Trading vs Gambling has been the most debatable topic among stock market enthusiasts around the globe. Have you ever wondered Trading and Gambling are one and the same? Do you really think that traders are gambling their hard earned money on few random tickers? Then, join me for a small fact-finding tour to explore more on this subject.
As a matter of fact, Gambling is a pure speculation where odds are not in your favor. No wonder, at the end of the day, Casinos do have a last laugh since the adage goes that the house never loses. Although there is no denying the fact that a few mathematicians have been successful in beating the casinos at their own game by calculating the probability and playing in a way that odds are in their favor. A case too prove the point: A gentleman, Don Johnson, recently made a whopping 15 million dollars and is known to be one among the best professional gamblers in recent times. On a lighter note, Gambling is said to be a sure way of getting nothing from something!
So wondering what Trading is all about..? Trading is all together a different ball game. Though there are similarities like both of them does get you the high adrenaline rush flowing. It is just like the sea and the sky, which appears to meet from long distance yet it doesn’t!
Trading is simple math and common sense, a person with the combination of both skills would definitely mint money sooner or later. Yes, there is no denying the fact that there is risk involved. Yet in this business, even if you are right only 40% of time can make you a very successful trader! Of course, you need to know the risk management techniques, trading strategies and the most important when to jump on markets, like a famish tiger jumps on its prey.
Trading vs Gambling: How they differ?
Speculating, just for the heck of it, without any specific trading strategy and analysis is a gambler’s trait whereas speculating after the analysis done, valid information received and the trading strategy put in place is a Trader’s trait. Do not speculate when odds are not in your favor, do it when there is high probability of winning. Yes, It’s a Traders way!
Rules & Discipline
Just like any business growth and profitability is dependent on rules and discipline, so trading is no different. It boils down to a number of fixed rules that govern how you conduct your business. The volatility and unpredictable behavior of the markets have the potential to make the sane person go insane within a short period of time. Hence, it is very crucial to abide by the rules and be disciplined.
Gambling, on the other hand, is finding yourself abandoning rules in order to place random bets in the market, than you are in trouble. This is a clear sign that you are no longer concerned with establishing a rationale for your trades and have instead opted for the ability to just place trades whenever and wherever you want.
Hope I drove home my point to convey the subtle yet thin difference in Trading vs Gambling. Now it’s up to you, the informed mind, to judge and decide which is your pick and on which you would like to lay your hands on and have your plate full.
Game is on!
Shoaib is a Software Engineer with 3 years of experience in the IT industry. He is extremely passionate towards Capital Markets and has experience in trading derivatives both options and futures since 2 years. Certified in Advance Equity Research Analyst Certification by NSE and NISM 8 Equity Derivatives.