Are You Trading Or Gambling?

Trading and gambling are basically not the same in nature. With a sole intention of growth, trading is mostly defined as simply investing in a certain security. Gambling however is generally termed as venturing something on contingency. While trading may not be gambling by definition, it could in some way result to being termed as gambling.

See also: Benefits of Short Term Trading

Traders may not now that they are gambling – this is every so often an unheeded truth present in the modern market. The psychology of trading for the purpose that is utterly different is often overlooked. Whereas having such mentality could possibly result to heavy downfalls especially in one’s investment.

Trading by impulse is one of the common signs of gambling. Here, a trader habitually makes spontaneous and uneducated decision when engaging with the financial activity. By doing such, a trader further elevates the underlying risk present in trading. And therefore, will be considered gambling by nature as it is.

Another factor present in the market is social proofing. Social Proofing is an existing psychological occurrence in the market - it also often gets heavily overlooked. Here people presume the whereabouts of others in an effort to reflect a certain behavior in a specified condition.

Some traders are not fully interested or invested in trading at all. These individuals are mostly pushed by their peers to enter the market. They enter the market with zero interest and thus gambling their investment thoroughly with the fear of being left out.

Another factor that could add to the idea of gambling is plainly excitement. Having to profit by investing on a certain security is one of the blinding philosophies of trading. Trading is attractive in nature which is why some traders would imprudently enter the market with no idea at all. Once deposited with no complete idea of what to do next, the nature of gambling comes to effect.

Gambling is evident in the market. To further avoid it, individuals must invest themselves with the activity wholeheartedly. It also would not hurt to familiarize with the philosophies and ideologies present in the market. Knowing these could help in the decision making when trading and would add to the potential success as goal.

An investment plan is a must in trading. It could help investors trade wisely and not gamble thoroughly.

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