Is stock trading analogous to gambling?

For many trading and gambling, are same in theory but are practically different. One is calculative risk-taking and another luck or chance game. But both offer unlimited potential for profit or loss.

stock trading

While trading most people have the will to win. Nevertheless only a few have the will to prepare to win. So, here are some stock trading tips for you.

Analyzing data

Trading in the stock market is not a game of dice, it involves, apart from other things introspecting the past data that is available and analyzing it. In gambling, it is an ultimate win or loss, but in trading, nothing is ultimate, neither the win nor the loss. Companies are in constant competition with each other to provide better services and bring in new products for better utility. This leads to a rise in their stock prices which earn better profits for the firm.

Reasoning, rationality, and logic

Traders want to invest in right stocks and hence constantly seek the latest information about the company. To predict market trends they perform technical and fundamental analysis and calculate things mathematically. They apply reasoning, rationality, and logic to come to the conclusion which stocks to buy and which to sell. Investors on the other hand judge past trades and then plan their strategy. Where to invest, amount to be invested, and for how long should they hold. Gambling is totally different game altogether.

Entering and exiting market

All trades are first carefully analyzed before buying and selling. Traders know at what level they will enter the market and exit before initiating any trade. They follow the strategy that they have made and are disciplined in it. Everyone knows that the market is unpredictable and the wise investor goes in a planned manner rather than playing with odds. It is due to his discipline and patience that he made a good profit. Trading is not winning the one-time jackpot but it can be a regular source of income.

Calculating before buying/selling

Before trading one should know that he/she cannot win each and every trade. Whenever one trades he should have a long-term approach. Before investing the trader should gain as much knowledge about the company as possible. Blindly buying stocks without calculations and analysis is like betting at the poker game without looking at your cards.

Effects of environment

In gambling no outside events affect the outcome, in stocks outside events like a good/bad monsoon, change of political power, change in government rules/regulations, strike etc. affect market movements.

Planning and learning

In gambling, there is a get-rich-quick perspective which is not suitable in the stock market. Traders look for a plan that provides for a learning experience which in due course leads to success. A trader gains experience even when he loses and using this experience he can gain better profits in the future, nothing like this in gambling.

Risk can be managed

In trading, you can incorporate risk management techniques to reduce loss. Risk cannot be managed in gambling, you win or you lose as simple as that. No need for technical and fundamental analysis in gambling.

We perform technical and fundamentals analysis of the company before providing you with any tips or suggestions. We also study other parameters like political climate, change in government rules or regulations, weather conditions (rainfall), inventions or discovery, etc. before coming to any conclusion to buy/sell the shares.

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