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Trading VS Gambling

Jan 14, 2011 09:25 am
paradise User

Posts: 75
Member since: 01/12/2010

This is taken from the book: "The Disciplined Trader" - Mark Douglas

[...]You have to make the rules to the game and then the discipline to abide by these rules, even though the market moves in ways that will constantly tempt you into believing you don't need to follow your rule this time. [...]

In an unlimited environment, if you can't confront the reality of a loss, then the possibility exists for you to lose everything, in each and every trade. If you believe trading is like gambling, it isn't. In any gambling game you have to actively participate to lose and do nothing to stop losing. In the market environment, you have to actively participate to get into a trade and actively participate to end your losses. If you do nothing, the potential exists to lose everything you own.

When you participate in gambling games, you know exactly what your risk is and the event always ends. With the markets you don't ultimately know what your risk is, even if you are disciplined enough to use stops, because the market could gap through your stops. Also because the event never ends and is in constant motion, there is always the possibility of getting back what you are losing in any trade. You won't need to actively participate to get back what you are losing; you just have to stay in your trade and let the market give it to you. As a result, there is the constant temptation not to cut your losses which is very difficult to resist. Why choose pain over the possibility of being made whole, when all you need to do is ignore the risk?


Jan 14, 2011 09:35 am
forexing User

Posts: 21
Member since: 09/01/2011

I am reading the same book right now. It is a very good one. I am enjoying it! Here's one for you:

As you cultivate a stronger belief in self-acceptance, you will then realize how the market reflects back to you your level of skill development along with the information that will indicate what you need to work on to become ever more successful. each moment will then become a perfect indication of your skills and your degree of self-valuation, giving you a solid base from which to improve and learn.

Sep 06, 2011 12:06 am

Posts: 513
Member since: 08/02/2011

it depend on you rather you take it as a bussiness or a gamling as i try to ans this question to my another thread that some take take it bussiness and take some serious actions and research like a when we invest in real physical investment then we get some good results other wise it is gambling Xynafx ... fund managers and forex signal service providers Minimum investment for our Forex managed Account service is $2k that will be managed individually in one investors account. XynaFx signals As low as $26 per Month.

Sep 07, 2011 04:31 pm
leebut User

Posts: 158
Member since: 16/07/2011

I think trading is similar to gambling in that we can look at the form of what we're betting on. I used to think it was different because we can make informed decisions on trades. However, just like in racing, we can evaluate past performance of the participants, in our context the currencies. We can the decide which are strong and weak contenders, and once the trade/race has started we have NO control over which participant will win. Just like gambling, trading tempts us back for another 'one last time'. I dont agree with Mark Douglas that 'In any gambling game you have to actively participate to lose and do nothing to stop losing'. You do have to do something to stop losing. You have to walk away. If you don't you can take one bet too many and lose what you took with you to gamble with in the first place.

Sep 09, 2011 04:05 am
illiterate User

Posts: 561
Member since: 21/04/2011


Very nice pick from the book.

This paragraph nicely explains the difference betwee trading and gambling. Not only the difference but tells you different aspects of both things. Most of the traders think that gambling and trading is similar.


You first example is of racing. In racing, there is just one thing to evaluate and that is to choose a stronger or weaker opponent based on their historical winnings or more specifically winnings on that specific track. Whereas in forex, you will have to evaluate on many basis.

Similarly in gambling u can do noting to stop it. When u enter a gamble, you either loose all or win all. But when you enter a trade u can use stop loss or manually cut ur losses. Trading is not a "win all" or "loose all" game.

Sep 09, 2011 07:27 pm
leebut User

Posts: 158
Member since: 16/07/2011

Illiterate: When you gamble you don't win or lose all. In gambling you can decide how much to risk on any given event. Essentially, that is a stop loss. In poker you can fold, thus manually stopping increasing losses. A margin call is probably similar to'all in' and losing.

A dictionary definition of gambling: 'An activity in which you risk money in the hope of winning more money [...]'  A gambler: 'Someone who is willing to take risks in order to be more successful'. Isn't that what FOREX is and what we do?

The point is that we don't know what's going to happen next in both trading or gambling. In that sense they are the same. Traders and gamblers attempt to find systems to give them an edge.

You mentioned my racing situation. Do FOREX traders not match the strongest vs the weakest and then choose the track to trade on? Lots of EUR crosses, but which pair (track) to trade? I think serious racing punters look beyond simply the strongest/weakest and the track. They to have to check the (market) conditions before they select a contender and more things besides.

There are amateur and professional gamblers, there are amateur and professional traders. Either way, a risk has to be taken, some will win, some will lose. Find a professional racing gambler and find out what he/she analyses before considering who to back. I think you'll find it's more than going to the bookies and slapping twenty quid on something.

I think a problem traders have with trading being called gambling, is not what it is, but the environments in which gambling is seen to take place in the wider public arena and the word 'gambling' itself. Somehow traders may think that 'gambling' sounds much less profesional than 'trader'.

I used to tell people that it's not gambling, but the more I think about it, the more I think it is.

People make a lot of money gambling as they do in FOREX, many also lose a lot of money as they do in FOREX.

















Sep 10, 2011 10:43 pm
Champ User

Posts: 711
Member since: 17/05/2011

Nice thread. I am also with paradise. Trading cannot be a gamble. I am not good in argumentation but the paragraph from Mark Douglas clearly tells the difference.

Sep 12, 2011 06:50 am
illiterate User

Posts: 561
Member since: 21/04/2011

If "taking risk to make more money" is the base of similarity then a businessman will also be a gambler. Similarly no one can predict future so even this "unpredictable" behavior cannot be the base of similarity.

The difference between gambling and forex trading is actually the intensity of these basis. For example u start a gamble with $10. You will loose $10 or you will win whatever is the prize. But in forex if u enter a trade with $10, you can cut your losses by exiting trade or you can take ur profits whenever u feel "its time". So there is no fixed profit or loss in forex. In gambling, you already know abt that.

There is no risk free thing so if there is risk in anything we cannot say it is similar to gambling. It is actually the nature and level of risk.

Sep 13, 2011 08:42 am
megrawab Hostedslavebeta

Posts: 332
Member since: 16/08/2011

I also think that trading is not gambling though I think they are almost related. It's like trading is a cousin of gambling. With this thread I also see the advantage of one over the other,.

I am a hosted slave beta.

Sep 16, 2011 02:51 pm
illiterate User

Posts: 561
Member since: 21/04/2011

Originally posted by megrawab

I also think that trading is not gambling though I think they are almost related. It's like trading is a cousin of gambling. With this thread I also see the advantage of one over the other,.

lol[grin] @ cousin....... Wow u explained the relationship in just one word.

Sep 21, 2011 01:52 pm
leebut User

Posts: 158
Member since: 16/07/2011

Watch this at around 5:15:

Admission is the hardest thing.