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FAQ Is Trading the Same as Gambling?

J'ai said:
Hi F, I understand what your saying mate, yes I agree you can control your future not by gambling but by reducing the risk to yourself.

I think most people confuse risk and probability with gambling but they are different. As you said "you risk your life walking onto a busy road", however you always have the ability negate this risk or the probability of being hit by simply stepping back on the pavement. When gambling you do not have this option you can only wait for the outcome and hope the cars miss you.

Fred

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Taking risks is essential; gambling is foolhardy.” German general Erwin Rommel
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Perfect explanation
 
Quantt said:
The major difference is the odds are in your favor in trading (if you trade with an edge to make money), compared to the odds are in the bookies favor in case of gambling or if you trade with no edge in the market...
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sorry - a professional Gambler has the odds in their favour same as a Pro Trader....

Gambling / Trading / Investing / speculation / Betting

all semantics .....

a person is either a winner or a loser in these games......assuming we take a cumulative view of their P/L
 
The English language is poor with regards gambling because it uses one word "gambling" for two very different types of gambling activity.

The two types of gambling are -
games of skill
games of chance

The outcome of a game of skill can be affected by the use of the player's skills, e.g. poker, blackjack, horse race betting etc. - and trading.

The outcome of a game of chance cannot be affected by the player's skills, e.g. lottery, roulette, raffles etc.

So trading is gambling only if you accept it is a game of skill and not a game of chance. Whether you use your skills or whether you have any skills, or use them well or badly or whether you wish to win big or small, sooner or later, it doesn't matter, its still a game of skill. And so is business. So trading is a business as well.
 
tomorton said:
The English language is poor with regards gambling because it uses one word "gambling" for two very different types of gambling activity.

The two types of gambling are -
games of skill
games of chance

The outcome of a game of skill can be affected by the use of the player's skills, e.g. poker, blackjack, horse race betting etc. - and trading.

The outcome of a game of chance cannot be affected by the player's skills, e.g. lottery, roulette, raffles etc.

So trading is gambling only if you accept it is a game of skill and not a game of chance. Whether you use your skills or whether you have any skills, or use them well or badly or whether you wish to win big or small, sooner or later, it doesn't matter, its still a game of skill. And so is business. So trading is a business as well.
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The best post on this thread so far
 
tomorton said:
Trading is gambling as almost everything in life is gambling; i.e. almost everything has an uncertain outcome. Life itself included.

The outcome of most activities in life can be modified by the application of skills / knowledge. But their outcome remains less than 100% certain.

The outcome of some activities cannot be modified by skills / knowledge, e.g. lottery, roulette.

Its a futile and never-ending argument whether trading is gambling or isn't gambling. Like most things, it both is and isn't.

But the fatal conclusion a newly successful trader can reach is "I am profitable, therefore I am not gambling, therefore there is no risk".
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a trader cannot influence the outcome but they can sure as hell influence everything that goes into pulling the trigger :smart:
 
Gambling it taking a position over which you have no control. Trading means using an instrument that you can control- you can close out at any time. A gamble is also an uninformed binary position, but a trade may be morphed into something else as new information is received.Trading is responsible risk management-gambling is not. Unless you fully understand your positions -both entry and exit, and the reasons for the trades you are a gambler.
 
When people use the word "gambling" in the pejorative sense they mean placing a bet with negative expectation. Most traders are gambling in that sense, using systems that are no better than the fool at the horse track who thinks he also has a system based on ideas from the 1970s.
On the flip side though, I can't see any good trader who places bets with positive expectation not seeing themselves as a gambler too. To not be able to see gambling,trading and investing as all different shades of risk taking and trying to run systems with positive expectation is just so newb to me. Honestly, if someone on here says they are not a gambler I don't even care what else they have to say. You don't even understand the game you are trying to play and are basically deluded.
 
In short gambling is not trading and if anyone wants to gamble then casinos are always there for those who are willing to try their luck. Even the gambling requires certain analysis rather than the intuitions only.
 
Been trading for 20 years- used to gamble on a £1 'place pot' bet sometimes back in the 90s. Trading is boring, and for me, profitable. Gambling is of no interest,and is nothing like my trading whichis 99% managed risk.
 
progix said:
In short gambling is not trading and if anyone wants to gamble then casinos are always there for those who are willing to try their luck. Even the gambling requires certain analysis rather than the intuitions only.
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whenever i am in a casino all i play is blackjack.....its not too bad and if you lose you can control the flow a little....I cant count cards and am only there for a little fun anyway ...N
 
nnash said:
When people use the word "gambling" in the pejorative sense they mean placing a bet with negative expectation. Most traders are gambling in that sense, using systems that are no better than the fool at the horse track who thinks he also has a system based on ideas from the 1970s.
On the flip side though, I can't see any good trader who places bets with positive expectation not seeing themselves as a gambler too. To not be able to see gambling,trading and investing as all different shades of risk taking and trying to run systems with positive expectation is just so newb to me. Honestly, if someone on here says they are not a gambler I don't even care what else they have to say. You don't even understand the game you are trying to play and are basically deluded.
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Agree we all lose in the long run. Even a bet with negative expectation can bring you profits it all depends on the time when you stop making bets. Professional traders just shift aggregated positive returns on the infinite timeframe closer, while for amateurs its more evenly "distributed" on the timescale. That's why it's not always suitable to judge only by statistics.
 
the percentage of winners doesn't determine whether you make money
you can make money with a 30% win rate, and lose with a 70% win rate. Its how much you win when you do win compared to how much you lose when you do lose. otherwise known as the win:loss ratio
I'm sure you know this already though. your trading edge is having a higher win:loss ratio than 1:1
 
Some great points so far ........as someone has mentioned already the real edge of trading is you have the ability to run your profits ........unlike most fixed odd gambling events where your return is preordained........even a horse race has odds set before the race starts

However in trading a skillful trader can extract maximum returns from each trade and this is where the money is made...... run your profits is a much quoted phrase but it’s true .....

N
 
Gambling can kill you, I never see anyone be killed by Forex. Maybe we can get many reasons for that but Forex doesn't get you more attracted but gambling does.
 
Hate to be disparaging about any trading as it's hard enough as outsiders. However unless your wins make at least 3 times as much as your losses you have no edge. I have heard some people trade on fundamentals on forex-how the hell that works is anyone's guess. Nobody can know much about the fundamentals unless they are in government. We hear there is much insider trading based on the Trump tariffs and FOMC meetings -allegedly... Either way to day trade forex on some flashy website is the road to ruin
 
Windlesham1 said:
Hate to be disparaging about any trading as it's hard enough as outsiders. However unless your wins make at least 3 times as much as your losses you have no edge. I have heard some people trade on fundamentals on forex-how the hell that works is anyone's guess. Nobody can know much about the fundamentals unless they are in government. We hear there is much insider trading based on the Trump tariffs and FOMC meetings -allegedly... Either way to day trade forex on some flashy website is the road to ruin
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I think it would be very helpful if you would expand on your view and what this is based on and add some context. I.e
FX is rubbish because....,
Indices are less rubbish (but still rubbish) because...,
Directional trading is rubbish because...
The only sensible way to trade is X because....
(and maybe even) The only way to trade is X and this is how I do it...:)
 
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