Trading or Gambling?

I plan to address the famous question that people who are new to financial markets or have average experience sometimes ask, usually during volatile times in the markets and after big gains or losses: "Is trading really gambling?" 😊

I will try to evaluate this issue under several headings. First of all, i would like to say that people who are professionally interested in trading already know the answer to this question, while people with less experience see gambling as black, they see trading as gray and try to win quickly, so they start doing this job in a line closer to gambling, ignoring many factors that require professionalism. People who really spend time on financial markets and receive the right training know that this job has many serious subheadings rather than just buying and selling something and that trading should be done as a result of serious work, and in fact, people who do what we call trading are people who deal with this job at this level.

If you are new to the market and you buy and sell things just because the market is popular and people are there, if you are hungry and you make purchases and sales with a greed for money, you are not trading anyway. At this point, since you are making purchases and sales with a kind of luck, there is no difference between you and gambling.

Generally, leverage and gambling are often mentioned side by side in financial markets. The reason for this is that people dont understand the leverage system. If you dont understand what the weapon in your hand is for, it can harm you. Leverage is one of the best inventions ever made in the world. If you know how to use it, it prevents you from putting your money into the market that is unnecessarily at great risk, and provides you with great convenience and a playing field. If you dont use it properly and start to act greedy by risking small amounts of money to earn larger amounts of money, then that means you are starting to gamble. When you lose money, you start looking for a culprit and blame the leverage system or even the financial market you are in, but the real culprit here is yourself.

I can actually go into this topic at length, but no matter how much i explain it, it is almost impossible for you to understand it without experiencing it. Trading psychology will basically be based on experience. Think of a game where you fight with yourself, how do you win? You cannot give the answer to this in advance, everyone has to fight with themselves and find the answer as a result, in other words, they will need to have experience. Therefore, psychology has a lot to do with the answer to the question of whether you are trading or gambling. Like gambling, trading can trigger strong emotional reactions. Excitement, the joy of winning, or the desire to recoup losses can affect decision making. However, successful traders learn to control their emotions and stick to their plans.

Trading exists on a spectrum between gambling and professional activity. The outcome largely depends on the trader's approach:

Another important aspect that separates trading from gambling is risk management. Here, risk management can vary from person to person and even depending on the strategy you use. It can vary significantly depending on your risk perception and goals. In general, those who apply successful risk management always apply strict risk control methods such as:

This does not mean that you will not gamble anymore, you will win and you are a professional trader. This is a stressful job that requires serious training and professionalism and many years of experience. Remember, you are responsible for your own actions, at the end of the day we are all adults and no one is holding your hand and forcing you to buy something.

I understand that the get-rich-quick vision is very appealing, but if you jump into the market without thinking about the risk first, it’s only a matter of time before you get hit hard. Of course, when things go wrong, those who lose money always blame others for their losses, but at the end of the day, you made the final decision and you must take responsibility for your actions.

As i mentioned before, even if you apply everything and have a good strategy, it does not mean that you will win, but in the long run, the strategy can bring you to a point. It is possible to win in a scenario where you are patient when you spend years with lower risks but regular earnings. Without going into details, i suggest you focus on the mechanization of any strategy that introduces systematic aspects to your trading. Once you start working through the “if-then” scenarios, it becomes much easier to see if what you’re doing is working. Money and careers in the markets are not made by one trade, but by a series of well-calculated bets that will reward you in the long run. The mindset of focusing on the next 1,000 trades instead of just one is boring, but it is a way to do things.

I developed software just for this special experiment and published it by making simple adjustments to prove it. You can apply and test this experiment for yourself in the long term. https://risk.sozgen.com I am leaving this address here so that everyone can try it. I also shared this software as open source. https://github.com/byozgen/tradingrisk

You can see the results of the test in this visual. As a result of this 365-day test, you can see that although i have a below-average success rate and even have a losing streak, i am actually a mediocre trader, but i ended up making a profit in the end. (This is just an experiment)

In conclusion, trading is definitely not gambling and it is a profession that requires serious professionalism and serious training and experience. Just because everyone can easily trade in financial markets and make money does not make them professionals; they need to have training and experience in this business.

As for me, i have never gambled in my life and i dont do this job professionally, i have been in the financial markets for many years only as a hobby and i dont have time to trade every day like in the experiment i showed you. Nevertheless, i have been trading in these markets as a hobby for a long time, which i started by receiving training, and there were times in the past when i spent as much time as a full-time trader and i think i have serious experience. Although i do it as a hobby, i can understand how difficult it can be for a full-time trader and i can see that this job requires serious accumulation 🤝