While I agree with your basic premise, I do disagree with you on certains aspects.
In the spirit of the discussion, without “opinions”, I would like to contribute:
Just because a game is 50:50, does not mean it is un-winnable.
Money mangement is cruicial to getting ahead in a 50:50 game.
For example, even in a coin toss match, if I lose only 1 on heads, and gain 2 or 3 on tails. This game is winnable. (Though this same game was given to PhDs, and only less than 5% won, even with these odds). The reason they lost, was because they staked too much on each coin flip (again money management). If you control your risk/reward ratio along with position sizing, it is possible to win a 50:50 game.
Just to be sure, I am not claiming I do/did, but neither am I denying it.
I left this “proving” part for the ending as I am including a screenshot of a very basic strategy, backtested on the NIFTY50 daily data from 1990-07-30 till today.
The simple strategy is "Buy at the open and sell at the close TODAY, if yesterday’s close was above yesterday’s open’. Also, this is not leveraged, as the case would be if trading futures.
This yields 51.94% winners and 48.06% losers.
Annual return of 4.02%, with Risk-Adjusted Return of 9.53%
Rest all you can read in the screenshot below.
Selling naked options for retail traders is a very bad idea.
The statistics will say “98% of option sellers make money”. And they are true. But, and it’s a big but, is that as the saying goes “Option sellers eat like birds and crap like elephants”.
While selling naked options might get you small amounts of money every month. The one time you lose, you can lose EVERYTHING.
Just a recent example, ZEEL options went up 96X (not 96%, but 96 TIMES) in a single day within the last month. Now imagine a retail trader who sold 10K worth of these call options, he is stuck with a bill of 9.6L.
I know of a trader in Delhi who lost 50C selling options. Even the famed “Victor Niederhoffer” lost it all in 1997 selling naked options AFTER the market had falled 90% (thinking it couldn’t fall further and the IV premiums were throught the roof, as you can imagine), but then they fell another 90% from that level.
One should read the letter he wrote his clients after losing everything… I’m sure it’s still on the internet somewhere.
Anyone who doesn’t understand options THOROUGHLY (and I include myself in that group, though I have a pretty good understanding and have traded them), should ONLY buy and/or sell SPREADS and their combinations. I would recommend that SEBI/NSE/Zerodha/whoever be petitioned that they allow spreads as a basic contract. Your profit and loss are limited easily and you eliminate some of the greeks.
There is one more saying that I can remember from fooled by randomness book,
“Option writers eat like a chicken but shit like an elephant”. This was also mentioned in varisty.
well…life itself is a gamble so it doesn’t matter…we all take risks in life though level/severity would vary so forget about whether its good/bad…as long as you have peace of mind & you are making money all is well
Yes, it’s true.
Isn’t driving a car/bike dangerous ? Isn’t flying in a plane risky ? These people take risks in this and say stock market is risky.
For them money related stuff is risky but other stuff like driving a car which is related to life is not risky. So will they stop taking this risk by not travelling ?
You can take risks, but don’t blindly do it. It’s a gamble when you blindly take risks. Instead learn to manage them, you must figure out the probable outcomes and manage the risk that you are taking.
It’s a gamble/depending on luck when you don’t understand what you are doing.
Gambling or not… The most important point should be, does one want to be just a gambler? Or a Professional Gambler! Retailers should decide for themselves…
IMHO, I think that if the person is proficient they will make money even in a gamble and if the person does not have any skill then they will bleed money in the best of trades or the best of business. Position sizing, risk management, diversification, probability and many more go hand in hand in both life, gambling and trading. Thus those who think that trading is gambling or that gambling in itself is just luck and nothing more are gravely mistaken.
Anything which has a time factor attached to it is gambling.
So by this logic all f&o/intraday/margin trades are gambling ,no matter how much rusk management one does, as the position has to be squared off at some point and can’t be held forever.
You got it right.I neither understand f&o nor wish to learn it. Reason being I know a few sob stories around me who destroyed their lives due to their f&o addiction.
I believe that not knowing f&o is probably the only thing that’s holding me from entering into this world but than looking at sob stories I feel it’s better not to waste time learning it and regretting later. Otherwise I too get fascinated looking at big returns in this segment.
WHat i feel is life is a gamble …
From marriage to job or business its a gamble
what requires is proper calculaton and risk management …
We should be awared of worst outcome
Shouldnt be blind in what we are doing
Achieving small targets is possible in market . The probability of achieving 1:1 RR is higher than probability of 1:4 .
Therefore scalpers make good money with small targets rather than a day trader expecting big targets.
Whoever has no grasp of probability and risk management is playing the game of chance, no matter how they try to disguise it. On the other hand, Anyone who has mastered it has reaped the benefits is a real trader.
ok so if you have any bias like prices will go up and prices are going down but still you are like no prices have to go up only and even if you loosing you are not getting lesson from it and you playing aginst market again and again then yes you are gambling more than gambling i will like to say trading is kind of betting its just when you win you have to take as much as you can and when you loosing you have to cut losses and take liittle pasue before starting again dont have the same bias again re-evaluate everything or take second opinion bcs when we make huge losses we lost our ability to think suppose you are making huge profits again and again then someone is loosing in that case but its game of probability if you winning again and again you start investing with huge quantities but in real you have to give less in that conditions bcs suppose you have 1 lakh and your opponent have 100 rs obviously you were right lots of time thats why you made huge returns/ so dont hink like i will bet 100 rs from now just bet 1 rs bcs you have more chances than your opponent eventually he will get bored or feak out bcs he is not moving anywhere he is at one place and he will quit soon or later bcs his psychology will get affected when he is not getting the results he want and he will start making mistake that the way pull back works for your every winning position there is looser and when they loosers saw pullback they think there time is now and they start betting more
Trading is Gambling for those who trade without knowledge, plan and guidance. It’s a science, mathematics, probability, risk Management, psychology and philosophy for those who actually study and invest. For me it’s a scholarly wiseman job
Capital Markets are wonderful place for doing so many things and gambling is one of thing you can do as well. You can gamble in the market just like casino as its all probability game.As long as its for entertainment then its ok don’t make it dirty habit.
There is an uncle who loves predicting the market for fun. He only keeps aside very nominal money ,he call it entertainment money which he ready to loose .I don’t see any harm , he enjoy doing it in the limit ,it gets away from boredom.
Market can be played as video game as well, again ,its all ok if you know all the downside limit. Loosing should not impact minuscule of your health,wealth and social /personal relationship and psychology then all good.
Then there is market for investment. You support a good business(become part owner) and cause ,if all goes good you reap the benefits from that business in form of dividend, capital Appreciation .
Then there is market for big firms/ institutions to place big money for short and long term.Its place they can liquidate money in secs. Thats the biggest advantage of capital market you can liquidate assets in secs which can’t be done for any other assets and this is such a thing which makes market unique. You can’t liquidate real estate, gold,paintings or any other asset so easily.
Then there is market for traders who are foot soldiers which are moving the system. They provide liquidity for small commissions which allows stability to the system and fair pricing possible. If you are good with money, risk management, psychology,probability and mathematics then you can make it your business.
There is market for new company to raise money.Money is fuel which brings innovation and progress in the society. We won’t benefit new technologies, social upliftment progression without for these companies ability to raise money.
So the bottom line is you are self aware and have sufficient knowledge what you want to achieve participating in the market.
For someone who has relevant knowledge and skills, trading is not gambling. A gambler won’t bother to come up with a strategy or gives no thought to risk management. A trader is driven by logic and makes decisions based on rationality. These are the things that differentiate a trader from a gambler. But if your trading style involves mindless speculation or a martingale strategy then that would become gambling instead of trading.
In general, trading is not gambling. But some traders make it gambling out of greed by trading like crazy and not really caring about what they are doing. But it is not gambling for others who do every possible thing to understand the market direction and trade as per their plan.
