There is a lot of confusion in the minds of people whether trading is similar to gambling. This, however, is not totally true. It depends a lot on the individuals investing style and what his strategy is.
Trading is not the same as gambling. This is because there are fixed odds in gambling for all the common games but when it comes to trading it is totally unpredictable. In trading the house which in this case is the market does not have an unfair advantage that gives it an upper hand. Read bitcoin trader scam review.
However, if you are not disciplined trading and do not stick to your trade strategy, then this would make it difficult for you to be profitable in the market.
To know whether you are trading the market like a trader or a gambler, read on.
Do you go all-in?
Based on what your account type with the brokerage firm is, the firm will offer you to trade with margin. This is over and above the amount that you have in your trading account.
As a trader, you need to have money management rules in place and also calculate the risk-to-reward on each trade. This is important for each transaction that you do. But if you go all-in then this means that you are taking risks that are not necessary. This will cause your profits to fall down substantially.
If you see that you go all-in frequently then this is a sure shot sign that you are trading as a gambler and not as a trader.
Do you overtrade?
Gamblers put money on the table, lose, put money again, lose and put money again and again in the hope that they will win at least one bet. This leads to a financial ruin. This is something that is quite common in the market as well.
Even professional traders have times when they have a bad trading day. If the trader thinks that he is unable to pick up good stocks and profit, then smart traders will stop trading for the period.
But if you are someone who trades even on days when the market is not favoring you and you are putting in more and more money and causing more losses, then this is gambling.
Beating the market is impossible and when you start to try to do so understand that you have crossed the line from being a trader to become a gambler.
Are you taking credit to trade?
Never even take credit to trade in the market. Also, make sure that you do not take loans to trade. This happens when greed creeps in. If you are borrowing to trade or taking out money from your investments to trade in the market, then stop right away. This is not what is called trading. This is pure gambling.
Losing money in the market is fine and this is something that everyone does. But you do not want to be in debt because of the market. You cannot make profits with your own money and you think that you can do so with borrowed money?