Last weekend I was in Las Vegas – strictly a business trip. Although I’ve been to that city seven or eight times, I’ve not once lost a penny gambling. Why? Because I’ve never even played the slots while there. Gambling is just not my thing. I guess it’s hard to get beyond the fact that it’s a losing proposition in the long-run. Yes, there is the entertainment value, but I’m just not that interested.
Trading is often compared to gambling. On the one side there is the element of chance – the idea of the unpredictable outcome. While it can certainly be said that for any given trade any outcome is possible, that’s as far as it can go. In gambling the odds are stacked in the house’s favor so the more you play the more likely you are to come out on the losing end. This is not the same for trading because in the markets you can develop a plan and a strategy which puts the odds in your favor. Does that mean making money every trade? Of course not. But a well conceived trading plan can ensure that you will be profitable in the long-run.
The other side of the trading-gambling comparison is the entertainment perspective. Gambling is intended to be entertainment, despite all the efforts to make a killing at the tables or whatever. Trading, though, is not supposed to be for entertainment value. It’s all about profits. Anyone who plays the market for fun has to seriously evaluate what he/she is doing because enjoyment and long-term profitability often do not go hand-in-hand.