Is trading really gambling? Yes and no!

by | Feb 16, 2024

I know why you’re NOT trading.

You think trading is nothing more than gambling.

I get emails every day from members saying things like.

“Timon trading seems like going to the casino”.

“Timon I don’t want to put money into something that’s gambling”

“Timon thanks but I don’t gamble”

So you’re not trading because you think it’s like gambling.

Well, before you send me another email like this – Please make sure you read this carefully.

Let’s dive into the heated debate and let’s see if I agree whether trading is just gambling.

Does Timon think trading is just gambling?

YES! I do believe trading is a form of gambling.

BUT – hold on…

Gambling exists in two realms. Chance vs. Strategy

There is chance gambling and strategic gambling.

Chance gambling is similar to playing slot machines, lotteries, and coin tosses.

It’s 50/50. And it’s all up to chance.

Have you ever heard of a professional slots player or coin flipper?

I don’t think so.

Then in the other realm of gambling is known as strategic gambling.

The strategic domain is where skill, knowledge, risk management, methodology, probabilities and decision-making play crucial roles.

And that my friend, is why I believe trading is a form of strategic gambling.

You do get professional and successful poker and black jack players, sports bettors and of course traders.

Right?

And that’s because you need skill, strategies and the right techniques to WIN as oppose to mere luck.

So before you quit trading because you think it’s nothing more than gambling, allow me to go one step further.

Let’s talk about the similarities between certain strategic gambling games and see how we can learn from them with trading.

Strategic Game #1:
Trading and Poker – The art of strategy and risk management

Poker and trading share a few similarities.

They both emphasize skill, strategy, and a sprinkle of luck.

But you need a deep understanding of the rules.

You need keen observation of the competitors.

You need adeptness at risk, reward and money management.

Poker players and traders alike must know when to hold their ground and when to fold.

Poker players put their cards down when the probability is low.

Traders either don’t take the trade, risk little in medium probability trades and use tools like stop losses to risk little.

Poker also teaches the importance of emotional control and patience.

And these as I have written many times before, are crucial in trading.

Because emotional decisions can lead to significant losses with both poker and with trading.

Next game…

Game #2: Trading and Roulette

Playing the probabilities

It may seem at first that roulette leans more towards chance.

Red or black, odd or even etc…

But the fact that you have a choice, means that it offers you some form of probability.

A fundamental concept in trading are probabilities.

Traders, like professional roulette players, use statistical analysis to help make informed and better decisions.

It is unpredictable what the ball will land on.

Just like it is unpredictable which way the market will go.

But if you have a sound system, proven track record and winning strategy – you will be able to base the probabilities and tilt the odds in your favour – over time.

In trading, while certain market movements can’t be predicted with absolute certainty, we rely heavily on technical, fundamental, statistical analysis and probabilities to make trading decisions. 

Trading, much like roulette, is where you need to diversify your positions and bets.

And you can WIN in the long run if you follow your high probability strategy.

Game #3: Trading and Blackjack

How a maths boffon can win overtime

In blackjack, players make strategic decisions to outmaneuver the dealer.

The main goal is to try and get the cards we’re dealt to hit 21, be close to 21 or be closer to 21 than our opponent’s hand.

Bet too high past 21 and you burn (lose).

This is similar to trading.

You need to be able to analyse the marker conditions.

You need to be able to calculate your position sizes and risk management according to your trade line up.

Both games need you to have a balance of risk, strategy, and knowledge to succeed.

Game #4: Trading and Horse Racing

Know your horse!

Now this is a game that has turned many statisticians into multi millionaires.

Horse racing is where you need to know and choose the right horse that will win based on its:

  • Form

  • Characteristics

  • Conditions of the race

  • Weather on the day

  • and other factors.

They study the characteristics, and race conditions to a T.

They calculate based on past performance on which horse has the higher probability of winning.

Traders need to know their horses (markets) too.

Every market you choose to trade, has its own personality, form, movements, and style.

You need to check to see if the chosen market has worked for your trading system and portfolio over time.

And you need to choose the right time, market environment and other factors – before you take on the trade.

In horse racing, experienced bettors also diversify their bets across multiple races and horses to spread risk.

With trading we diversify our portfolios over different accounts, markets, sectors, instruments and types.

Finally let’s talk about the last game:

Game #5: Trading and Sports Betting

The power of predictive analysis

Sports betting, much like trading, relies on predictive analysis to almost see potential outcomes.

If you understand a team’s performance, strategy, and conditions – You will be able to make better betting decisions for the next game.

As a sports bettor you definitely need to know how to analyse a team’s or player’s form, weather conditions, past scores and more to predict an outcome.

Whether it’s football, rugby or cricket – you need to have your winning game plan to increase your chances of winning the bet.

Traders do the same. They have different markets like sports bettors have different games.

Traders also conduct similar technical, fundamental, sentimental, volume analyses to help predict potential market movements.

Both activities involve calculated risk-taking, aiming for high-probability successes based on thorough research and analysis.

Final words:

So, as you can see trading is MORE than just gambling.

Unlike games of pure chance, trading is a disciplined, analytical pursuit that shares more in common with skill-based gambling.

It does require you however to have the right knowledge, strategy, and strong risk, reward and money management.

Let’s sum up the games and sports vs trading so you can remember what we’ve covered today:

Strategic Game #1: Trading and Poker – The art of strategy and risk management

Game #2: Trading and Roulette – Playing the probabilities

Game #3: Trading and Blackjack – How a maths boffon can win overtime

Game #4: Trading and Horse Racing – Know your horse!

Game #5: Trading and Sports Betting – The power of predictive analysis

Trade well, live free.

Timon Rossolimos
Founder, MATI Trader

 

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Trade well, live free.

Timon Rossolimos

Founder, MATI Trader

 

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