Are You Investing or Gambling?
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In the context of this definition, trading is gambling; however, so is starting a small business, going to college, getting married, having kids, buying a house, investing in the stock market.
Keep that in mind as you read this post. Your mindset is a fragile thing. Unlike a trading account which can be re-built over and over again due to additional capital injections obtained through work outside of trading, family, is stock trading gambling, etc. Part of that great care is dispelling and disproving all of the negative, toxic thoughts that enter your mind via external sources e.
And that takes us to the reason why I decided to write this post: That traders are gamblers? All present-day traders have heard the aforementioned at least once in their career — but, with the presence of social media and the Internet, probably have heard it and continue to hear it a lot more than once — they probably hear it every damn day I know that I do.
What kind of impact do you think this has on your mindset as a trader? And for many traders, it has meant the difference between pushing forward through adversity e.
Is there a high failure rate in trading? Who the fuck knows. But just like in trading itself, context is key. You see these characters on Twitter every day:. Because good trading takes a lot of work, especially in the beginning when the learning curve is substantial. Most people suck at managing their own money.
The point is, the pool of those in society who actually have the drive and the mental, emotional, and financial maturity to develop the qualities necessary to be a successful trader is very small.
Yet society is full of individuals who want to make a lot of money and want to make it fast — individuals who undoubtedly are drawn to trading and to the markets. In other words, traders who act like traders are being lumped in with degenerate gambling bozos which significantly distorts the true trading failure rate, since degenerate gamblers are being lumped in with actual traders. Second, anything with potential reward carries with it risks and varying rates of failure.
The aforementioned failure rates — all failure rates that are commonly accepted and reported when doing research on the Internet — demonstrate that, on the surface, failure is a part is stock trading gambling life for most of us. However, just as is the case with the trading failure rate, if we were to eliminate some of the common variables that lead to failure with these endeavors, then the is stock trading gambling rate of those who start a small business, go to college, or get married without said variables in the picture would look much better.
Is stock trading gambling odds are significantly against them, and with those odds, they face great risk of ruin more on those specific risks of ruin soon across a variety of spectrums. As traders, we is stock trading gambling this disclaimer all of the time.
Or those feel good college education commercials? And what about is stock trading gambling nauseating eHarmony commercials? But — based solely on the numbers — all 3 of these commonly accepted and encouraged endeavors carry with them their own degrees of significant risk and danger.
Yet trading undoubtedly gets the most significant scrutiny and stigma applied to it. After reading about these failure rates of very common endeavors for a high percentage of people in developed, free countries, think about this:.
As mentioned earlier, traders are commonly viewed as gamblers. When you gamble, you take a risk betting that the outcome reward will be worth the risk. Thus, it seems most fitting that in order to properly gauge the degree to which something is to be considered gambling, one must look at the probabilities in addition to the Risks vs Rewards. Understand which variables may increase your probabilities of failure and which variables may increase your probabilities of success.
Then, based on that, determine if you have a more likely chance of succeeding or failing at your specific venture. Once this is determined, then you need to measure the risks vs rewards. The main point that I want to drive home is the following: All 3 of the aforementioned, commonly accepted and promoted by society, life changing decisions carry with them significant levels of emotional, relational, and financial risks, just as trading is stock trading gambling.
Each have varying degrees of potentially high failure rates. Each have potentially promising rewards. But we as is stock trading gambling are led to believe that attempting to become a trader is a shameful endeavor, a form of gambling, with a failure rate and risk factors far greater than other more common life endeavors such as those mentioned in this post. Can trading be gambling? But based on the information described is stock trading gambling cited in this post, so can starting a small business, going to college, or getting married.
In terms of trading, I did my homework. When you take all of those degenerates is stock trading gambling of the picture, the true trader failure rate is much lower, specifically for those who:. The way I look at it, given that our time alive is finite, are you risking more working a job for shit pay, longing for the weekend to come, doing something that you may not even like, or are you risking more taking a chance to unlock your ultimate potential as a free is stock trading gambling by doing something that you love by starting a small business or trading?
I say small business or trading because the risks and rewards between the two are very similar, is stock trading gambling previously outlined in this post. However, I personally believe that the rewards are much greater with trading, which is one of the reasons why I gave up my six is stock trading gambling income as a small business owner years ago to pursue a career as a trader.
Most importantly, remember this:. You see these characters on Twitter every day: Lazy, get-rich quick types with a completely unrealistic perspective about what it means to be a trader. And what about those who quit their job to get rich as a trader, giving up their sole source of income, only to find that it takes longer than originally anticipated to make money, essentially forcing them to go back to work and put trading on hold or quit altogether?
Failure rates of common life endeavors Second, anything with potential reward carries with it risks and varying rates of failure. A small business is more likely to fail due to: Lack of experience Insufficient capital Poor location Poor inventory management Over-investment in fixed assets Poor credit arrangements Personal use of business funds Unexpected growth Competition Low sales And college: Variables that increase or decrease your probability of failing college: A study showed that children from low-income households were 7.
A Balancing Act Is stock trading gambling Probabilities and Risk vs Reward After reading about these failure rates of very common endeavors for a high percentage of people in developed, free countries, think about this: How many people who opt to start small businesses are referred to as gamblers or degenerates by their family and friends?
The mainstream, broadly reported failure rate of small businesses is almost identical to that of the commonly discussed trading failure rate. What happens to that capital when their business fails?
Is that risk not as great as that of a trader? Then why is the same stigma not more commonly applied to small businesses? How many students who opt to go to college are referred to as gamblers or degenerates by their family and friends? Mix in the fact that a high percentage of students take out student loans to fund their education and are students not taking on a even more significant risk?
Yes, if they graduate, then they have the potential to find a well paying job in their field which can help mitigate some of said risk. That sounds like a pretty big gamble to me. Is stock trading gambling many people who opt to get married for the 2nd and 3rd time are referred to as gamblers by their family or friends?
And when kids are involved, the gamble is even greater. Small Business Risks vs Rewards Risks: Losing all of your initial investment if the venture fails.
Neglecting, damaging, or even destroying relationships due to lack of time or stress caused by trying to build a successful small business. Significantly damaging your own mindset is stock trading gambling the small business venture fail. Potential health problems due to the stresses of running a small business or dealing with a is stock trading gambling failing business. Be your own boss Set your own schedule Unlock your potential as a is stock trading gambling being Employ others, allowing you to take a direct role in the potential enrichment of the lives of others and their families.
If successful, potentially make good or great money. Build a family business legacy which can be passed down from generation to generation theoretically, but this is more vulnerable to potential seismic shifts in the marketplace or to the health of the economy. College Risks vs Rewards Risks: Failing to graduate Carrying varying degrees of student loan is stock trading gambling obviously, the more debt the greater the is stock trading gambling. Carrying varying degrees of student loan debt without a job or without a well paying degree-related job out of school and potentially for years to come.
Seismic shifts in the marketplace which could potentially limit or wipe out your career options. Damaging relationships with friends or is stock trading gambling due to the need to focus on higher education. Graduating with a degree which has the potential to help you secure a high-potential job or career with no guarantees.
If able to find a well paying job related to degree, then having a higher income compared to peers with less education. An increased probability of financial security and relational security i. Being able to say that you graduated from college. Marriage Risks vs Rewards Risks: With divorce comes the risk of: With marriage comes the reward of: Losing all of your trading capital, which you may or is stock trading gambling not be able to afford to lose. Suffering significant lifestyle setbacks for yourself and, if applicable, your family, if not able to obtain profitability.
Neglecting, damaging, or even destroying relationships due to lack is stock trading gambling time or stress caused by trying to become a successful trader. Significantly damaging your own mindset after severe is stock trading gambling compounded setbacks. Potential health problems due to the stresses of learning to trade is stock trading gambling dealing with a trading account is stock trading gambling a perpetual or significant state of drawdown.
Be your own boss Set your own schedule Unlock your potential as a human being. If successful, potentially make good or significant money. Build a family trading business legacy which can be passed down from generation to generation not nearly as vulnerable as a small business legacy since the market will always be open for trading unless the world comes to an end. Degenerate Gambler vs Trader In terms of trading, I did my homework. When you take all of those degenerates out of is stock trading gambling picture, the true trader failure rate is much lower, specifically for those who: Most importantly, remember this: