Are you investing or gambling?

Gambling is defined as betting under unexpected circumstances. However, when considering transactions, the dynamics of gambling are much more complicated than the definition suggests.Many traders gamble unknowinglyTrading in a certain way, or for reasons completely different from success in the market.

In this article, we will study the hidden ways that gambling sneaks into trading behavior and the stimulus factors that may prompt individuals to conduct transactions (and possibly even gambling).

Key points

  • People who show a tendency to gamble in transactions have two characteristics in common.
  • If a person trades for excitement or socially proven reasons, rather than in an orderly manner, then they are likely to trade in a gambling manner.
  • If a person is trading just to win, they are likely to be gambling. Traders with a “must win” attitude are usually unable to identify losing trades and exit positions.

Hidden gambling tendency

Anyone who believes that they have no gambling propensity is likely not to happily admit that they have a gambling propensity, if it turns out that they actually acted out of gambling impulse. However, discovering the underlying motivations behind our actions can help us change the way we make decisions in the future.

Before the in-depth study of gambling tendencies in actual transactions, many people have clearly shown a tendency even before the transaction occurs. When traders gain experience and become regular market participants, the same motivation continues to affect them.

Social proof

Some people may not even be interested in trading or investing in the financial market, but social pressure urges them to trade or invest anyway. This is especially common when a large number of people talk about the investment market (usually in the final stage of a bull market). People feel pressure to adjust to their social circle. Therefore, they invest so as not to disrespect or ignore the beliefs of others or feel left out.

If people really know what they are doing, then making some transactions to appease social forces is not a gambling in itself. But conducting financial transactions without a solid investment understanding is gambling. These people lack the knowledge to control the profitability of their choices.

There are many variables in the market, and misinformation between investors or traders can cause gambling. Before the knowledge that would allow people to overcome the chance of failure was developed, gambling occurred every time a transaction occurred.

Factors that contribute to gambling

Once someone gets involved in the financial market, there will be a learning curve, which seems to be a gambling based on the social proof discussion above. Depending on personal circumstances, this may or may not be. How this person approaches the market will determine whether they become a successful trader or continue to be a gambler in the financial market.

The following two characteristics (among many characteristics) are easy to overlook, but they can lead to a trader’s gambling tendency.

Gambling for excitement (trading)

Even a failed transaction can provoke emotions and a sense of strength or satisfaction, especially when it is relevant to social proof. If everyone in a person’s social circle loses money in the market, losing money in a transaction will allow the person to enter the conversation with their own story.

When a person is trading for excitement or socially proven reasons, they are most likely trading in a gambling manner, rather than trading in an orderly and tested manner.The trading market is excitingIt connects individuals with global traders and investors with different ideas, backgrounds and beliefs. However, the “thoughts”, excitement or emotional ups and downs of getting caught up in trading may affect the system and orderly actions.

Trading is to win, not a trading system

In any odds-based situation, it is important to trade in an orderly and systematic way. Winning the transaction seems to be the most obvious reason for the transaction. After all, if you can’t win, why trade? But when it comes to such beliefs and transactions, there is a hidden harmful flaw.

Although making money is the overall result we want, trading in order to win money actually keeps us away from making money. If winning is our main motivation, the following situations may occur:

Taylor bought stocks they thought were oversold. The stock continued to fall, putting Taylor at a disadvantage. Tyler didn’t realize that the stock was not just oversold, and there must be other things happening, but to keep holding, hoping that the stock would come back so that they could win the trade (or at least break even). The focus on winning forces traders into a position where they will not get out of bad positions, because doing so will admit that they have lost.

Good traders will suffer a lot of lossesThey admit they were wrong and keep the damage small. They don’t have to win money in every trade and suffer losses when the conditions indicate that they should lose money, which allows them to profit in many trades. Holding a losing position after the original entry conditions have changed or become negative means that the trader is now gambling and no longer uses reliable trading methods (if ever).

Bottom line

The tendency to gambling is much deeper than most people initially thought, and it goes far beyond the standard definition. Gambling can take forms that require proof of oneself in society, or act in a way that is accepted by society, which leads to action in a little-known area.

Gambling in the market tends to be obvious to people who are primarily motivated by the excitement and action of the market.Finally, rely on emotion or a winning attitude to create profitsInstead of trading in a methodical and tested systemIndicates that the person is gambling in the market and is unlikely to succeed in many transactions.


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