Traders who make their living via the stock market are often very opposed to anyone associating their activity with that of gambling. Successful traders within their spheres are often seen as being people of keen intellect, being able to calculate trends before the press is even clued-in on the action, with gamblers often reduced to images of chip flippers and lucky spinners on The Strip. While the perceptions certainly differ, the activities of trading and gambling are essentially the same.
From the fundamentals of the activities to the methods of finding success in these estranged sectors, gambling and trading are far more familiar than one might assume.
Basically the same activity
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Trading on gut instinct is the same as gambling on games like online slots, with there being very little planning or skill involved and the outcome essentially being randomised to the one who placed the bet. Trading as an experienced trader who has done their due diligence, however, is akin to a veteran casino gamer playing skill-based table games like blackjack.
In the real-time gaming of the live table games at Casino Dome, gamblers have found that table games using real decks of cards to offer the game of blackjack can be defeated. Over the last several decades, people have built on Basic Strategy to create ways to gain the edge of knowledge through probability to beat the game and make good bets. In stock trading, traders do their research, examine market trends, and weigh the information at hand to have an edge in the stock market and make good calls.
Players of skill-based casino games and traders can both enhance their chances of success through research and calculating probability. Furthermore, both activities in this line still carry an air of risk, with the outcome still being beyond the control of the player.
Keys to success align
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The fundamentals of finding success on the trading floor align very well with the methods of hosting a successful gambling service. Casino runners and seasoned traders understand the same codes of practice, as detailed by The Balance. The casino owner exercises extreme discipline by enforcing table limits to mitigate risk, while traders need to focus on protecting capital to make the most of an edge when it arises. Limiting exposure is key in both fields. Furthermore, they’ll only play games in which they have an edge, while seasoned traders will focus on high probability trades to capitalise on the best edge available.
Playing to one’s edge, primarily sticking to low volatility options, and remaining disciplined with money management are all fundamentals to success in both gambling and trading. The reason why these aspects mirror is because both activities have inherent risks, ways available to mitigate risk, and the chance for human error to greatly impact the eventual returns.
The same mindset
On a base level, both gamblers and traders are willing to risk money that they have in order to gain more money. Seasoned players on either side will use research and experience to rationalise their decisions and will always manage how big they bet based on their calculations of probability. In both fields, the player must have a passion for the game, as only by enjoying it and wanting to delve deeper will anyone ever reach the heights of success.
As you can see, both gambling and trading are very similar in several ways. Apart from how the activities are organised in society, the two incite incredibly similar methods and mindsets in the aim of achieving the same goal.
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