Trading vs Gambling
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  1. #1
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    Trading vs Gambling

    Hi traders! I’ve seen a thread here, on the forum «Is Forex trading gambling?». I’ve decided to reflect on this point a bit and to express my point of view.

    About 1.5 years ago I’ve been in Las Vegas and seen all those casinos with flashing lights, shows and magnificence. I asked myself – how in the world could they build all this in the heart of the Mojave desert?
    What «business model» casino (whether it’s traditional gambling house or online casino) does employ? There is a thing called «house advantage». It means that casino has the right to limit ceiling of gains in one single gambling attempt, thanks for limited stake in dollars. One simply can not bet 1 million dollars for a single stake (and, say, win 36 million). Every stake is calculated so that gains of one single player can’t affect house (casino) much.
    To extract money from casino, you should get series of consecutive wins, otherwise house advantage will lead to migration of money from your pocket to pocket of casino holders. I remember one joke, when man asks: «Is my money lost?», and he gets answer: «No, they just have changed their owner».

    That’s what casinos do. They allow you to earn limited amount of money in every stake while probability of winning event is pretty low for every player.

    What about trading the market? Is it similar to what casinos do? First of all, trader defines cost of a stake himself. That’s a very serious difference between trading and casino. It’s you who decide in trading – to bet 10 USD or 100 USD for the single «stake». Then, in trading outcome is never defined unless you’ve closed your position. Probabilities change as new data comes to the market. If you are in position, you may close it to breakeven, close it with the small profit, close it with large profit, close it with a loss, and yes – you can lose more than you intended to do. Trader has much more choices and can actually manage probabilities while gambler deals with chances, defined before the game – chances can’t change while roulette is rotating.

    Trader can decide to have probabilities on his side. Even if his analysis is not too good, he nevertheless can manage risks, keeping losses small and gains big. By the way, low risk doesn’t mean always small loss in a trade, low risk also mean that you can have good chance of being right rather than being wrong.

    What about this?

    Trader can have higher odds of success because of his analysis. Well, some people think that they can have perfect analysis and be right in 90% outcomes. That is not proven statistically. Research and experience show that 60% of profitable outcomes is a very high rate. Many professional traders are ok with having just 50% of profitable trades (yet, it doesn’t mean that they lose much in other 50% of trades, losses can be reduced or they may even get zero profit/loss). But it's the fact that trader CAN increase odds of success with his analysis, that’s why analysis is worth doing. Gambler doesn’t have this advantage except card counters in poker (they are very rare and casino owners know most of them :) )

    So, as you see trader can have huge advantage in a long run while gambler is destined to failure – otherwise we couldn’t see those hotels, shows, Broadway stars and free cocktails.

    Yet, gambling in small portions can be fun. While being in Vegas, I came to hall of the hotel and lost a few dollars in a slot machine. As a trader I always have to think about the risk, deal with discomfort and manage my emotions. Slot machine was pure fun and I was agree to pay 10 dollars for that.

    Share you experience and ideas on this topic!

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    Last edited by Value trader; 02-23-2014 at 06:01 PM.

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    Glad to see your wise discussion about trading vs gambling. Forex cannot be considered with gambling because gambling can be done with less knowledge, but forex trade is completely skill and knowledge based trading. Even, forex market is the best trading market where various level of traders are trading and with honor and dignity. Of course, we can not do gambling with honor.

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    to work with the better support with the technical preference that the work comes with the better to lift with the custom of qualification to recalls of number and the distincts of initials to use further with the evaluation of returns with the improvesment by the development of the system.

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    forex trading is a pure business, and all depend to us where only depend to knowledge and ability, but the problem comes up when the trader do trading with bet, guess or predict for the market price or also was caused by lack of knowledge then they have already changed this business into a field of gambling, i see there is thinner limitation between both of them
    and of course we can see that a real trader will stay for longer time and make it profitable if we compare it with them who do gambling and just wait for luck factor

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    I totally agree with you on the misconception that most individual have that forex trade is like gamble, although some traders are gamblers while some are experts . The bottom line here is that your trading career can either be based on proper plan and well grounded knowledge on price action which leads to long term success or it can be based on assumptions which in other words can be also referred to as gambling

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    Many people do gambling in forex and try to make money in this business but I think gambling is not good for our success in forex I am still learning this business and will never do a gambling in forex because for a new trader learning is better than earning in forex and I just like to trade with good learning in forex

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    True.I think the difference between them is that forex is not depend on luck.And i think we should not depend on our luck.because luck can not help us in Forex business to makes profit.Sometime we can makes profit for our luck.but huge time we loss our money.To makes profit from Forex business must be need good skills.Because only good skills can help us to makes profit.so we need to avoid to depend on only our luck.

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    yes toenjoy the delivery of values with the good covers of the good system by the fulfillment of the past compliance with the entry. to arrange with the good helps of the choice with the strategics to approach more of challange to request the better of the difference by the submission. that different rader manages the use of the different customs with the profiles with the casuals.

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    Forex is similar to gambling as both deal with money and you do not need to put in much effort to earn profit from both and both are risky. The only difference is that Forex is legal and widely accepted by various countries and if you lose, you only lose the money you have invested and you need not withdraw more money from your bank or deal with your household assets.

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    gambling i guess there ara also ebook author to sells the technicals of the poker games playing to define the best of the custom with the logics to add of the good request with the submission of calling the best of the challange to complete the aims with the good projection.

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