I remember when I first started trading and most of my friends and family were so negative towards it... perhaps envy that I had a more proactive mindset than them. One thing that they all shared with regards to my passion for trading financial markets is that they all saw it as gambling. You're returns are not guaranteed. I said, I know. But these people make me laugh. I would say to them that if you think trading is gambling, then you must think that starting a business is gambling. You must think that buying a property, is gambling. Funnily, they all disagreed. How is a house a gamble? You get a 95% mortgage; economy takes a turn for the worst; house prices plummet; your firm makes cut backs due to a decrease in revenues fast tracked by the under performing economy; you can't afford to pay your mortgage; you need to sell; but you are now in negative equity. In laymen terms, you are f@~d. After they have all seen me find my feet and returns on trading, now they all want a slice of my Michelin star rated pie. This is trading. This is business. There is risk. But tell me one thing in life where there is no risk? Or no gamble? A lot of people look at the financial markets and are overwhelmed by it. Why? Because there are people who make a substantial amount of money from it. We are brought up in a society whereby at school, your teachers would drum into you head that you need to be overly intelligent to be successful in something like finance, and so on and so forth. We are led to believe that a £40,000 per annum salary is a comfortable living. When you do the math, take off your taxes, your mortgage etc, you are left with nothing. The way I see it is like this. There is a 10/10 beautiful lady in a bar. There is a line of ten guys. How many of those ten guys would approach her and derive something from her? Maybe one, but even he'd be put off by the other 9. But... she's there for the taking!? Is it a risk going up to her and getting rejected? Or is it a gamble? If you add in the information available with trading, the technical and historical analysis available, this makes it far from gambling but managing your risk exposure. If you had the equivalent info about the gorgeous girl in the bar, your chances of success are dramatically increased right? And let's face it, if it didn't work, your ego wouldn't be beaten up so badly compared to if you didn't. Those who trade on no information etc, are just greedy. The seven deadly sins have never made so much sense until I started trading.
trading needs gambler's spirit. since trading is uncertain. you need have a nerve to enter before uncertain results. I always think I am a gambler. if I think I am a reasonable person, then I could not trade. since I will hesistate to make sure everying can be reasoned. that is a disaster to me. when I hesistate, when I am sure,the opposite always happens. trading better than gambling is there are clues in trading,most ordinary people can guess right above 50%. i.e., follow common sense, 99% people can trade successfully. but before acasino machine, the odd toguess right is very low, like 0.1%, almost sure to lose. people fail becuase they have logic. in trading, since the guess right odd favors most people, that creates an illusion: they can always guess right. when people stumbles, they start to search the holy grail. or they start to hesistate and doubt about his/her common sense. for example, people do paper trading, rigious back testing, they deny the fact they actually can trade well just based on common sense, waste tons of time on "TEST". when you stumble, don't question common sense, donot generalize experience. Blief in common sense, no shake. if you do that, you pravil in trading. The gambling sprit is needed. noone can predict the market 100% correct each time, but we do sure, we can guess right most time. the key is here, who can handle those guess wrong time well grows and succeeds. Risk taker is the essential part of success.
Trading, investing, real estate and just about anything one is trying to make a profit is very much a gamble, one accumulates a stake and unless you have it in the bank or annuity, you are risking it. How many start a business and seek to lose their money? How many people who were flipping houses, flipped one time to many and went belly up when real estate boom busted? I use to gamble quite heavily when I was very young, I saw that as no different than what I do now in stocks/commodities/options. You educate yourself to find that edge, you have a business plan well backtested, be well capitalized and you go to work.
People who try to argue with the dictionary are comical. You're not some special princess who gets to make up personal meanings for words. If you want to communicate with the rest of the English speaking world, you have to use the conventional meanings.
Trading as a business carries the same risks associated with any other business. Owning and operating a business of any type can be perceived as a gamble. An individual trader can be likened to a card-counting or statistical gambler. Winning (profiting) is not a random result, although it is not a guaranteed result. Equating trading to flip-of-a-coin gambling is something the misinformed or unknowing do. You would not need a chart. You would not need a price quote. You would just buy or sell and be a winner 50% of the time.
Again, traders fail because they are playing a game with a negative mathematical expectancy. Each time you initiate a position you automatically pay the spread plus any commission. For example if you buy 1 standard lot of EUR/USD you pay about $30 to the broker (spread is about 3 pips for this currency pair). In other words you now need to earn $30 just to break even. If you trade just once a day you pay $600 per month to the broker. And just like in a casino, the more you trade the more you lose, that's why most traders end up giving all their trading money to the broker. The only way to win this "game" is to beat the spread and the commissions, otherwise you will lose ALL your money in the long run, period. That's why a trader needs a trading system with a built-in mathematical edge or he is history. But believe it or not, most traders have a hard time understanding this simple concept. Instead they blame the market for their failure, or the lack of trading capital, or this and that and bla bla bla..., while these reasons have absolutely nothing to do with their failure.
He didn't refer to gambling, he referred to a 'gambler's mentality' - which implies the mentality of most people who gamble, not the tiny minority who successful make rational wagers for profit. Gambling has connotations of sacrificing or ignoring EV calculations, in favour of the chance of a big gain, the thrill of semi-random outcomes, or other motives other than the pursuit of long-run profit. What you are referring to would more accurately be called professional betting. So his analogy was accurate, albeit open to misunderstanding, as your response showed. It would have been more productive of you to address the substance of his argument, rather than nit-picking over a minor semantic detail. Useful life principles: i) don't nit-pick over trivia, life is too short ii) debating 101 - before thinking you disagree with someone, check to make sure you are not 'talking past each other' due to semantic misunderstandings. iii) speak only for a worthwhile purpose. Do not talk just for the sake of it, or for a worthless purpose - such as gratuitously slating a stranger you have never met, via the medium of a minor online message board. This merely wastes your time and focus, which could be spent on more productive activities. And on that note, I'm off to do something more useful
Read this thread over and you will see why most traders fail. http://www.elitetrader.com/vb/showthread.php?s=&threadid=278594
Don't try to defend it. The article was wrong and deserved criticism. One key contributor to trading success is insistence on accuracy in all things - mathematical, linguistic, and argumentative. At heart, trading (and the broader scope of gambling in general) is about being more correct than others repeatedly.