Difference between trading and gambling?

Gambling is, usually, an event with:

  • Limited duration
  • Finite upside
  • Finite downside
  • Binary outcome

When you gamble you either win or lose. That event usually takes only a small amount of time.

For example, you can bet on a horserace 10 minutes before it starts and 5 minutes later you have a result. For anyone who plays poker, you know it may take a little bit more time as the stakes are raised. So poker is a little bit closer to trading.

In gambling your risk on any event is usually what you outlay. And your potential return is what the house is offering at the time you agree to the bet.

I love to play blackjack (and for some reason, while I don’t play often, I have been profitable almost every time I’ve played in the last 3 years) like one of my trading mentors who was an original Turtle Trader.

A bet on a Blackjack table can take a minute or two until it’s over. Whereas in trading, a trade has the following characteristics: (more…)

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