A long time ago, I remember seeing some posts debating the difference between gambling and trading.
Here, I am trying to make an effort to help us understand related topics better, for our own betterment.
Let's start with a question.
Is there a difference between gambling and trading?
My answer is;
YES but at the same time NO!
Let me arouse your curiosity through an example.
We know that some day, for sure, we will get our grave. Right?
But, do we have any control over it? Usually, no.
Our grave is dug by someone else. We will have no control over it, even if we wanted, since we are dead by that time.
Gambling is exactly like that. Our destiny regarding the grave is already decided by someone else.
Now imagine, you somehow want to take things in to your control, while you are living; and decide to dig your own grave, the way you want it; and make arrangements to use it for you when the due time comes.
Stock trading is exactly like that. You have the CONTROL over the whole thing!
Anyway, the end result will be the same: you will only get a place 6 feet below the ground level!!
However the two methods used are different;
In method-1, you have no control over how much you will loose in the long run; it is fixed.
In method-2, you have the total control of how much and how fast you can loose.
But the ultimate result will be the same!
OR is it???
Is gambling worse than trading? or is it the other way round?
Well, my understanding is that it is up to us;
it is up to us to make trading worse or better than gambling.
Depending on our understanding of the markets and 'feeling' of mathematics, we will find trading is better or worse.
(I purposely used the word 'feeling'. because knowing and feeling are different skills)
Do you guys think it is worthwhile to initiate a long mathematical exploration to find out what makes the difference?
If so, we can continue this discussion to have a closer look at the following;
* Random approach
* Methodical approaches: martingale, reverse martingale, Labouchère systems, Reverse Labouchère systems, scaling in, scaling out.
* Turning the tables to our direction; i.e. Controlling the probability of the outcome.
Let me know your interests.