Is trading actually gambling? This is more a philosophical question in my opinion. Trading can be compared to coin flipping. The market can go two ways only, up or down and a coin can land on two sides only, heads or tails. Even though, the outcome has to be predicted and what is prediction if not gambling? So is trading actually gambling?
Professional gamblers follow strategies, systems and have proper money and risk management and they succeed in the long term, just like speculators. Professional gamblers study the game, know the rules and predict the outcome. They take the risk and hope for a gain. Just like traders. Is gambling a financial instrument or is trading a game of luck? Can you prove professional poker players wrong? Can you prove beginner Spot traders wrong?
You can't argue with currency traders that win in the long term just as you can't argue with roulette players that win the long term. Be it trading or gambling, you bet on the outcome. There is absolutely no way you can know what the next card will be and there is absolutely no way you can know how the market will behave in the next move. You may have systems, strategies and methods but in the end, you still bet on the outcome.
I have friends who bet regularly on sports and few of them gamble in a casino once a month, they all have systems they follow regularly. Each time they gamble, one or two win and the rest lose money. I know Spot traders (including myself) who trade every day and they all have systems they follow. Each time the market moves, few of them win, the rest lose money. So is trading actually gambling?
Your charts tell you what has happened in the past, you have no insight in the future. The cards that have been dealt show you the past and you have no insight in the future. In both cases, you study the past and try to predict the future. So you are a gambler, fortune teller and a guesser. If trading is not gambling, why do you set stop-loss levels? Aren't you convinced in your outcome? Do you trade based on your calculations or based on how it feels? Are calculations valid in an unpredictable market? Is sixth sense a valid indicator?
When you open a position on EURUSD, the dealing desk on the other side takes an opposite position and trades against you hoping you will lose, because that's how they make money. When you gamble in a casino, the house is a dealing desk hoping you lose because that's how they make money. As you can see, there are many similarities between trading and gambling but I would like to add just one more thing, which I find essential to the whole debate.
Results of financial markets depend on many factors such as economy, social situation, stability, supply and demand, politics... while with gambling the result depends on only one factor, randomness (or probability or luck if you will). When you gamble in a casino you in no way affect the process of the game, but when you trade your position is a liquidity provider and while that might be just one of the factors affecting the outcome, in essence you do influence the process of the game and contribute to the desirable outcome. That's the biggest and most valid difference between classic gambling and trading.
While trading and gambling might be similar and you could say that trading is gambling, considering the fact that the outcome cannot be predicted, the main difference between the two is that gambling is a game with a random outcome, while trading is taking action in the process of the outcome. That's only my opinion and I might just be wrong completely, so don't take my words for granted.
