Money Proctology: Examining Whether Trading Is Gambling

Trading stocks can be highly lucrative or a huge black hole of money. But how do you know before you do it whether trading is gambling or not?

Trading stocks involves a lot of determination and understanding of how the markets work in order to be able to create wealth. The market as it is referred to is really an economic growth vehicle that has been designed to allow many companies and brokers to raise capital through the issuance of shares. With the various stock markets in the world, there is a huge volume of stock and funds that are traded every day and thousands of companies that have shares listed around the world. That’s lots of opportunities to bet on.

There are two ways to invest in the stock market, trading and investing. Although some terms are used interchangeably, the two ways of investing are different in regards to how they are executed. With trading, there is a mindset of short-term instead of the often long term view that is found among investors. Traders tend to make money on a daily basis, while investors tend to make money on the quarterly basis. Traders may make a profit on a daily basis but they also have a number of investments that are spread all over the market. It is a common trait of being a trader, but the truth of the matter is that trading is gambling.

Why is trading equivalent to gambling? This is because traders often operate on information they derive from price action itself rather than fundamental economic information. Indicators are used in trading to calculate the right time to buy and sell a stock. Usually traders will allow themselves a certain period of time to hold on to a stock, but it’s nowhere as long as an investor and it’s based on far less information. Trading short term is really a gamble because there is no guarantee that stock will increase in value so this is potentially risky and the mindset of a gambler is needed in order to succeed as a trader.

Although you may find a broker who can assist you, the choices are ultimately up to you. Knowing the right time to get in or cash out of a stock is important. You must have a keen sense of timing to move in or out of the market. In a sense trading is gambling because you would have to apply the same skills a gambler would use – probabilities and bet sizing. You have to know the risk associated with the stock you trade and have the ability to move in and out at the right time with the right amount of money at risk.

Being a trader requires a certain level of knowledge and timing – you have to be on top of things all the time. Sometimes the stock you are trading will do well, other times it will not. Since basically trading is gambling, you will have to work on your own style of trading that is both safe and uses professional gambling techniques to manage your risks.

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