Trading vs. Gambling - What's the Difference?

As a trader, you must have a statistical edge in the markets! Otherwise, you are in fact just gambling!

Gambling

Gambling in casinos and with bookmakers involves taking financial risk whereby the player is at a disadvantage in terms of their risk/reward.

Let's take casinos, for example.

Blackjack is known as one of the most favourable games that a gambler can play at a casino. Yet it still offers a negative expected return to the player (Up to 99.5% at best).

This of course makes sense as running a casino is simply a business! Casinos will NEVER offer games where they stand a significant chance of losing money over the long-term as it would simply destroy their business model!

As the saying goes, "The house always wins!".

Trading

The difference with Trading is that, with a well crafted strategy, a trader aims to have an edge in the markets in a similar way that casinos and bookmakers have an edge over the gambler.

Essentially, the trader becomes 'The House' and expects to make a profit over the long-term based on real data and statistics.

Of course, there will always be losses and/or drawdowns in-between, but that's just a by-product of profitable trading that we cannot avoid.

Always remember that patience and discipline are key attributes of successful traders! Trading should NOT be thought of as a 'get rich quick' scheme!