What is the difference between a spreadbetter and a trader???
There is no evidence to suggest financial trader's are more successful than sport traders. I actually remember reading that 90% of traders loose money, a statistic that is hard to beat...
JK
I agree with you, JK. If you haven't got a clue spreadbetting, why would you be a roaring success with futures?
sorry mistype, I meant sports betters not spread betters.
I wonder what the statistic with sports betting is. Wouldnt be surprised if its 100%
I know alot of sports betters. I am yet to meet one person to claim he/she can profit consistently from sports.
Perhaps this is because you don't 'know your market' when betting on sports. I trade fx mainly but am happy to call myself a (part time) gambler - it is what it is.
If you know more about football than you do about the financial markets then I would BET on you being more profitable with your sports betting - or very lucky with up/down financial bet's.
JK
I am not debating the trading/gambling analogy. I agree with you.
You are wrong on the second point. I know alot about my football and in fact know very little about financials. But still I have better returns on financials.
graemenash
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To put it another way, an individual trade for me is something that has an uncertain outcome. That is undoubtedly a gamble. However, I don't think in terms of individual trades; unless you have a strike rate of 100% you have absolutely no way of knowing in advance which trades will be the winners and which will be the losers.
Therefore I only think in terms of a sample of X trades which over time will result in a profit. I believe my system will produce an overall profit every single time over a sample of X trades.
If I cherry-pick and only take 25% of the entries my system produces within that sample of X trades, then I am gambling because I am introducing a chance factor and not playing the probabilities correctly. If I take 100% of the entries, then based on the historical evidence, which at the end of the day is all I have to go on, I'm not gambling.
You may say that past performance is no guarantee of future performance etc and that therefore I am gambling; and you may be right, but I personally can't think like that because if I did I'd either not trade at all or I'd sit here flipping coins all day long
Therefore I only think in terms of a sample of X trades which over time will result in a profit. I believe my system will produce an overall profit every single time over a sample of X trades.
If I cherry-pick and only take 25% of the entries my system produces within that sample of X trades, then I am gambling because I am introducing a chance factor and not playing the probabilities correctly. If I take 100% of the entries, then based on the historical evidence, which at the end of the day is all I have to go on, I'm not gambling.
You may say that past performance is no guarantee of future performance etc and that therefore I am gambling; and you may be right, but I personally can't think like that because if I did I'd either not trade at all or I'd sit here flipping coins all day long
To put it another way, an individual trade for me is something that has an uncertain outcome. That is undoubtedly a gamble. However, I don't think in terms of individual trades; unless you have a strike rate of 100% you have absolutely no way of knowing in advance which trades will be the winners and which will be the losers.
Therefore I only think in terms of a sample of X trades which over time will result in a profit. I believe my system will produce an overall profit every single time over a sample of X trades.
If I cherry-pick and only take 25% of the entries my system produces within that sample of X trades, then I am gambling because I am introducing a chance factor and not playing the probabilities correctly. If I take 100% of the entries, then based on the historical evidence, which at the end of the day is all I have to go on, I'm not gambling.
You may say that past performance is no guarantee of future performance etc and that therefore I am gambling; and you may be right, but I personally can't think like that because if I did I'd either not trade at all or I'd sit here flipping coins all day long
So trading, not being gambling, is based on whats happened before, yeh?
Is this a guarantee for the future?
graemenash
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Did you read the whole post? :cheesy:
Are you a gambler?
Depends - if you trade without a plan - you are a gambler !
If you know the probability of winning/losing before you trade - you are a trader - not a gambler...
Trading is, to determine by reasoning, common sense, or practical experience, to arrive at or commit oneself to an opinion about the direction of the market, without having sufficient evidence to support the opinion. Basically, all you are doing is, making a careful estimation of the likely outcome: "it all comes down to a calculated risk, but a risk nevertheless" So to answer the question, its gambling with a few added fancy whistles added to it called trading.
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the way that I look at it is that trading is simply a subset of "Gambling" and there are many similarities between the people who consistently win and the people who consistently lose at both trading and everything else that traditionally falls into the category of 'gambling'.
Plenty of professional poker players will keep careful records, employ risk management, deal with similar psychological pressures and perform a lot of analysis on their results. Some may even source seed capital/client funds in the form of backers.
What about bookies - they are gamblers too & not to dissimilar to market makers - retail punters can play the role of bookies too on the likes of bet fair just as they can get inside the spread on exchange traded products with direct access brokers or an account with a clearer
Other sports gamblers out there will arb between bookies & other bookies or the exchanges & plenty of bots out there that have automated the process & made things harder for the traditional sports arbers (just as algo trading has made things harder for locals in the futures markets) - the main 'gamble' in arbing between bookies/exchanges is execution risk and/or counterparty risk just as with arbing financial product (though with financial products it is the execution risk you need to be careful with with sports betting it is the counterparty risk that is greater)
Casino's too - they are not too different either - in games of poker they simply act like both a broker and an exchange - they provide free drinks/entertainment and encourage play and also take a rake (commission/exchange fee)
in other games casinos are effectively making a market - they are acting as a counterparty to your & other punters bets (trades) and will happily accept them up to a certain size
the most important thing about trading/gambling is having an edge
money management is great too but it is useless without an edge - with the exception of blackjack and poker there aren't many casino games where players can develop an edge - it doesn't matter what money management strategy you employ in a game of roulette - you'll still lose over time as there is no edge
Taking directional bets at highstreet bookie based on some 'tip' or news is unlikely to work in the long term.
Taking short term directional bets at a financial spread betting firm based on some completely subjective chart pattern or magic indicator is also going to cause most to lose their money
IMO it is actually a lot easier to find an edge in things like sports betting than it is with financial products - the markets are less efficient - though a lot of the inefficiencies are not really scalable and thus it is just a hobby. The ability to both back and lay on betfair opens up a lot of interesting bets - and looking at the behavior of odds during tournaments, TV reality shows etc.. can provide numerous strategies in the same way that looking at the correlations between different financial instruments can provide interesting spread trades - both provide some interesting & fairly low risk bets/trades, employ hedging to an extent and are certainly more consistent than the mug punters taking directional bets at high street bookies or directional trades/bets at SB firms.
Plenty of professional poker players will keep careful records, employ risk management, deal with similar psychological pressures and perform a lot of analysis on their results. Some may even source seed capital/client funds in the form of backers.
What about bookies - they are gamblers too & not to dissimilar to market makers - retail punters can play the role of bookies too on the likes of bet fair just as they can get inside the spread on exchange traded products with direct access brokers or an account with a clearer
Other sports gamblers out there will arb between bookies & other bookies or the exchanges & plenty of bots out there that have automated the process & made things harder for the traditional sports arbers (just as algo trading has made things harder for locals in the futures markets) - the main 'gamble' in arbing between bookies/exchanges is execution risk and/or counterparty risk just as with arbing financial product (though with financial products it is the execution risk you need to be careful with with sports betting it is the counterparty risk that is greater)
Casino's too - they are not too different either - in games of poker they simply act like both a broker and an exchange - they provide free drinks/entertainment and encourage play and also take a rake (commission/exchange fee)
in other games casinos are effectively making a market - they are acting as a counterparty to your & other punters bets (trades) and will happily accept them up to a certain size
the most important thing about trading/gambling is having an edge
money management is great too but it is useless without an edge - with the exception of blackjack and poker there aren't many casino games where players can develop an edge - it doesn't matter what money management strategy you employ in a game of roulette - you'll still lose over time as there is no edge
Taking directional bets at highstreet bookie based on some 'tip' or news is unlikely to work in the long term.
Taking short term directional bets at a financial spread betting firm based on some completely subjective chart pattern or magic indicator is also going to cause most to lose their money
IMO it is actually a lot easier to find an edge in things like sports betting than it is with financial products - the markets are less efficient - though a lot of the inefficiencies are not really scalable and thus it is just a hobby. The ability to both back and lay on betfair opens up a lot of interesting bets - and looking at the behavior of odds during tournaments, TV reality shows etc.. can provide numerous strategies in the same way that looking at the correlations between different financial instruments can provide interesting spread trades - both provide some interesting & fairly low risk bets/trades, employ hedging to an extent and are certainly more consistent than the mug punters taking directional bets at high street bookies or directional trades/bets at SB firms.
Trader333
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By the time this happens you can be almost certain that it wont work at all. I cannot remember who it was who said that they were in a taxi and the driver was giving tips on which shares to buy. As a result they went out and sold everything and soon after the market collapsed. Once the public believe that they are onto a winner and a buying frenzy occurs, the smart money dump everything and then the price collapses. You often see this characterized by a price and volume spike.
Paul
If you have to think about probability (the chance of a future event occurring) you are a gambler and trading falls into that 'gambling' bracket.
It doesn't matter how confident we are that our trades are going to be in the money, it is a calculated risk - just as a sports gambler would take calculated risks.
Look back at my roulette wheel analogy in the first post.
It is totally understandable that people who devote every working day to trading in the financial markets don't want to be classified as gamblers.
The markets are a force with so many factors affecting them, if betting on football you may just look at the injury list. So it is without doubt a more intellectually challenging and interesting form of speculation.
Im off to study cable form and plan for the week ahead!
JK
Check out this sport's trading software package
http://www.betangel.com/main/software.php
The similarities are quite incredible
- Stop loss
- Trailing stop loss
- Fill or kill orders
- Can scalp the market
- One click trading
- Market depth
- Charting packages
- Live video/news feed's
- Excell spreadsheet integration
- You can develop you own automated trading strategies
Check it out - it is now a very thin line.
Would you call these guy's gamblers? Is the term trader not just a way to define an 'advanced gambler with all the tools and knowledge required to be consistently profitable''?
There are people who would be classified as gambling on the stock market - taking blind punts. What makes a full time trader any different? - Knowledge, experience, tools and discipline - with all that though we are all still gambling.
JK
http://www.betangel.com/main/software.php
The similarities are quite incredible
- Stop loss
- Trailing stop loss
- Fill or kill orders
- Can scalp the market
- One click trading
- Market depth
- Charting packages
- Live video/news feed's
- Excell spreadsheet integration
- You can develop you own automated trading strategies
Check it out - it is now a very thin line.
Would you call these guy's gamblers? Is the term trader not just a way to define an 'advanced gambler with all the tools and knowledge required to be consistently profitable''?
There are people who would be classified as gambling on the stock market - taking blind punts. What makes a full time trader any different? - Knowledge, experience, tools and discipline - with all that though we are all still gambling.
JK
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Hello JK,
My point was, that if you backtest your algorithm/stragegy on historical data, and papertrade for a period, then the propability of winning during trading on a real account is - theoretically - the same as during backtesting and papertrading.
Thus - knowing the propability, you know before you start risking your money how your trading will perform. If so - its not gambling any more, but trading using a calculated risk.
Gambling is forbidden in Denmark, ( apart from a few state controled lotto and bed companies ). Poker was for a long time considered as gambling, and illegal if money involved - but the Danish court did a few months ago state, that Poker is not gambling, since the player had a significant influence in whether he was winning or losing.
Because something has happened before doesn't mean it is going to happen again.
If you have some form of crystal ball trading strategy them you are betting on a sure thing, thus there is no probability.
What we do fit's into the definition of gambling - it is what it is. How likely an event is to occur is neither here nor there.
I think that Man U will win more games than Derby this season so will be backing them throughout - I feel that I know how my trading will perform before kick off. By backtesting last seasons and this seasons results so far, I feel the odds are in my favor - am I gambling? (just to give an example)
JK
It is still gambling - what is to stop a sports better from back testing? how is betting on the outcome of a financial instrument any different?
Using a particular methodology to gamble doesn't stop it from being gambling.
Just because 'gambling' evokes images of unemployed wasters in bookies and 'trading' provokes images of smart city types doesn't mean that what they are both doing isn't the same thing.
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