As per me - if you want to play long-term, be profitable and above all be in the trading zone frame of mind then yes you have to consider trading as gambling. You can try to get an edge using different strategies, but when you enter a trade however big may be your edge, there is also a probability to fail. So, if you are entering a trade with a mindset that you will make a profit or you will be right, then, in the long run, you will get hurt. I guess to be really successful in trading one has to forget the outcome and focus on the process. As Krishna has quoted “Karm kiyeja, phal ki icchha mat kar”. This should be the trading mantra for successful trading. These are just my thoughts, it would be enlightening to hear from successful traders if they ever used this mantra?
All of you are fooling yourself by giving these excuses for day trading.
80% of time nifty stocks on any given day move by 0.5% up or down.
52% of time nifty move up and 48% time moves down. you have to be a super trader to predict which direction nifty will move on a given day.
And even after being a super trader , you do catch that part of 0.5% move. The cost of trading every day will eat into your profits and don’t forget the loses.
you can calculate all these statistics by pulling data from inception to till date and do these calculations.But i really doubt anyone here even does statistics before day trading.
your strategy or psychology or money management isn’t going to change these facts.
More importantly your psychology or money mgmt has nothing to do with these statistics. you can try whatever you want, This is the reality of markets.
Given these kind of odds , isn’t day trading gambling?
Someone prove me wrong on this and i will give you a free 10K Rs in your trading account.
Also it doesnt matter what nithin says, its in his best interest that day traders keep on trading. So can’t really take his word on this matter as there is direct conflict of interest.
Stock market is not a gamble. Market participants are gamblers.
In fact traders must be asking “why trading should be approached as a Gamble” instead of worrying about whether trading is gamble or not. Anything that involves wagering on a uncertain future outcome is gamble. Be it politics, business, Career, Marriage, stock, poker …anything. Wagering is not just about betting money, it involves other valuable resources also such as time, our life, effort etc.
The problem i see here is that Indian culture sees the gambling as a sin while in other cultures its not as sinful. So the new traders (Including me ) want to “trade” and “Invest” but all they actually doing is gamble.
Once the traders are clear about it and reconciled about making a living out of gamble. They can go ahead to learn other essential stuffs such as “resulting” “probability” “Edge” beliefs and biases" etc.
I recently read a book written by poker world champion (multiple trophy winner). Excellent book to know about the professional gamblers mind
Good points.
Most indians do view gambling as something bad. Gambling is looked down upon in most societies.
However, i would like to add another point.
Instead of being the gambler , why not be the house. The house always has the odds, unless someone like ed thorpe comes along and screws up the house. But how many ed thropes do we get in a lifetime.
The issue here is that retail trader cannot be the house (in most cases) and they are forced to be the gambler and that is why 95% of gamblers lose, or should i call them traders so as not not offend the community here.
But its good that these newbies live in this fantasy world and gamble on “hope” , because without them the house cannot win.
What would be your POV if someone is trading High Frequency with Algo ? Would you still call it a gamble…?
I would not call it gamble , because they use quant strategies and they run them like real business.
But even before they start the algo , they would do some serious due diligence that it is profitable. They run it through rigorous process.
HFT Algos are one of the reason why volatility in intraday has reduced due to very high liquidity and they are here to stay.
Retail traders can never compete with them.
Fantastic reply.
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I take the following from comment section of http://niftynirvana.blogspot.in/2014/06/
Trading is NOT gambling for sure.
But please make sure you have other plans too, just in case trading never worked for you…
or it may take 4 to 5 years of very hard work to become a mature profitable trader in my opinion.
okay back to your question:
both gambling and trading involves betting. To differentiate gambling from betting…
ask this question: can you control the losses i.e risk ?
If the answer is NO then its gambling… you throw a bet roll your dice and nothing you can do to improve the situation.
If you can control the risk, through reducing the position size on losing and increase the position size on winning…
or cutting your losses small and letting your profits run bigger… then you are controlling the risk.
If you can spot an opportunity where rewards are better than risk… then you are managing the risk.
Understanding and managing risk is precisely what you do in trading, its not gambling.
For instance insurance companies exactly do this… they manage the risk of its policy holders and risk to the company…
and at the end they make profit… so does LIC company doing gambling? NOPE
What does a business man do ? he finds an opportunity where he can make loss but if it works out he will be making lots of money. usually business men… fail in first 2 or 3 business before they find their jackpot business…
This is also a type of risk management and we call entrepreneurship.
In trading you do exactly similar things, find trading opportunities with bigger potential for profit with better risk to reward setups… how is this different than business men who are run the country ?
Risk is every where and inevitable… you have chosen a profession where you get paid for managing risk and finding profitable opportunities.
So you are not gambling or doing something immoral… infact you are doing a service to all idiots who don’t know anything about risk management… so don’t feel bad.
but final caution: risk management is NOT easy, its multidisciplinary study i.e you should know statistics, psychology, have emotional maturity etc etc… so its not for all.
My Take:
Let us say, you are a casino owner. Are you doing business or gamble? If you are a casino customer, you are a gambler. If you are a casino owner, you are not a gambler. Now, to relate this to trading. If you donot own a method with positive expectancy along with psychology and money management skills, then you are a gambler.
if trading is abt 50 50 change then why to learn all this stuff, just toss a coin. It is also 50 50 percent. at least less time consuming and mind will be less burdened.
clear example of gambling.
Thank you for sharing the link and the answer. I agree with your answer completely.
It’s surely gambling.
But who u are?
Casino
Gambler.
If you have positive expectancy trading methodology, then you will surely make money on longer run.like casino’s Games.
If you are doing things randomly and emotionally without risk management, you are like gamblers.who lose money eventually over a period of time.
Trading on ZERODHA platform is a big gambling !
but but…what about emotions?
I meant zerodha platform is so flaky (eg., 12th april 2018, 1pm) all BO orders went for toss and plat form is not showing any positions.
If u think trading is gambling then don’t trade.in this era even studying is gambling buddy,my friend has been studying for clerk and p.o exams for the past 3 years and hasn’t cleared them till yet…he took coaching classes for SSC as well,no results there also…and he is trying this year as well…so would you say he is gambling for the past 3 years by studying.
LOL. i can only laugh.
you can give whatever excuses you want for trading , whatever analogy.
truth is trading is gambling, simply because the the very next trade you take has a 50/50 chance and no more, of winning.
Now this is a fact. human mind cannot accept this especially day traders. why? because if you accept his , then there is no hope to make millions/billions from trading. The fantasy that is sold to day traders by the industry.
I m not going to argue or convince you, because i want you to gamble. without you the house cannot make money.
So keep telling yourself that trading is not gamble and keep on trading…
If Trading is a 50-50 gamble then your strategy accuracy is only 50%.You need to develope a strategy with more than 60% accuracy.My trading strategy accuracy is 70% or higher.So probability on my trades are 70% chance of winning and 30% chance of loosing.Yes you are right that it’s a 30% gamble but I have 70% non gambling surety.So my surety % is above my gambling %.Hence proved that I am not a gambler when it comes to trading.Ofcource majority of traders gamble as their surety % is below 60.For them trading is gambling as you said.But I am not a gambler because I make money out of it in the end.
As time progresses, that probability will come down to 50/50. That is the law.
Would you still say then its not gambling?