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Gambler or Speculator?

  • #21
  • Feb 11, 2009 9:39pm Feb 11, 2009 9:39pm
Quoting Leonlorenzo
It seems ive confused people by going off on a tangent. Im not debating anything, just rambling about different things regarding trading.

I originaly posted the extract from T&E to make people think a little, and as a talking point.

The posts that you quoted are working on the assumption that FOREX is a speculative market untill a large order comes In from a business and disrupts the speculators. But couldnt it also be possible that 90% of what we see is exactly that, business transactions that had to be made regardless of what was happening...
The only confusion I entail is the point of dissecting the Gambler or Speculator question. How is this going to make us better traders?

Yes, it could be 90% regardless of what the charts/fundies say. How you'd find out the exact figure I don't know.

And no, the quotes are not working on the assumption that it's speculative until a large order comes in. It's indicating to us just what forex actually is based from - one currency being exchanged for another and the one of millions of ways it can be transacted.
  • #22
  • Feb 11, 2009 9:48pm Feb 11, 2009 9:48pm
People have already addressed this in the thread.

Everything in life is a gamble.

You gamble with your own life when you walk out your front door and cross the street. Chances of being run over are 1 in a million (exact figures I don't know), so does that stop you from ever leaving your home?
  • #23
  • Edited 10:51pm Feb 11, 2009 10:05pm | Edited 10:51pm
The only confusion I entail is the point of dissecting the Gambler or Speculator question. How is this going to make us better traders?

I did not dissect anything, I presented the extract and then left that point alone. There is a difference between the two types of trader.

Yes, it could be 90% regardless of what the charts/fundies say. How you'd find out the exact figure I don't know.

It's indicating to us just what forex actually is based from - one currency being exchanged for another and the one of millions of ways it can be transacted.

If that is all that the quotes are saying then there was little need in posting them here. Im sure we all know that.
________________________________________________________________________________________________________________

Some people here make trades based on the assumption that the market prices move in a predictable rythem untill a large order comes in that sends the price in the opposite direction, IE- A random event that disrupts this rythem. For price moves to be predictable then they would have to be made by speculation.
If price movements are non-speculative in majority then the Intraday trends we see are random events all lining up to push price in thesame direction.

Now, the important part is the difference between non-speculative and speculative trading. Most on this forum try to predict price moves by using technical analysis, for eg. Breakouts, All these things depend on psycology, trying to determine what traders will do next and trading before they do.

Simply put, Psychology, and therefore charting bare's no weight in Forex IF it is not a speculative market.

Did anyone follow that above? I hope I put across my thoughts clearly. Lol.
Living the adventure in my head.
  • #24
  • Feb 11, 2009 10:26pm Feb 11, 2009 10:26pm
There seems to be some confusion about gambling and risk. In life there are risks all the time: walking accross the street, leaving your garage open, whatever. I do not consider this gambling. Trading is no different. When you trade you always take on a risk, even if you profit.

When you gamble, you take on the same risks but do not profit from it. That is why Larry Harris says that some traders think they are speculators but because they lose money and do not recognize it they are gamblers. A pure gambler is a utilitarian trader, meaning his profit is not based on his performance in the market. Instead the gambler derives pleasure from trading, and therefore profits from pleasure even if he loses some money.

Savvy?

Edit: Psychology in trading as regards to technical levels and such is a whole nother topic altogether. I may touch on that in a later time.
Headline: USD drops due to news of USD dropping!
  • #25
  • Feb 11, 2009 10:58pm Feb 11, 2009 10:58pm
Quoting NuckingFuts

You gamble with your own life when you walk out your front door and cross the street. Chances of being run over are 1 in a million (exact figures I don't know
Ha!

You dont know the old woman that drives a beatle who lives on our street, were on our 3rd cat now...... and the other 2 had all 9 lives left when we got them.

Leon
Living the adventure in my head.
  • #26
  • Feb 11, 2009 11:20pm Feb 11, 2009 11:20pm
Quoting Gaston
There seems to be some confusion about gambling and risk.
From the Oxford dictionary:

Gamble:
1) Play games of chance for money stake
2) Risk much for great gain
3) Risky undertaking

So my analogy of the "Risk undertaking" by crossing the street, is still in-fact a form of gambling. According to Mr. Oxford at least.

That said, I still agree with you and with what Larry is trying to point out that there are two types of traders.

Someone has already mentioned that it is the pathway to becoming a trader/pro/expert, and I agree to an extent.

You essentially start as a gambler (very little to no knowledge), move onto speculation (acquired some knowledge) and then (maybe) achieve trader status (expert/pro).
  • #27
  • Feb 11, 2009 11:38pm Feb 11, 2009 11:38pm
J Pual Getty


Gambling is taking uncalculated risk, Business is taking calculated risk
  • #28
  • Feb 12, 2009 7:03pm Feb 12, 2009 7:03pm
Quoting Gaston

Edit: Psychology in trading as regards to technical levels and such is a whole nother topic altogether. I may touch on that in a later time.
I sure hope you do. Would love to hear(?) your thoughts.
Living the adventure in my head.
  • #29
  • Feb 12, 2009 8:02pm Feb 12, 2009 8:02pm
To qualify as 'not gambling' you need to have adequate information and the outcome must at least be correct more than 3/4 of the time.
In forex, there are too many influenting factors, eg DJI, Fed that would move the forex markets significantly. People fail to even predict the the above influenting factors, and yet some claim to be able to predict forex which is actually a composite of all influenting factors combined (cental banks, GDP, interest rates, stocks, sentiment, people's spending ...the list goes on)

In all trading 'systems', the strong emphasis on money management that talks about risk:reward ratios and probabilities, points to gambling systems.
Adaptive autotrading is the future...
  • #30
  • Feb 14, 2009 10:58am Feb 14, 2009 10:58am
Some Info that Birdt posted in another thread........

"Speculative Positions Vs. Commercial Transactions In the global foreign exchange market, speculative positions outnumber commercial foreign exchange transactions, which arise due to trade or capital flows, by a huge margin, although the exact extent is difficult to quantify." http://www.investopedia.com/articles...ncy-market.asp "Some estimates indicate that as much as 95% of foreign exchange transactions are speculative." IFSL Reseach - Foreign Exchange 2007 "Hedge funds as speculators About 70% to 90% of the foreign exchange transactions are speculative." http://en.wikipedia.org/wiki/Foreign_exchange_market
Living the adventure in my head.
  • #31
  • Mar 31, 2009 10:24pm Mar 31, 2009 10:24pm
Quoting Gaston

Edit: Psychology in trading as regards to technical levels and such is a whole nother topic altogether. I may touch on that in a later time.
Just bumping this thread so that Gaston can continue with this If he wishes. Im very interested to hear what he has to say on the subject.
Living the adventure in my head.
  • #32
  • Mar 31, 2009 10:43pm Mar 31, 2009 10:43pm
Something that would be Interesting to know is the % (money-wise) of Forex trading Individuals or Entities that use TA asthe pillar for their trading, sadly there is no way to know or prove opinions. If this % was reasonably high then I can see there being a use in thinking about the psychology of price moves, ie, trendline breaks, fib bouces ect.

Although psychology is usefull regardless of how you trade in a way.

'Psychology of the move' is like saying 'reason for the move', and I think when creating a method you need to create a scenario in your mind(psychology of a move/cause and affect) around some Information you class as 'valid' or 'usefull' and then prove yourself rite or wrong.

Just thinking out-loud here.

Leon
Living the adventure in my head.
  • #33
  • Last Post: Mar 31, 2009 11:03pm Mar 31, 2009 11:03pm
hi...

Watched this show on TV the other day....was very intertesting...

About a new science " ‘behavioural economics’

is now showing that hormones like testosterone and cortisol may be causing supposedly rational traders to make irrational decisions.


http://www.abc.net.au/catalyst/stories/2525497.htm
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