Do You Think Trading is Gambling?

Apologies for the long post here, but I felt that I had to post this typical rubbish from one of the "novelists"!

Read it and weep!

Part I Introduction…………………………………………..4
1.1 Understanding Trading Dynamics…………………………………….…5
1.2 Trading vs. Investing………………………………………………...…..6
1.3. Trading vs. Gambling………………………………………..……….…7
1.4. 8 Steps To Successful Trading…………………………..……………...8
Part II Stock Index Futures…………………………………11
2.1. S&P 500 Index…………………………………………………………11
2.2. Nasdaq-100 Index………………………………………………...……12
2.3. Chicago Mercantile Exchange………………………………...………..12
2.4. Order Types………………………………………………...…………..13
Part III How To Choose An Online Broker?………………..15
3.1. System Reliability…………………………………………….………...16
3.2. Fee Structure?…………………………………………………………...16
3.3. Execution Speed………………………………………………………...17
3.4. Quote Reliability………………………………………………………..17
3.5. Charting Software………………………………………………….……17
3.6. Technical Support And Phone Service Reliability……………..……….18
Part IV How To Set Up A Trading Workstation?…..……….20
4.1. What Kind Of Computer Do You Need?…………………………..……20
4.2. How Many Monitors Do You Need?……………………………..……..22
4.3. What Kind Of Operating System Should You Use?………………....….24
Part V What Kind Of Internet Connection Do You Need?…25
5.1. Cable Internet Connection…………………………………………….…25
5.2. DSL Internet Connection………………………………………………...26
Part VI Trading Capital……………………………………….28
6.1. How Much Capital Should You Start With?………………………..……28
6.2. How Do You Find Startup Capital?……………………………..……….29
Part VII Technical Analysis……………………………………31
7.1. Why Does Technical Analysis Work?………………………...………….31
7.2. Price Chart…………………………………………………..……………33
7.3. Volume……………………………………………………..…………….35
7.4. Moving Average MA…………………………………….………………36
7.5. Time & Sales Window…………………………………..……………….38
7.6. Pivot Points……………………………………………...……………….39
7.7. Support & Resistance…………………………………..………………...40
7.8. Trend Lines………………………………………………………………41
7.9. Relative Strength Index RSI……………………………………………..42
7.10. Chart Patterns…………………………………………………………..43
7.10.1. Head and Shoulders…………………………………………………..43
7.10.2. Double Tops……………………………………….………………….44
7.10.3. Double Bottoms………………………………………………………44
7.10.4. Rounding Tops and Rounding Bottoms………………………………45
7.11. Candlestick Patterns…………………………………………………….47
7.12 S&P 500 Squawkbox……………………………………………………48
Part VIII How To Choose The Trading Software……………49
8.1. Qcharts……………………………………………………………………50
8.2. Medved Quote Tracker……………………………………………………51
Part IX Trading Strategy………………………………………54
9.1. When And How Will Your Trading Day Start?………………………….55
9.2. Calculating Major S/R Areas……………………………………………..55
9.3. How To Set Up Your Screens?…………………………...………………58
9.4. When To Enter The Trade?……………………………………………….63
9.4.1. … on the long side………………………………………………………65
9.4.2 … on the short side………………………………………………………66
9.5. When To Exit The Trade?……………………...…………………………67
9.5.1. Cut Your Losses Short…………………….……………………………67
9.5.2. Where To Place Your Stops?……………..…………………………….68
9.5.3. Let Your Profits Run……………………..……………………………..69
9.5.4. Trailing Stops…………………………..……………………………….69
9.6. Example 1 S&P 500……………………..………………………………..70
9.7. Example 2 Nasdaq-100……………………………………………………73
9.8. Paper Trading……………………………………………………………..77

 

SPECULATION AS A FINE ART
WHAT IS SPECULATION?
Before entering on our inquiry, before considering
the rules of our art, we will examine the subject in
the abstract. Is speculation right? It may be questioned,
tried by the highest standards, whether any
trade where an exact equivalent is not given can be
right. But as society is now organized speculation
seems a necessity.
Is there any difference between speculation and
gambling? The terms are often used interchangeably,
but speculation presupposes intellectual effort; gambling,
blind chance. Accurately to define the two is
difficult; all definitions are difficult. Wit and humor,
for instance, can be defined; but notwithstanding the
most subtle distinction, wit and humor blend, run into
each other. This is true of speculation and gambling.
The former has some of the elements of chance; the
latter some of the elements of reason. We define as
best we can. Speculation is a venture based upon calculation.
Gambling is a venture without calculation. The
law makes this distinction; it sustains speculation and
condemns gambling.
All business is more or less speculation. The term
speculation, however, is commonly restricted to business
of exceptional uncertainty. The uninitiated
believe that chance is so large a part of speculation
that it is subject to no rules, is governed by no laws.

 

it might seem like gambling to the outsider

but to the wizard of oz

its just business

www.youtube.com/watch?v=X-ZULpr8m5o

* I am learning to respect his powers *

 

The legal definition of gambling is irrelevent. It only serves to distinguish between 'traditional' gambling, and gambling in markets such as the financials.

If you want to use the 'game of skill' argument, most forms of what the public thinks of as 'gambling' can be beaten in some way. In blackjack you can count cards, in sportsbetting you can use similar methods as in the financial markets, you can use basic strategy for video poker, for poker you can use the knowledge of behaviour to make informed decisions etc. This completely blows the 'game of skill or chance' argument out of the water.

It seems to me that people who suggest trading isn't gambling either don't understand the definition of gambling, or are fooling themselves into thinking that the markets are somehow above playing poker, blackjack or betting on sports. As if it is legit and professional rather than 'taking a punt'.

Everything is about probabilities, and just like in the market, in some casino games you can turn it into your favour. The casinos profit over the longterm because few people try and make positive expectation bets. More people make money in the markets simply because more people are approaching it professionally.

 

Heck no......I can make an exceptional living TRADING and not much of a living gambling!

 

Trading is the cousin of gambling, just accept it.

Accept it and learn how to adapt. In fact, waking up and trying to succeed in anything is a gamble, because you do not know the outcome, especially in this shitty economy.

Everything has it's risks. Speculation is when you define risk. Sheer gambling is out of hope.

"risk defined speculation" the gambling aspect is a very thin line away!

I would say going into any business can be like gambling. You use known information to make a decision, but that doesn't make it fool proof.

You wager your money and assets to hopefully create more money, by specializing in a niche or service.

 

the market is not a casino. but the market participatnts are making bets on the market.

you see. there will still be markets and companies without traders.

and the market doesn't need shorts either.

 

95% of market participants are not 'investors'.

shorts/long traders are not investors.

market doesn't need market makers or traders.

there could be zero volume and companies would still be there and still producing goods etc in the real economy.

 

Traders are gamblers, not economists!

We do not have to know the intricate workings of how companies are financed, how they operate, or in some instances, even the name!

However, we do need to know how to read a stock price chart, when is the less risky time to place a bet, and when to get out when we have a loss, or a profit, realized.

 

I think this covers at least 95% of day traders:

Gamble

Definition:

To engage in any activity in which money is put at risk for the purpose of making a profit, and which is characterized by some or most of the following (in approximately descending order of importance): little or no research has been conducted; the odds are unfavorable; the behavior is risk-seeking; an unsystematic approach is being taken; emotions such as greed and fear play a role; the activity is a discrete event or series of discrete events not done as part of a long-term plan; the activity is significantly motivated by entertainment or compulsion; ownership of something tangible is not involved; no net economic effect results.