How do you guys deal with this?....Intraday trading = gambling | Traders Hideout


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How do you guys deal with this?....Intraday trading = gambling

  #21 (permalink)

Christchurch, New Zealand
 
Trading Experience: Beginner
Platform: SC
Broker/Data: IB, BC, Dx Feed
Favorite Futures: US Equities
 
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KatieD View Post
I am a developing trader who is still in sim mode. So in other words, I love the idea of becoming a consistant and skilled trader, but I am still really insecure about it since I have not yet developed my "edge".

I will occationally come across someone who, when I tell them I am working on becoming a trader, will look down their nose at me and say, "well, professional gamblers win at first too.... before they lose everything because eventually the numbers catch up to them and their luck runs out". Then sometimes you will see write ups like this......

Some Cautionary Advice for the Novice Day Trader | Investopedia

Yes, it is Investopedia. So not the most sophisticated source. However, why would people feel the need to put sentiment like that out there if they did not see some truth in it.

For myself, I like to remember that everything is on the spectrum of "gambling" from crossing the street to playing roulette. The difference of where you are on that spectrum, I think, is based on information available and the ability to apply skill. With roulette there is no information to base a decision on and skill cannot be applied. With poker and black jack (ahead of roulette on the spectrum). You still have very limited information but skill can start to come into play. However, you are still at the mercy of what hand is dealt to you and the fact that once you are in, you cannot walk away. Trading is much further up the spectrum in my opinion. Information is somewhat limited (information risk vs. price risk) BUT unlike gambling, you don't have to play every hand that is dealt to you. You can wait and play the ones that you recognize to have the highest probability of success. In this way, we inject a much higher amount of skill in comparison to typical "gambling".

All, that being said, trading is still highly based in chance. Sometimes I'm scared I'm just deluding myself by thinking I will be able to develop or recognize a process that give me a positive expectancy. How do you all deal with this nagging question????

Quantify your edge and bet accordingly.

It's not just about developing your edge, it's about quantifying it instead of relying on guesswork- Any analogy based on gambling should associate you as the "house" instead of the player.

99% of what you hear about trading is White noise.

"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
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