Don't be a gambler be a trader

Don’t be a gambler, be a trader

The successful trader behaves more like a business person so please try Don’t be a gambler be a trader. Their goal is to control risk, manage inventory, follow trends, look for patterns in their customers’ buying and selling, and make money, not excitement, like any business.

The market has one big difference between winners and losers. When new traders are confident about their trades, they go ‘all in’. To be a rich trader, a new trader must manage their risk per trade well.

Why gambling and trading are different

Let’s start by defining what gambling is. You are betting on a bet whose expected value is negative. In other words, a rational person should expect to earn less than they invest. A gambler might get lucky and win much more than predicted by the math. If these bets are placed too often, long-term losses may result.

A trader must make trades with a positive expected value in order to avoid gambling.

Don’t be a gambler be a trader differs in their long-term effects

Let’s apply this concept to trading. How are the trades that you make in the market expected to perform? Getting a true understanding of the odds of making a profit, and the size of it requires establishing a set of rules and testing them over an extensive number of trades so you can find out what the expected value of those rules is.

If the price-to-earnings ratio is less than 70% of the industry average, you may want to buy the stock. This seems like a good idea, but is it really? The only way to truly tell whether this simple approach to the market is effective is to test it over many market examples.

There is no need to complicate strategies. Testing is essential! In the trading market, you are a gambler if you do not set up a set of rules and are not realizing what your trading approach will bring you. Your chances of getting lucky and making big profits are good. Profits for gambling traders are, in reality, just short-term loans.


Leave a Reply

Your email address will not be published. Required fields are marked *

Post comment

More Posts