FAQ Is Trading the Same as Gambling?

[Futures Hunter]

forgot to add.
Advantage of trading over gambling is, you have more probality to count the winning %

combining technical analysis, such as Price Pattern & with your positive methodlogy. Just like card counting

 

[michael922]

Hi, everyone. New here (obviously) and this thread caught my attention immediately as I believe it addresses a very important factor in one's trading approach - hope the discussion isn't over yet (forgive me, I'm one pontificating SOB, but it makes for good spirited debate)

...And I believe that is the answer to the question: It's all in your approach. "Trading" (buying/selling securities, options, futures, etc) A contrived and oversimplified example of trading-as-gambling would be "look at how low this stock is! If I buy now and it goes up to its 52-week high, I would quadruple my money!"

Notice the only basis in reality that position has is what "could" happen (ah, a very frightening term to advocate one's open position, isn't it?), as in, there is nothing in the laws of physics that forbid that from actually happening - while there is no *indication* whatsoever that the stock will actually rise again to its 52-week high. And what if it doesn't? At what point do you determine you're wrong? It "COULD" drop to a fraction of a penny, and by and by, shoot up to its 52-week high but only after you have essentially see your entire investment wilt away. Congrats, you just gambled your way to a fortune.

If you are to be a successful *trader*, not a gambler, you need to establish a viable premise for determining what SHOULD happen, not trade simply based on the notion that "well, it'd sure be great if it did." We all know the problem with the trade in the example above (and some of us might have been burned by that very scenario) . . . and it might even be a "safe" gamble since your loss is limited to the amount invested, but it is a gamble nonetheless. The right decision (since it made money) was made for all of the wrong reasons.

So what is gambling? We all have our own definitions for sure, but I am of the conviction that it is a refusal to address reality and a refusal to take responsibility for your actions. You cast conscious control to the wind and wait to see what "luck" brings you. While there is a desired "end" to your actions, you have refused to calculate the means. It is the advocacy and the religion of "Random Luck" which exists only as a mystical concept.

A pleasure!
Mike

 

[RRTrader]

In gambling, you can calculate the odds. Not so in trading.

 

[intradaybill]

Trading is not gambling but you can certainly turn it into such activity easily by undecapitalizing your account.

 

[Fxpro-Traders]

Trading and gambling both required luck and number of years experience in particular field. New member or player do not survive there. Great thread.

 

[justtellingitasitis]

It is almost certain to be gambling as an independent trader. As an independent, you don't have access to half of the data required to make an informed judgement. That never seems to get mentioned here, and I think it is a fundamental point that is really inescapable. Whether you call it scalping, or whatever you want, short term day trading as an independent person is almost certain to end in failure.

Say you're trading the dollar on your own - you don't have access to all of the news, every trade requires you to cross the spread essentially because you are exclusively a price taker (granted you can post a bid / offer, but you have no order flow yourself). You don't see the volume being dealt, you don't have access to crossing network, or the vast majority of liquidity...

I think the discussions here are generally focused on individuals that are punting - that is not what your average trader does. Your average trader is actually providing liquidity and risk management for a price - that price will keep them ticking over.

It's bizarre to me that on the whole forum, with all the talk of managing risk, there doesn't ever seem to be a mention of VaR, of expected shortfall, or in fact of any standard risk metric?! It seems people aren't actually even calculating a risk in any real sense. It's like on the options threads, there doesn't ever seem to be a mention of how options are actually priced. Well, if you don't understand how to quantify the risks you are taking, and the information flows are stacked against you, you're gambling.

So, after all that waffle, for all intents and purposes for the vast majority of contributors here, you're gambling, not trading. As such the argument as to whether or not trading is gambling is moot!

 

[BeginnerJoe]

Trading (speculating) is not really gambling. It's really more of a legalised robbery. This is why 99% of people loose. Normal gambling has better odds.

 

[calamancini]

Trading is Gambling when you do not know what you are doing and you just oversize positions and use too much leverage . Gambling is also not using stops or having limits. Trading can be gambling, and for many people more often than not it is because of the way they trade. Such people have better odds in las Vegas

 

[Shakone]

Trading...Gambling...just words. The meaning of words is dependent on the person, and some will see these as meaning the same thing, and some will think they're two completely different activities.

12 pages of semantics.

 

[NVP]

Trading (speculating) is not really gambling. It's really more of a legalised robbery. This is why 99% of people loose. Normal gambling has better odds.

Normal Gambling has better odds than Trading ?

define normal Gambling........TJ

N

 

[NVP]

Trading...Gambling...just words. The meaning of words is dependent on the person, and some will see these as meaning the same thing, and some will think they're two completely different activities.

12 pages of semantics.

100,000% agreed

I was brought up in the Gambling world and now spend all my available time in the trading world...... and the winners and losers of those worlds are just the same

Semantics

N

 

[BeginnerJoe]

Normal Gambling has better odds than Trading ?

define normal Gambling........TJ

N

Playing red or black is gambling. The odds of winning that is better than any bucketshop 'trading'. For starters, you don't go into an immediate loose from the word go. After the word go, you don't get the house overtly manipulate the spinning ball as they would manipulate the prices in the 'market'.

 

[Coleen]

Well, I heard about something like this. What you're saying is really interesting and unique. So what is the difference between analysis and forecasts in trading Forex and in gambling?

 

[neil]

Well, I heard about something like this. What you're saying is really interesting and unique. So what is the difference between analysis and forecasts in trading Forex and in gambling?

One analyses and forecasts moves in forex.
The other analyses matters likely to impact upon a considered outcome in other areas outside of the financial markets.
You make a decision in either event based upon your analysis and place a wager, or trade, inline with the forecast outcome that arose from your earlier analysis.
:|

 

[D70]

Hello there. As I can see trading Forex and gambling have something in common - you win or loose, but in trading Forex you make analysis and forecasts to be in touch with the situation and to trade successfully, and I don't think it is possible to do in gambling. Does anyone agree with that?

To win at either you need an edge. Otherwise, in both situations, you will lose.

 

[jacknapier]

The bottom line is that based on the current Oxford Dictionary of English definition - trading is gambling.

Now, I don't have an Oxford dictionary on hand, because I use dictionary.com.

gam·bling  [gam-bling] Show IPA
noun
1.
the activity or practice of playing at a game of chance for money or other stakes.
2.
the act or practice of risking the loss of something important by taking a chance or acting recklessly: If you don't back up your data, that's gambling.

1. The stock market is not a game. And therefor, according to this definition trading is not gambling.

2. Yes, this definition can fit. Meaning, if you didn't dyodd or give your money to someone who can, then trading is gambling.

I, personally, do not believe trading is gambling, simply because people who say trading is gambling tend to view the market as a casino. That explicitly implies definition 1 and therefor, since the market is not a game, it's not gambling.

 

[wackypete2]

1. The stock market is not a game.

Some would disagree with that.

Peter

 

[Coleen]

Now, I don't have an Oxford dictionary on hand, because I use dictionary.com.



1. The stock market is not a game. And therefor, according to this definition trading is not gambling.

2. Yes, this definition can fit. Meaning, if you didn't dyodd or give your money to someone who can, then trading is gambling.

I, personally, do not believe trading is gambling, simply because people who say trading is gambling tend to view the market as a casino. That explicitly implies definition 1 and therefor, since the market is not a game, it's not gambling.

I absolutely agree with you. Trading cannot be a gambling, because when you trade you want to get profit, in gambling you want to win. These two are different definitions, and in most people's mind, I think, gambling tends to be something illegal.

 

[Emini-mouse]

Is Trading the Same as Gambling?
on this thread we are getting close to the end of our analysis

 

[Vicorka]

It could be gambling or it could be work. It is completely up to you. Those who work take money from those who gamble.