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Why Trading is not Gambling?

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In the collective unconscious, the line between gambling and stock market investing is not always clearly defined.
And for good reason: chance, luck or impulses are notions that can sometimes be found in both cases.

But are traders really gamblers?

The myth of chance and luck:

 

“Trading is like roulette, you never know if the price of a stock will go up or down, it all depends on chance and luck.”

It’s true, it’s impossible to know for sure if the price of a stock will go up or down. To pretend otherwise is pointless.

Except that you don’t buy shares of a company in the same way as you place your bet on the gambling mat. You study the company, its figures, its reports, the movements of the price of the company. action over a certain given period, the company’s projects over the more or less long term…

 

Is there uncertainty once you have invested? Yes, it is obvious.

But our decision to invest is the result of a long reflection, influenced by many factors, which is not the case for roulette: we bet and we see what happens.

For the trader and the roulette player to be compared, the latter should at least establish statistics based on a lot of data. He could then draw probabilities and try to anticipate where the ball will stop at the next shot: which is impossible to do in a casino.

 

Impulses

 

We can find the same type of motivation and the impulses that accompany them, in the minds of novice traders and gamblers: to get rich, to earn a lot and quickly, the adrenaline rush caused by risk, and even, some addiction.

For the most disciplined of investors, this type of drive disappears with experience.

For the players, it is unfortunately more complicated, precisely because the part of chance is too important.

But the problem with this kind of drive does not come from the activity itself, but rather from the personality of each one.

If you jump from an airplane without a parachute, you have to expect a violent (and even fatal) shock…
Will aeronautics or skydiving then be accused of being games of chance? No.

It’s the same thing for trading: wanting to take risks stupidly does not make trading a game of chance.

 

Are you an investor, or a player?

 

If, despite everything, you continue to perceive stock market investing as a game of chance, it is actually better to stay away from it.

These activities cannot be approached in the same way, although it is sometimes thought that there are some similarities between the two.

If you are drawn to quick and easy winning, you have all the gambler mentality. The investor, on the other hand, is patient, disciplined and will avoid any emotional situation that could cause him to lose money.

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