Trading and Gambling
They are both speculative activities where the outcome is winning or losing money
Both have risk-to-reward strategies
FX Trading - the buying and selling of currencies or commodities
Characteristics
Chart/market analysis - predictions based on past data + price action
Emotionless - based on following rules, not determined on the outcomes of trades
Mechanical - tested and proven strategy based with strict criteria
Slower results - Long term can be profitable if you are consistent
Gambling - the betting or staking of MONEY to have a chance of winning more MONEY
Characteristics
Based on guessing/hope/luck
Fun activity
No strategy except maybe for Black Jack or Poker
Random outcomes
Low probability of winning - odds are against you
Quick results - the outcomes are revealed quickly
Trading learning curve
At first you don't know what you don't know but with time and experience trading your learning should broaden and your trading should become better. If you aren't improving and working on your trading then you are gambling
Emotions
Whilst trading you should be using a strategy that has strict criteria so you should not have any emotional attachments to the outcomes
If you are feeling excitement or a rush then you are most likely gambling
Trading is not based on the outcome but more on the process and if you are trading to win then its high likely you will not be able to handle losses
Successful traders know that with a proven strategy the profits will come but they also know that even with an edge, trades can win or lose. The important step is following the process
TILT
Tilt is a poker term which describes a frustrated or angry mental state of a player which causes them to play at a lower standard
This can happen to traders too when they are emotionally attached to the markets and are triggered into making trading mistakes
Conclusion
There is a fine line between trading and gambling and to be a successful trader you must adopt and practice the characteristics of a trader ONLY
Ask yourself:
Do I work on improving my edge?
Do I have a proven strategy with mechanical rules that I follow?
Am I emotionally attached to the outcomes of my trades?
Do I have a plan for removing bad habits?
If you can answer YES to all of these questions, you are on your way to becoming a great trader!!
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