Trader or Gambler?

I see quite often in posts something along the lines of "That is just gambling!"
Well, what are we, Traders or Gamblers?
The definition of gambling - "to bet on an uncertain outcome"
So the answer to the question is that all traders fit into the "Gambler" bracket. There is no such thing as a surefire winner in trading, horse racing, poker or sports.
When you bet on a horserace, the bookmaker sets the odds so that he is almost certain to pocket between 20 and 50% of the total different bets by the punters. Professional gamblers in horseracing will usually have inside knowledge and that gives them an edge.
The professional poker player will know instinctively what the odds are of him improving his hand and taking the pot against an idiot gambler that typically goes all in with a pair of Aces. This person has done his homework and studied, has a very good knowledge of the odds and that is his edge.
A lot of people who bet on sports bet with emotions, maybe just because their favourite team is playing.
I used to fish National team fishing competitions in the UK and I was amazed at the way nearly everybody who took part would line up at the bookmaker to hand over their money to bet on themselves and their team. It was quite obvious to me that the bookmaker would be returning less than 20% of the money staked to the winners. These people were trading with their emotions and hope. Realistically, they knew that they had very little chance of winning, but would bet at 100:1 when they must have known that their real chance was 1000:1. These people had no edge at all because they were up against the best in the field, but still they bet/traded with hope despite the odds being massively against them.

When we think of "Gamblers", we often classify them as those that place ridiculous bets in the hope of regaining losses.
Those that get angry when they lose more than they can afford and then scrape together some money to put a bet on bigger than their normal stake in order to get their "revenge" on the bookie.

The truth is that all traders are gamblers, it's just that the better traders are trading with an edge
Just as good poker players are gamblers, but they are also playing with an edge.
The good poker players have obtained their edge through a good knowledge of probabilities. They don't expect to win every hand, just know that they will come out on top in the end.
How many really good poker players signed up to an online poker course that cost $99 and guaranteed them success?
How many poker players that have yet again assured their wives that they have found the perfect system time an time again only to find themselves divorced, alone and living in a hovel. Scraping the stake to get into the next game totally consuming their lives.

The best poker players are the best because of their experience and their effort in learning about probabilities.
That takes effort and commitment. The best poker players are better traders than the average forex trader because they know and understand their craft.

What about the snooker and pool hall hustlers? They're real lowlifes aren't they.
They know that they are a better player than most and get them sucked into betting even money on themselves. The hustler will let you win a little and then bring out their skill. You get annoyed when you lose and will often bet bigger in a "revenge trade" thinking that you will win your money back.
The fact is that these pool hall hustlers are very good at what they do because they have put in hundreds or thousands of hours practicing.
The market is a hustler and will let you win a little bit and when you lose, you get angry, lose all common sense and the market takes back all your winnings and then some.
You lose to the hustlers because you think that you are a superior player and then find out the truth at your cost.

The funny thing is that most of us traders are not so different to the pool hall hustlers. For us to win, somebody else has to lose.
When you have a winning trade do you really care about the other trader that has lost?
No you don't, you don't even think about it.

The truth is that all traders are gamblers, but they prefer a more respectable name.
The only gamblers that win are those that put in the effort to become good at what they do.
Emotions have no place in the life of the succesfull gambler, the only thing that he is interested in is probabilities and likely reward when compared to risk.
A succesfull gambler will not have become so because of signing up to a $99 internet course.
A successful gambler will not be successful because somebody else tells him how to be successful.
A successful gambler is successful because he understands the probabilities of when he is likely to win or lose
A successful trader accepts responsibility for his losses and will learn from them.

very good post. I agree

in essence, poker and trading are the same. you place a mathematically sound bet on an uncertain outcome which has a certain probability of happening

There's a massive difference between playing a slot machine and playing poker. Slot machines are solitary and the house is who wins. In poker, the house only takes rake from each hand, but they aren't not in the game. You play against other opponents. This makes poker a skilled game and not gambling. There is a little math involved, but the real skills comes from game theory and learning about your opponents. You can't learn about your opponents on a slot machine, because the insert coin slot is the opponent.

When you place a trade, you are actively trying to transfer equity from one stack to another. When you bet on a hand in poker, you are actively trying to transfer equity from one stack to another. There's no jackpot in trading, no triple 7s, nothing of the sort.

The market is not a casino. Its a massive exchange. Every transaction which happened between countries and market participants(comprises of multinational companies and banks etc) The liquidity is like the ocean compred to swimming pool if you compare it to the stock market. So when import and export happens its going to affect the market. Us retail traders might be trading with a 'casino' broker but the banks are trading this for real. They are moving billions per day.

Yes like you have said there is a fine line between gambling and trading but not all traders are gamblers!! most of the successful one does not visit this forum/doesn't reveal themselves to the public and usually these successful traders are like an institution. They trade via a prime broker as they need the liquidity it provided.

But if you do not know what you are doing or are suffering major losses then you simply are not 'fit' enough to trade in the market. If you do not know what you are doing then yes you are gambling. My advise for newbies either stop trading or start educating yourself. I myself read hundreds of trading books and articles. I have tested thousands of indicators and systems. I have had ah-ha moments/epiphany almost 20 times, yet after a week or so i realised it was not real. I have failed so many times.

I had friends telling they want to do what i do(trading) and i advise them not to simply because there are just so many things to be sacrificed. I spent about 2 years and a half of my life. Its about 18 hours per day to study the market, do research and read stuff. If i were to compare studying in the university and learning to trade i would say its 100 times harder because the there are no specific materials out there. You need scour through everything to find a needle in the haystack, a diamond in the rough.

You need to persevere through the thousands of hours needed to study the charts. Once you have done your thousands of hours studying the chart you will see what others would never see. Dicsipline in managing risk is ultra important if you are planning on doing it for some years.

My advise is for most to stop trading but a real trader won't stop. I know that because right now i can say i am a trader. In 6 years god willing i will be one of the most successful trader ever.

I strongly believe that Dickson G. Watts has already given us the answer in his "Speculation as a fine art and thoughts on life":

"Speculation is a venture based upon calculation."

"Gambling is a venture without calculation."

Best wishes

Ubik

My advise is for most to stop trading but a
real trader won't stop. I know that because
right now i can say i am a trader. In 6 years
god willing i will be one of the most
successful trader ever.




I don't want to doubt that ... but when you decrease your risk.

You are a trader when you win
You are a gambler when you lose

When you trade technically with (x) period, it's a probability game. When you trade fundamentally with (y) period, it's an investment or a speculating game.

Personally, what i think that set a trader and a gambler apart, is the odds(R/R or M/M), because as a trader, your profit or loss varies under different strategy, system, etc, controllable by yourself instead of a casino which set their own odds.

I wholeheartedly agree with you. It seems that on this forum people have a hang-up about the word gambler though.

The word trader gets thrown around this forum a lot like it's something special in this world. It's not. I have far more admiration for someone that is running a successful business with employees than someone who sits at home in their pyjamas pushing a few keys on their keyboard.

I'd bet (pun intended) that if they meet new people and are asked "So what do you do for a living?" most people will say they're traders.

no matter you are gambler about your trading or not provided that can make money
like you can make money of any job
as long as it does not deceive people or do evil
is good
and use the money wisely
for families and other goodness

salaam

I want to fix something with this:

When I said that the house doesn't play the games it hosts in poker, I'm actually wrong. I've been to plenty of home games where the guy hosting is playing. Silly me.

However, this is something to note, because if the house is playing, they will always have the button. (not in the real poker sense, but in trading.) When I place a trade, all I know is my position. I don't know where I'm at concerning the informed positions, but I'm aiming to be as close to the button as I can. I don't know who I'm sitting by, but the only position other than mine that I know of is the buttons. Even then, while I may know their positions, I don't know their sentiment and if they will even be playing whatever cards they get.

My broker knows all the trades that are being placed with them, so they have the most information out of the players in their game. This is not like blackjack, where the players have an -EV no matter what, and the house has a +EV no matter what. I can have a +EV just like the button, however, they will always have be +EV.

Even in online poker, when a player makes a bet, even if it's a machine, there will be tells. (bots are becoming more advanced are more a nuisance in the online poker world, however, if you can spot the bot and know what bot it is, then that's information the bot doesn't have.) So, when my broker starts actively betting, their actions will be reflected in the charts. I've just got to find their reflection amongst who knows how many other reflections.

Another way of looking at it is instead of a home game, it's a multi-cash table game set up in tournament style. (Where you start off with low stakes and only when you have enough money, can you move up. However, there's no first place, as it's a cash game.) Now, what this does is change the dynamics of the brokers because they will now be competing with each other. The more players at their table, the more rake. They also want to make sure there's a good ratio of sharks to fish.

Love it

I can't agree more.

You even forgot chips and beers

trader = trading system + discipline

gambler = no system, no discipline

You are wrong. If you compare professional traders and professional casino players, they both have system and discipline.

IMHO - professional player in casino is not gambler. He has system and discipline. He is counting with numbers history, with probability.... He works.

Gambler - only try fortune. Gamblers are in cassino but also in trading.

Of course that the professional casino player is a gambler. All activities done in a casino is gambling ...

The only difference is that one (the professional) is gambling intelligently while the other one is gambling only for fun.

While managing a business with employees is far different than managing money, who's to say running a successful business is a luck of the draw?

http://www.nytimes.com/2012/08/25/op...kill.html?_r=0


Even federal judges consider poker to be skilled.

You have to play the players and not the cards.

I find it quite comical that there is even a debate about whether trading is gambling, of course it is, end of story. The real question people need to be asking themselves is how can I do it professionally and how do I increase the odds in my favor so that I make money over the long haul.



The last I checked everything in life is a gamble and the only two certainties are death and taxes.