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My family says trading isn't work.

  #5 (permalink)

North Carolina
Trading Experience: Beginner
Platform: NinjaTrader, Tradestation
Favorite Futures: es
Posts: 644 since Nov 2011

I think it is useful understand the differences in trading versus gambling because clarity of thought is very useful in speculation. Trading is actually very similar to gambling in some ways but different in others. It is similar because both involve taking risk but so does entrepreneurship. I think it is more relevant to understand the differences:

1. Most gambling games have known odds. Trades rely on a future state which is always unknown even though some traders are very good at predicting and/or using historical precedent to weight the odds. This is relevant because there is a difference in risking money on a game that is known to be biased against you versus a game that is likely biased against you but might not be at times. It is therefore more apt to call trading speculation because one is speculating about the future.

2. Trading does serve a purpose in making the market more efficient for other investors/traders whereas gamblers are pitted directly against each other. In other words, if you make money trading while you will be taking money from other traders then you will be helping another group of traders or investors. This is a big difference in my mind.

3. Most gambling games have betting limits that make it difficult. While negative bias in the form of slippage does exist, there is much less negative bias for traders at retail size. Traders can basically bet bigger when the odds are in their favor.

Anything that expends energy can be seen as work even playing games. What they actually probably question is whether it is productive. I think it can be as long as you are growing and learning. Perhaps, you might find a way to meet both immediate income and long term goals by picking up some part time work. Good luck with your trading!

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