Well if you read my post you would see that I am not arguing whether he is gambling or not, or whether he knows he is gambling or not, or whether everyone else knows he is gambling or not ......
The point I am making is that in my view it is a risky venture to gamble notwitstanding that its a small account or that he knows that he is gamblng, but because the most difficult aspect of trading is to control emotions, to remove the urge to gamble , so that if you continue to allow youself to gamble, albeit is a small / controlled manner you have not conquered that demon....(maybe some can do this)
Its like giving up smoking while using nicotine patches...or an alcoholic giving up drink while allowing himself a little tipple every once in a while....
This post is very meaningful to me. I have not conquered that demon and doubt that I ever will. Not only this, but my personal experience is that, unlike episteme, I am not taking risks with money I can afford to lose but with money I care about, and maybe that's why I lose and he wins.
All trading means taking risks. Yet if you risk too much (such as trading without a stoploss), you suddenly find yourself "gambling", which you didn't plan at the start. There's a very thin line between trading and gambling, because it's not just a matter of stoploss, but also of choosing your entries. If you don't have a stoploss, you certainly are gambling. Other times, you may have a stoploss, but if you trade impatiently you could still be gambling and you will still blow out your account (despite using a stoploss).
Sometimes you think you were trading but you were gambling and made money. Other times you think you were gambling because you lost money, but in fact you were trading correctly (with good risk and money management). In either case, pretty soon I revert to gambling and lose everything. I would not say that episteme is gambling, because his past (long term) gains show that he knows what he's doing. You can't win that often and that consistently and still call your trading "gambling". Not all losses are caused by gambling, but no long term gains can come from it, as in his case. I've been gambling (compulsive trading) for over 10 years, and I've never had one profitable month.
The only guarantee to avoid gambling, for me, was automated trading. If I do automated, I am safe from it, unless of course I interfere. Yet even if you don't interfere, if you push your risk too much, you could increase your risk of financial ruin from 1% to 100% within the next year. For example, right now I am about to start again (after blowing out several times), and I will have to take big risks. Yet I wouldn't say that I will be gambling. Gambling to me means picking the wrong entries (being impatient), picking the wrong exits (being impatient with profit, and patient with losses). With automated trading I am only pushing my money management but at least everything else is done correctly. Here's what I will do. I have almost 8 months of forward testing and I know that if I come across the worst possible drawdown, which happened for one week of the past 8 months, I will lose over 50% of my capital. That would be close to blowing out. Yet I will still go for it, because out of 34 weeks, only one week was that bad. I have one chance in 34 of blowing out. If I get lucky and that doesn't happen for 4 weeks (one chance out of ten that it will happen), then the risk of blowing out is pretty much gone for good, because I'd be able to withstand the drawdown, if it comes after one month.
So I would say that I am taking a risk, like all traders. And in this case, I am deciding to take a bigger risk than I would like to. But merely taking a risk doesn't make you a gambler. Gambling means taking unnecessary risks out of compulsion, more or less. Gambling means engaging in betting behaviours that will likely make you lose money. If you're doing something that will likely increase your money, then you're not gambling. So, since episteme, has made a lot of money with this type of trading in the past, I don't think we could say, in the above sense, that he's
gambling.
