The definition of gambling:
1. Money that is risked for possible monetary gain
2. Take a risk in the hope of a favorable outcome.
Do those two statements define most of your trading activity? Just as somebody would study sport as a hobby and back their views, are traders not just learning about and studying the markets and ''taking a risk in the hope of a favorable outcome''
However we access the markets, whatever we trade or buy we are all taking ''risk in the hope of possible monetary gain''
I know a guy whose life has gone downhill since he secretly started gambling heavily on the horses and football - he nearly lost his shirt. I bet there are just as many stories of people loosing all their money, wife, car, sanity etc... 'gambling' on the markets.
Trading is without doubt a more intellectually challenging and sophisticated form of gambling - people who do it full time are really just informed gamblers.
This is how I see it
When you start trading every decision is like spinning a roulette wheel with all 36 numbers present as you spin. As you gain more knowledge, discipline and skill - those numbers start to whittle away giving you more chance of being successful.
Is this any different to analyzing premiership football and making your money there? I know it is all very impressive explaining to people your a trader but I wonder if we would get such a positive reaction introducing ourselves as professional gamblers at dinner party's??
What make TA or fundamental analysis any different to studying form when betting on horses????
What do you guy's think?
JK
My idea is that there's different forms of gambling,
for example, if playing a casino fruit machine you are guaranteed to lose in the long run,
if playinmg poker, you can slowlly develop the ability to see into your opponents eyes,
categorize types of players into different groups, and finally make it so that you win anyone less good that you,
when good players face each other, the tendency of the game is to come to a draw....
In the markets i think most newcomers are gambling, they are using some illusive
system which fails eventually,
most books on trading mention about discipline, improving your character, etc
first it's impossible to improve or change your character on taking risks and how
you cope under pressure, different people have different skills and that fundamentally
will not change, we just grow older and can only grow wiser,
as for discipline and mechanical trading, i think it's a misconception,
market movements contain some kind of human emotion element which brings
uniqueness and non-repeat action to the trading day, mechanical trading systems
can't catch up with the speed of highly-alert state traders
The bottom line is that the stockmarket has closed more homes and marrriages
and made people go broke than has made millionaires... those who lose are
greedy, unpatient people who like to be in control of their lives, they drive fast,
react violently, or are just low profile gullible people,
winning traders are gamble addicts but are patient, more stable under stress,
not easily taken by fear, not easily getting excited over success and they are 'hard to bend'
personalities, they are not at all easily convinced by exiciting language such as that used
by salesmen or TV ads.
If TV adverts work well on you, and you are not able to disagree with salesmen calling on the phone, or Car salesmen then I'm sorry but you are not an analytical mind,
you are not in a position to spot the pitfalls and most likely you won't in
the financial markets either!
which brings me to a well known saying;
'When everyone thinks alike there isn't any thinking going on' '
trading is unlimited gain or loss.
