Hey hey, what's up my friend so in today's episode right i want to discuss. Is trading gambling, i'm sure that's a question that have you know pop up in your head from time to time? Right, especially if you go down to trading forums right, you see people, you know creating threats. Topics on is trading gambling. Then you have questions.

Answers like yes, trading is gambling you're a gambler. Then you have on the other camp. People who say no trading is not gambling trading is a legitimate business, yada yada. Now the question is, you know, who's right, who's wrong right, so i'm going to share with you my point of view right to whether trading is gambling.

First and foremost, let's define gambling. What is gambling well in today's modern society? Right gambling is where you risk your own money to make even more money, and you agree right that at the start, there is a possibility of you losing your money. If things doesn't go your way and there's also a possibility of you making even more money, if things does go your way, that's gambling there's a pop probability of you losing or winning, and if you ask me, gambling is kind of like the the hater right, the The the parent, if you want to call it and below gambling right the children, there are many forms of gambling. You have sport, betting, you have casino games like poker, baccarat, etc.

Then you have trading. There are different forms of gambling out there. So, in my opinion, right trading is a form of gambling and it's only one form of gambling and i'm sure you can agree right that as a gambler, there are professional gamblers that make money consistently and then they are the majority of gamblers who lose money consistently. Like you know, professional poker players who you know goes down to the casino and they are consistently profitable right.

They treat poker as their business, a serious business. Then you have sports better right who analyze right the the math out there on all the different sports results and then place their bets. Those are professional gamblers as well, and they make money in the long run and same for trading right. We, depending on how you look at it whether you're serious about it.

Do you treat this as a professional business right? Only a small percentage will make money in the long run and majority will lose money. So, in my opinion, right trading, yes, is gambling, but it doesn't mean that you have to be a loser because, as you know, right there are professional gamblers out there who wins and then the majority who lose most of the time and it's the same for trading. Okay, so that's my take on it. Trading is gambling so now the question is: how do you actually, you know, be different from the majority of the losers.

How do you be that small percentage of winners that make money in the long run? That's the question and let's look at this from a casino point of view because that's i would say, those those are like kind of like the biggest game gambling house out there, so for a casino right to make money consistently in the long run. There are two main ingredients that they need. Let's not you know talk about all the marketing strategies, how they attract clients, customers and stuff. Like that, let's start with the basics, the two main ingredients they need number one there are games in a casino must have an age over the players.

This means they must have a positive expectancy right. The house must have an age over the players. This means that the games that they organize must be skewed in favor of the casino, but that doesn't mean right that the casino cannot lose in a short run. Yes, they can lose in a short run, but in the grand scheme of things, when you look at the statistics and numbers, the casino has an age over the players.

That's the first thing you need, you must have an age and for a casino, it's a mathematical h, right like a dice right. It can only come out one two, three, four five or six, it's a mathematical age. So, let's say, for example, simplified version. Let's say every time the dice come up, one three and five casino wins two dollar.

Every time it comes up. Two four six casino loses a dollar eighty cents. In the grand scheme of things, a casino will make money in the long run because they have an age in the dice roll. The simple dice roll that i just shared with you.

Okay, second ingredient: that a casino needs is risk management. A casino right just because they have an age doesn't mean they can let a big high time roller to bet one billion dollars on one round of gamble, because that could just simply bankrupt the entire casino. If, if that gamble doesn't work out for the casino, so they have risk management, they have table limits to contain their losses. So these are the two main ingredients.

That is what make casinos you know, make money in the long run, and it's the same for trading. If you want to be a winning trader number one, you must have an age in the market now for a trader. Your age is slightly different because you're not rolling a dice where your outcome is just one two, three five or six. Your outcome is almost unlimited.

Almost anything can happen in the market, so the way to get an edge in the markets, in my opinion, is to take advantage right of human behavioral biases, for example, trend following right markets trend falling, for example. It does well during crisis period, and why is that? And it's simple because when market collapse, investors traders, they all think similarly sell. All the risky i said, sell the stocks sell the market. So i sell the stock markets, buy bonds buy gold and this will lead to trends in these markets and when this market is trained, guess what trend followers make money because they exploit trends in the market.

So that's one right: exploiting right, behavioral prices, biases in the market and that's and trend following is not the only way you can also you know. Look at things like mean reversion trading in the stock markets when there's a sharp pullback, a sharp retracement. You know due to a oversold of uh certain stocks right, panic selling, usually more often often than not the next few days the stock will rebound higher. So if you can exploit against such a short-term panic selling in the stock markets, you can actually, you know, buy low and sell highs.

That's another way right to extract age right in the markets. So that's the first thing. Second thing: risk management as a trader as an investor as a gambler, you must have risk management. This means that you agree that you could be wrong on that trade, and you want to make sure that when you are wrong, it doesn't wipe out your bank roll.

It doesn't wipe out your entire trading account, and this is very simple all right. It's all about position, sizing, stop loss, etc. Okay, so i mean i have articles devoted to it on my website. You can just check it out, okay, so now the question is: how do you find an age in the markets? How do you go about doing it again? I've said this a number of times already on this show: go and read trading books right that have back test results that come with it.

You know, for example, a few that come up to my head right now. It could be uh unholy grills by nick reg, following the trend by andreas cleno. How about uh buy the fear, sell the grid by larry connors? This is a few just come up to my head. These books already have the system, the back test results for you to check out, but don't just take it at face value.

Take the system tweak it and test it and validate it and see whether it works for you right, don't trade, anything blindly right! So that's the first thing: the easiest way to get an age in a financial market number two. What about risk management? How do you apply proper risk management? Just you know. Google right position, sizing calculator for stocks, position, sizing calculator for forex or whatever markets. You're trading enter the your account size, the amount you want to risk.

They will tell you right how much to risk or how many units of shares to buy or currencies to buy. Based on your risk profile - and that's pretty much it that's how you know could go about uh getting an edge, getting a competitive advantage right over the other traders out there. Okay, i hope this makes sense. So, as a quick recap, number one is trading gambling.

In my opinion. Yes, according to the definition, trading is gambling thing right as a gambler as a trader majority are losers and there's a small minority right that wins consistently over time and you kind of want to reverse engineer. What are the winners doing and if you ask me, it's just two main things number one: they trade with a positive expectancy. They trade with an age and number two.

They practice proper risk management, make sense alright. So with that's it. I have come to the end of this episode and i'll talk to you soon. You.