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Trader or Gambler?

  • #81
  • Oct 25, 2013 6:48am Oct 25, 2013 6:48am
Quoting Mingary
{quote} Let's say you are a lawer. You have a big case you have to plead tomorrow. Tonight it's your girlfriend's / wife's birthday and she wnats to party. You go out all night and get drunk and get no sleep. The next day, you lose the case. You tell your client he had a weak case anyway and find some other \\"legitimate\\" excuses. You still get your money. Let's say you trade the forex. You blow your account. Now call your broker and find an excuse to get your money back.

2 assumptions here:

1. You go out all night and get drunk and get no sleep. The next day, you lose the case

2. you trade the forex. You blow your account

Both assume you aren't taking what you do very seriously. Could quite easily turn both of these on their heads and say:

1. You choose not to spend the night before a big important work day getting drunk - win the case and get a bonus as a result. This is a conscious choice you make.

2. You trade forex with a plan and edge and make a steady return with sensible MM after learning and practising on demo and saving enough to fund an adequately capitalised account. This is also a conscious choice.

Either way you can choose to blow up your account, or your big case, or job interview or [insert something important here]. Or you can choose to make a go of it and do whatever it takes to make it work for you

We are all where we are as a result of our choices. If you choose failure then good luck with it..
Anything can happen.
  • #82
  • Oct 25, 2013 6:58am Oct 25, 2013 6:58am
Trading is gambling, there is no question about that. You risk capital and have absolutely no guarantee of a return.

There is a "but", though. It's a gamble where you can have a great deal of control over the size of the gain or the size of the loss. That skill comes from having a good handle on typical price movement and what the likely next outcome is. You do not retain this control is a casino, once the roulette wheel starts spinning, your job is done and you have to wait for one of two outcomes.

That ability to manage the trade and manage the outcome is a great skill and makes trading a very different type of gambling to the others. I'm also of the school who believes you can predict future price movement with a very accurate degree of reliability, when you've had sufficient exposure and experience. It's less about recognising patterns and more about being able to see/feel/understand the momentum, to understand who has current command of the market. We all accept that there is no dead cert trades but I do believe that your accuracy can reach the mid or even high 90% figures. With that sort of ability, trading still remains a gamble but one with a very highly probable outcome. It could be argued that this isn't vastly different from a merchant who bulk buys goods from China. He knows he only need to flog 80% to make a profit and past data tells him this is likely. He'd be willing to not sell the remaining 20% if it came to that, he's willing to speculate to accumulate.

Typical gambling is usually - from what I understand - more about tilting the odds everso slightly in your favour, enough to be able to make consistent small gains over an extended period of time. I don't know of any gamblers who are able to call 90+% winners.

Trading gives you a great deal more hints as to what the next available outcome is going to be than any other form of gambling. I've never placed a bet that i've been very confident of the outcome of, i've places many trades that I know are highly unlikely not to deliver at least some profit.
  • #83
  • Oct 25, 2013 7:10am Oct 25, 2013 7:10am
Apologies to Gumrai, as I think this whole gambler vs. trader discussion may ultimately be pointless, because it may break down to semantics. Some people may use these words as synonyms, some people may use them as antonyms. Then, the context in which the words are being used may also change their meaning.

For instance, I most often use the terms gambler and trader as antonyms. I use the term gambler referring to those who bet way too much on a single trade as if they were 100% certain on the outcome of that particular trade. So for me the term gambler has negative connotations: a gambler is someone who is irresponsible, reckless, doesn't understand money management, who will blow the account sooner or later, who lacks common sense, doesn't accept the possibility of being wrong, etc.

Another person may use the terms as synonyms, interchangeably, based on the fact that both traders and gamblers make bets based on probabilities.

Who is making a proper use of the words trader and gambler, me or the other person? Could it be that we both are? And if not, does it really matter who's making a more proper use of the words? As long as the words succeed in carrying their intended idea from speaker to listener, I think both are OK.

Communication is key (always wanted to say that)
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #84
  • Oct 25, 2013 7:10am Oct 25, 2013 7:10am
Quoting ForexFury
You need to risk your capital to make any kind of gains. Forex is also a random walk which means it's luck that determines if you hit your TP or SL. Sounds a lot like a gambler to me.
every single part of our lives are a constant stream of calculated risks,from what foods we eat to the type of wife we take.this term gamble is a negative notion which will only subconsciously have a negative effect on your trading.when your wife asks you to make love on an unexpected night do you think bloody hell this is a gamble,what does she want !or do you enjoy this unexpected event and deal with the paper work afterwards.

of coarse its gambling ,but i would rather use the term calculated risk.the same as is every decision we make in life.

if you were trading for barclays bank would you call yourself a gambler when asked.no you would call yourself a risk annalist,or a floor trader,unless you were very honest and told the truth that your a legitimate conman.

as for the random walk,yes price is a random walk as it finds its way to attraction points ,places were customers are prepared to transact at what they consider fair value . if you can establish more often than not were those orders are,that would seem to me to be calculated risk,the term gamble dosnt quite fit,you see its all about perspective
  • #85
  • Oct 25, 2013 7:16am Oct 25, 2013 7:16am
Quoting Trotty
There is a \"but\", though. It's a gamble where you can have a great deal of control over the size of the gain or the size of the loss. That skill comes from having a good handle on typical price movement and what the likely next outcome is. You do not retain this control is a casino, once the roulette wheel starts spinning, your job is done and you have to wait for one of two outcomes.
  • #86
  • Oct 25, 2013 7:36am Oct 25, 2013 7:36am
I wonder if the word actuary can be applied here in any sense?

Quote
An actuary is a business professional who deals with the financial impact of risk and uncertainty. Actuaries provide expert assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms

I know it's an insurance term, but does it have any relevance to trading (gambling)?
Anything can happen.
  • #87
  • Oct 25, 2013 7:40am Oct 25, 2013 7:40am
Quoting Trotty
Typical gambling is usually - from what I understand - more about tilting the odds everso slightly in your favour, enough to be able to make consistent small gains over an extended period of time.
I can't emphasize the importance of this more. I learned so much about money management from the strategy of blackjack card counting.
  • #88
  • Oct 25, 2013 8:04am Oct 25, 2013 8:04am
Quoting ddinnov
{quote} 2 assumptions here: 1. You go out all night and get drunk and get no sleep. The next day, you lose the case 2. you trade the forex. You blow your account Both assume you aren't taking what you do very seriously. Could quite easily turn both of these on their heads and say: 1. You choose not to spend the night before a big important work day getting drunk - win the case and get a bonus as a result. This is a conscious choice you make. 2. You trade forex with a plan and edge and make a steady return with sensible MM after learning and practising...
Obviously forex traders don't live in the real world...
  • #89
  • Oct 25, 2013 8:05am Oct 25, 2013 8:05am
Quoting Mingary
{quote} Obviously forex traders don't live in the real world...
Meaning
So sorry for always replying late! But I got 2 Jobs!!
  • #90
  • Oct 25, 2013 8:09am Oct 25, 2013 8:09am
Quoting Muhammad Ezz
{quote} Meaning
I wouldn't bother - I shouldn't have either.

No more internet drama for me this week, and hopefully next week - and the one after...

In fact new trading rule for me - "Do NOT engage internet drama queens or become one yourself"
Anything can happen.
  • #91
  • Oct 25, 2013 8:15am Oct 25, 2013 8:15am
Quoting ddinnov
{quote} I wouldn't bother - I shouldn't have either. No more internet drama for me this week, and hopefully next week - and the one after... In fact new trading rule for me - \"Do NOT engage internet drama queens or become one yourself\"
Don't mind me.
I dwell where the rubber meets the road (:
  • #92
  • Oct 25, 2013 8:17am Oct 25, 2013 8:17am
Quoting ddinnov
{quote} I wouldn't bother - I shouldn't have either. No more internet drama for me this week, and hopefully next week - and the one after... In fact new trading rule for me - \"Do NOT engage internet drama queens or become one yourself\"
I don't see this as a drama, we're having fun I assumed
So sorry for always replying late! But I got 2 Jobs!!
  • #93
  • Oct 25, 2013 8:56am Oct 25, 2013 8:56am
Quoting Mingary
{quote} Don't mind me. I dwell where the rubber meets the road (:
As long as it's not where the shit hits the fan
Anything can happen.
  • #94
  • Oct 25, 2013 9:39am Oct 25, 2013 9:39am
Quoting ddinnov
{quote} As long as it's not where the shit hits the fan
Indeed (:
  • #95
  • Oct 25, 2013 10:24am Oct 25, 2013 10:24am
Dear All,

I'm very new to trading and I have only about a year experience in trading. I'm here to share my perspective on this topic.
i believed that trading is not gambling and this has very much related to my current job(Business Analyst). Very often I have
to generate forecast such as Sales forecast, Market shares forecast and Economic forecast. The purposes of doing so is to
have some insight or speculation before the actual figures are released. I believed this is a very successful systems as ALL companies
somehow generate/forecast to plan their business strategy.

Likewise as a trader I did my analysis be it Technical or Fundamental analysis where I will look back at historical data to GAUGE
a probable outcome. Hence if traders who did in-dept analysis are considered a gambler then MNC all over world are the biggest
gamblers. How many statistical report have you ever read that provide insights that were no where near the final results. Do we call
this a gambling ? Are Business Analyst a gambler too ?

I believed that the ultimate answer on whether trading fall under gambling is subjected to the individual trader. It will depend on
that trader's personality, objective, Risk level and rationality. I met individuals who wanted to start trading and their goal is to earn
as much as possible. They came with a hope and such hope are generated by various brokers that advertise the high return rate.
I'm surprised to met interested personnel who knew nuts about forex and willing to give a try. However, what really disgust me is that
they are reluctant to learn anything yet expect high return without doing analysis. They are often reckless in trading and ignore all
trading guideline. They place large size position and did no trade management.

To me this group of people are gambler as they put little effort and expect high return in short span of time. i believed many of us heard stories of
how individuals blew out their account but what the moral behind the story ? I myself believed that the word is DISCIPLINE.
I'm part-time trader and everyday i did my analysis before placing my entry and trust me where I say analysis I did my best before deciding to enter a trade
be it technical or fundamental research and the last thing I want is to be labelled as a Gambler. I have friends who are real gambler and we went casino once in a while and the different between us is again discipline. For me Gambling is so much easier as analysis are far lesser than trading requires. Gambling require lesser brain power in decision making. I know some people will start to quote me that Poker such as BJ or Texas requires far more effort. But there are still so many different type of gambling games that purely required little thinking effort expect placing bet relying on luck.

To sum up, whether trading equal gambling is very subjective and it mainly depend on the individual trader. These are my perspective and
I'm not saying that I'm definitely right but to share my view on trading.

Thank You
  • #96
  • Oct 25, 2013 10:37am Oct 25, 2013 10:37am
Quoting ForexFury
You need to risk your capital to make any kind of gains. Forex is also a random walk which means it's luck that determines if you hit your TP or SL. Sounds a lot like a gambler to me.

Anything in the world requires you to to risk your capital

Get a job= u need to first get Cert/degree , buy shirts and pants and travel fee.
Get a GF = dating = Time effort, movie and dinner
Get Married = Get a house, thinking effort and Saving

Everything in Life requires you use your capital in order to gain the return and all those
above all Gambling in Life if it is. Then I see trading as a daily routine task then.
  • #97
  • Oct 25, 2013 11:56am Oct 25, 2013 11:56am
Quoting Mingary
{quote} Do you take it seriously, like it's a \"business\", or \"the most important thing you have ever done\", or \"if I work hard at it, I will be a forex millionaire\" ?
I take it as a game.

and btw blowing an account should be normal from time to time. having a few $100 in the account won't ruin our day specially if blown after all the profits done.

if you have more than a few $100 perhaps you don't use the leverage they offer.

Sorry Gumrai!
  • #98
  • Oct 26, 2013 7:01pm Oct 26, 2013 7:01pm
Quoting diceman555
{quote} every single part of our lives are a constant stream of calculated risks,from what foods we eat to the type of wife we take.this term gamble is a negative notion which will only subconsciously have a negative effect on your trading.when your wife asks you to make love on an unexpected night do you think bloody hell this is a gamble,what does she want !or do you enjoy this unexpected event and deal with the paper work afterwards. of coarse its gambling ,but i would rather use the term calculated risk.the same as is every decision we make...
diceman555,

I agree and like your perspective. Gambling has a negative connotation probably due to the fact that people who go to casinos and blow their life savings are termed "gamblers". In the finance industry, these people who "gamble" are termed speculators; a more political correct word.

But I agree with you. It is indeed a calculated risk. Like you say everything is a calculated risk; or at least we'd like it to be.

Good luck.
Remember, Red. Hope is a good thing, maybe the best of things...
  • #99
  • Oct 26, 2013 7:07pm Oct 26, 2013 7:07pm
Quoting LinusFX
{quote} Anything in the world requires you to to risk your capital Get a job= u need to first get Cert/degree , buy shirts and pants and travel fee. Get a GF = dating = Time effort, movie and dinner Get Married = Get a house, thinking effort and Saving Everything in Life requires you use your capital in order to gain the return and all those above all Gambling in Life if it is. Then I see trading as a daily routine task then.

Hi Linus,

I agree. What I meant was the reward is going to match the risk; and you may just lose it all. But in order to make any kind of substantial gains in Forex or any other capital market you have to take the plunge and take on an amount of risk a "normal" individual may not.

2:1 R:R, 1% each trade, etc. These things are all fine and dandy but unless you are a magical guru; even better than the speculators on Wall St., you will never be correct > 50% for the long term. That is almost finite.

We can hedge all day and minimize loss, but we are also hedging away any profit.

This is all an opinion of mine.
Remember, Red. Hope is a good thing, maybe the best of things...
  • #100
  • Oct 28, 2013 12:39am Oct 28, 2013 12:39am
How about calling people who set up new businesses gamblers as well since they risk their capital in the hope that they make profit out of their new businesses? New start up businesses have very high failure rates as well.

Reality speaking, it is easy to fail in many fields in life, be it businesses, sports, relationships and so on. It is silly to use a negative label like 'gambling' on anything outside of real gambling (casino, betting).

Trading itself being tough and notorious for a high failure rate doesn't mean it should be classified under gambling.

The real reason why the field of trading has an exceptionally high failure rate is that there are no REAL institutional trading training schools opened to public to train people to trade properly, compared to other tertiary industries. The real profitable methods of trading are kept as 'secrets' from public knowledge. However I am not suggesting that only people who work in trading institutions are making money. You can come up with a workable method of trading through trial and error on your own, though it would be time consuming and costly (if you are trading with a live account) in comparison.

I would call a consistently failing trader an unskilled/untrained trader rather than a gambler.
'For the market to work, it needs people who think that they can beat it.'
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