRS will deny you the right to do rather liberally), you can declare net income, rather than include all winnings as income and then deduct losses.

p.s. ya think T.J Cloutier reports the money he loses at the craps table?? he's a perfect example of what I said about having discipline. He is one of the top poker players in the world, and yet has a 'leak' in his game-...called craps! lmao. [/B]

What's that got to do with anything? I don't know what TJ's reporting habits are, but those rumored craps losses are indeed deductible losses from his gambling income.

Fletch

 

[nhtrader]

Poker and Trading

Like so many, I’ve been caught up in the poker craze that has taken the country. Don’t get me wrong, I don’t have illusions of grandeur and expect to be the next Greg Raymor, but I do hold my own in at the low limit tables I frequent. Since taking up the game, I’m amazed at the number of analogies I find between the game of poker and business of trading. My current trade reminds me of a situation I often face in playing no limit hold’em.

The key to winner at no limit hold’em is to get all your money into the pot when you have the best hand. Great hands come along so infrequently that you really want to maximize ever potential opportunity when you feel you dominate the other player. When playing this aggressive style of poker you will often find yourself sweating the last card on the board, or river. For example, suppose you currently have three of a kind (a very dominant hand in hold’em), go all in, and your opponent calls. When the hole cards are flipped, you see that you against 4 hearts to a flush, meaning that if the next card is a heart you lose, otherwise you win. Since there a 4 suits in the deck, you have approximately a 75% chance of winning the pot. If you play this scenario many times, you should win most of the time, but no one knows the outcome of that individual hand.

Compare this to my current trade (Short Jan SPX 1295/1305 call credit spread). The first trading day of the new year appeared to be a key reversal day. After selling off in the morning the market rebounded and finished strong. Today we had some minor follow through, leading me to believe there is further upside ahead. This is not the best news for my current trade because I need the market to close below the 1295 strike at expiration to realize the maximum profit. However, with just over two weeks until expiration, we are in the rapid time decay phase, helping to offset some losses due to market strength. Currently, there is approximately a 75% probability that the market will close below the 1295 strike - pretty much the same odds as beating a flush draw on the river.

Given these odds, and the fact that time decay is on our side, its prudent to not panic, and hold on to the current trade until my stop loss levels are breached. In other words, I’m still ahead, but the market has outs.

 

[traderich]

hi mr nhtrader,

nice to hear you are getting into NL hold em poker.

Here is some very valuable information (free of charge too!)

If your opponent has a 4 flush on the flop, he has 9 outs, assuming you don't hold that suit. The odds of hitting his flush on the turn or river is 9x4% or about 36%.

If he misses on the turn, then his odds drop to 9x2% or 18%.

So, a handy tool for playing NL is you count your outs (do your best to figure out what your outs are) and then if its on the flop, you have 2 cards to see, so multiply your outs by 4% and if its on the turn, you have only 2% per out.

this can come in handy, especially when you are trying to grind out a living playing cards. This is especially important because you do not want to be calling an allin bet on the turn of say $1000 when the pot is only $100 and you are looking for a flush card (i.e. 18% chance to hit it and its costing you alot more).

p.s. I know Greg Raymor personally from Foxwoods and knew him before he became WSOP champ. One thing many didn't know is that he had a $50k bankroll of which he used to win the seat and several people had a piece of his win because they had bought a part of his bankroll years before he went on to win.
Sad thing is I knew of this and opted not to buy a piece of his bankroll! ouch.
One guy netted 500k from Greg's win. I heard Greg is not letting anyone back him anymore too!

 

[ElectricSavant]

Did you vote?

 

[romik]

isn't it all to do with odds? Trading is gambling, that's a fact. But unlike in the casino we're aloud to 'count the cards', possibly adjusting the odds in our favour. Technically as there is always at least 1% chance of a negative outcome, it's still a gamble.

Definitions of gamble on the Web:

- money that is risked for possible monetary gain
- take a risk in the hope of a favorable outcome; "When you buy these stocks you are gambling"
- a risky act or venture
- play games for money
wordnet.princeton.edu/perl/webwn

Gambling (or betting) is any behavior involving risking money or valuables (making a wager or placing a stake) on the outcome of a game, contest, or other event in which the outcome of that activity depends partially or totally upon chance or upon one's ability to do something.
en.wikipedia.org/wiki/Gamble

I am surprised an overwhelming majority do not consider trading as gambling OK, in trading the probability is calculated based on etc, but as long as there is risk involved and risk is always present, surely that makes it a gamble.

I recall speaking to a Muslim once and he was trying to make a point about not being able to play Lottery (a gamble), though he could justify trading. Technically though, a definition of gamble is involved in every single trade that we make.

Definitions of a speculator:

http://www.google.co.uk/search?hl=e...eculator&sa=X&oi=glossary_definition&ct=title

Also, the question is not that well defined. Successful traders with a track record vs novice traders with minimum knowledge/experience. 2 groups face 2 different outcomes, 1st on proven probability, latter on chance mostly.

 

[kevinmr]

Even if you are not a believer in EMH you have to acknowledge the near randomness of stock markets. The near-EMH behavior pretty much guarantees that trading is gambling for 99.99% of ET readers.

 

[romik]

You can trade via a conventional futures broker or bet via a spread betting firm. Trade vs Bet, same principles used in decision making, but the difference in the technicals is huge. No income TAX in betting, as betting is considered to be gambling.

********"Profits from spread bets are not taxed either as capital gains or as income.

The reason is that under current law no betting profits are taxed, and the reason for that is that if the Revenue taxed profits they'd also have to let people offset betting losses! As more people lose money betting than make it, the Revenue's coffers fill quicker by having no tax on betting gains/losses than by having them.

Of course, the absence of CGT is only relevant to people whose annual gains are likely to exceed the annual exemption, but that threshold is within sight for many investors.

There is betting duty paid on spread bets, but this is almost always paid for by the indexation companies out of their profits, so you don't need to worry about it."*************

EDIT: So statistically the majority lose, Inland Revenue confirms this by making such laws for betting (including financial) therefore for the majority it is a gamble, BUT for the majority of voters on ET it's not a gamble. Amazing

 

[maxpi]

I just came back from Nevada, that was gambling for real. The very strange thing is that my wife is net positive over many trips to play games of chance. She described her "system" to me, it would have been funny if I could have understood the whole thing but I know better than to laugh at her. The thing is, it is mathematically impossible for her system to work but it is very consistent. There must be some intuition involved. I suspect that a lot of traders are doing something similar, trading a system that is largely intuitive.

 

[NanoTick]

To be mathematically correct, you can only ask: what is the probability that trading (or a specific method) is pure gambling?

This is the right approach to all probablistic events.