Gambler, Trader, Speculator or Investor

The odd one out is the Investor, because he/she does not place their principal at risk.

The others are all the same. We could add the venerable term Stock Operator but nobody uses that any more.

But is a trader or speculator a gambler if he calculates correctly on a regular basis?

I've always considered life, in general, to be a gamble, albeit a carefully calculated one. Practically every decision one takes has its element of risk and it's only afterwards, when it is over, for better or worse, that one realises the chances involved.

"If"

What an important word that is!

im going to take a huge risk when eurusd hits 1.45

Chartsy said:

im going to take a huge risk when eurusd hits 1.45

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All in a day's work, mate!

BTW, you said "when" and not "if". That means that you are not gambling. With that opinion of it, I hope that you are long. If not, why not?

Why is he not gambling if he definitely takes a trade?

In any case, do you mean smokey bookmaker and beer gambling or professional gambling?

shadowninja said:

Why is he not gambling if he definitely takes a trade?

In any case, do you mean smokey bookmaker and beer gambling or professional gambling?

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He's not gambling if he says "when it gets to 1.45", only if he says "if it gets there".

Professional gambling sounds posher.

Splitlink said:

He's not gambling if he says "when it gets to 1.45", only if he says "if it gets there".

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Why? Is it a guaranteed win? Define "gambling". It can mean two things.

Roulette, trading, horses, Poker, Blackjack, football, Lotto: which ones are definitely "gambling" and which are "professional gambling"? Which of them is it possible to earn a living from and which will you lose over the long run? And why?

I think people get confused between professional gambling and gambling.

In fact, if you're bored right now, go play Roulette with free credits. You will learn a lot about trading.

yes i am long eurusd

funny enough i immediately knew me saying 'when' over 'if' would be taken the wrong way

Chartsy said:

funny enough i immediately knew me saying 'when' over 'if' would be taken the wrong way

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Why? How, wrong?

You said "when" which means that there is certainty in your thinking, that it's, simply, a matter of time. Lots are "iffers".

shadowninja said:

Why? Is it a guaranteed win? Define "gambling". It can mean two things.

Roulette, trading, horses, Poker, Blackjack, football, Lotto: which ones are definitely "gambling" and which are "professional gambling"? Which of them is it possible to earn a living from and which will you lose over the long run? And why?

I think people get confused between professional gambling and gambling.

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Shadowninja makes an important point that often gets overlooked when the trading / gambling issue is discussed. I define gambling as a game of chance in which there is no mathematical possibility of a positive expectancy in the long term. If you win (in the short term), it's entirely down to lady luck and not your edge - as it's impossible to have one. The odds always favour the house (bookie of casino). Roulette is a good example of this. You might win in the short term (i.e. one night or one week) but, in the long term, you will lose. Guaranteed.

Poker is quite different as you can have a positive expectancy and you can, potentially, win over the long haul having developed an edge. Although luck and chance may play their part at times, poker is largely a game of skill which some 'gamblers' master. Trading is in the same category as poker, hence it is possible to be consistently profitable in the long term.

In spite of these key differences, there are of course those that do not realise it and do not treat them differently. They take wild, ill considered trades that are akin to betting on red of the roulette wheel. These people are just as much gamblers as the person who plays roulette.

A great site about gambling if you've not seen it before:
Wizard of Odds
Tim.

Splitlink said:

Why? How, wrong?

You said "when" which means that there is certainty in your thinking, that it's, simply, a matter of time. Lots are "iffers".

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That doesn't make the trade not a gamble.

Amusingly, people like to use the term "investing" to make it sound clever and like they accept there's a risk but the reality is they have big pound signs in their eyes and they're ignoring the potential downside thinking that it will never happen.

shadowninja said:

That doesn't make the trade not a gamble.

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Of course not, I'm doing some joking, here. Nevertheless, a person who consistently knows how to take money out of the markets is not a gambler, IMO, even though Wall Street is considered to be a casino by many. Neither is a trader an investor, he is a speculator taking calculated risks, ie. his losses are controlled, not like a gambler who takes pot-luck.

That's what we've been saying all along but didn't realise you were joking as you didn't clarify after I asked.

"The odd one out is the Investor, because he/she does not place their principal at risk."

I don't see that.
Someone can invest in a company and it goes bust, or comes out with a profits warning and loses 80% of its price; in which case the investor has certainly not only placed their capital at risk, but lost a huge chunk or all of it.

at the end of the day a trade is nothing more than a gamble with associated benefits (edge,risk management, and so forth). Whether you chose to employ those benefits is a personal choice but it doesn't change the essence of trading being gambling. Professional or not it is still gambling. I wish people would just accept this and be honest with themselves.

The worst is religious traders who define themselves as investors. I spoke with one a couple of weeks ago and he explained to me his edge provides him with a 100% probability of making a return in the long run and hence he is NOT a gambler, he stated he is undeniably an investor. heh, cracks me up every time.

even though he readily admitted that each trade was a calculated gamble he was not a gambler at the end of the day. I told him to repent his sins at church and give them 50% of his profits

For me the term gambling means an activity where there are low or equal odds of winning / losing and the main purpose is the enjoyment or thrill derived from the process... degenerate gamblers love the process, despite losing all their money..

There are plenty of traders who fit into the above, but if you're doing it correctly , there should be an edge in terms of the odds, and it should be boring..and you shouldn't be continuously losing