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Day trading, gambling, and investing: three terms that sometimes become meshed together. And with the rise of each one of them, people may confuse one with another.
Yet, what are the differences? Could trading be considered gambling? And vice versa? What about investing?
Experts have dwelt upon these industries as well as the safest places to pursue each one of them.
We’re here to shed light on these three specific terms and each one of their contexts, as well as the multiple distinctions and similarities between them.
And those who choose to invest, use the risk-return ratio to their advantage and understand if it is worth allocating a percentage of their capital to receive profitable returns. Of course, any comparison must be made in accordance with the type of stock exchange of your choice.
One significant aspect of investing is that it takes a longer time to gain profit from it as the returns may change overnight.
As opposed to investing, which relies on longer time spans for significant returns, day trading is a swift process.
Buyers don't like to linger on and are looking to make the most of any market changes while keeping an eye on the best opportunities. Therefore, they buy something with little money, only to double or even triple the price when selling.
At the same time, they must be aware of everything that happens on the market, from recent events, news, statistics, charts and so on, to be able to build their strategy.
Gambling implies placing wagers on an uncertain outcome that primarily relies on luck. The player may either win or lose, depending on the game’s odds, which vary in percentage.
Of course, in some cases, success and failure can also rely on other factors such as skill or experience, and these can outrun the 'luck' component.
For example, Poker heavily depends on understanding the opponent’s gambling behaviour and strategy but also on the ability to control even the slightest reaction that might be a dead giveaway. These factors can play a big part in overturning the outcome of a gambling event, even when the odds of winning are pretty low.
Yet, others assume the possibility of losing and create such a framework that, in this event, the end loss would not be so substantial. So, they rely on GTO or exploitative strategies that may reveal the rival’s next move and disarm him.
With day trading, sellers must spot the best opportunities and immediately grab them before anyone else sets their eyes on them. And then, to sell the goods as quickly as possible while they're still valid.
Depending on how much gambling experience you have and, of course, your luck, you can lose or win pretty quickly.
The one that requires more time is investing; to see profit, investors must study the market carefully, pay attention to some indices and prepare themselves with patience for a pretty long wait.
Slots are an excellent example since they rely on a variable parameter called ‘Random Number Generator’ (RNG), which, ultimately, decides the outcome of the game, irrespective of your skills.
For instance, there are tremendous differences in risk-taking and investment amounts if we look at the New York Stock Exchange in comparison with other smaller stock exchanges.
For example, when it comes to gambling, it’s not enough to presume the outcome of a game but also to inform yourself beforehand about the general rules, the casino requirements and conditions, as well as the psychology of the game itself.
According to an extensively analysed list, gamblers usually look for:
Nonetheless, since they have quite a few things in common, if you already have some knowledge about one of them, you might have an ace up your sleeve with another!
Day trading, gambling, and investing: three terms that sometimes become meshed together. And with the rise of each one of them, people may confuse one with another.
Yet, what are the differences? Could trading be considered gambling? And vice versa? What about investing?
Experts have dwelt upon these industries as well as the safest places to pursue each one of them.
We’re here to shed light on these three specific terms and each one of their contexts, as well as the multiple distinctions and similarities between them.
How can we define investing?
Investing implies the intention of producing a profit based on a sum that you put in without knowing if your investment is successful or not. This may read very much like gambling, yet there are some noticeable differences.Research is the key to profit!
First and foremost, this process requires thorough research.And those who choose to invest, use the risk-return ratio to their advantage and understand if it is worth allocating a percentage of their capital to receive profitable returns. Of course, any comparison must be made in accordance with the type of stock exchange of your choice.
One significant aspect of investing is that it takes a longer time to gain profit from it as the returns may change overnight.
Trading facts
Day trading means buying and selling products (a process usually conducted between two parties). These 'products' refer to either goods or securities that are being given by the seller in exchange for other goods or for compensation.As opposed to investing, which relies on longer time spans for significant returns, day trading is a swift process.
Buyers don't like to linger on and are looking to make the most of any market changes while keeping an eye on the best opportunities. Therefore, they buy something with little money, only to double or even triple the price when selling.
Supply and demand
The supply and demand dynamic happens quickly, yet with higher risks involved. Traders don't like to beat around the bush as they must move fast before someone else takes their lead.At the same time, they must be aware of everything that happens on the market, from recent events, news, statistics, charts and so on, to be able to build their strategy.
What is gambling?
Gambling implies placing wagers on an uncertain outcome that primarily relies on luck. The player may either win or lose, depending on the game’s odds, which vary in percentage.
Of course, in some cases, success and failure can also rely on other factors such as skill or experience, and these can outrun the 'luck' component.
For example, Poker heavily depends on understanding the opponent’s gambling behaviour and strategy but also on the ability to control even the slightest reaction that might be a dead giveaway. These factors can play a big part in overturning the outcome of a gambling event, even when the odds of winning are pretty low.
How much are you willing to risk?
Players always pay close attention to the sum of money already placed in the pot and, based on this criterion, assess the amount they wish to gamble. It is true that some function on the principle of: ‘go big or go home’ and risk tremendous amounts, sometimes even if they don’t own them.Yet, others assume the possibility of losing and create such a framework that, in this event, the end loss would not be so substantial. So, they rely on GTO or exploitative strategies that may reveal the rival’s next move and disarm him.
Spot the differences between gambling, investing and day trading!
Long terms versus short term involvement
The major difference between the three is the amount of time each one implies.With day trading, sellers must spot the best opportunities and immediately grab them before anyone else sets their eyes on them. And then, to sell the goods as quickly as possible while they're still valid.
Depending on how much gambling experience you have and, of course, your luck, you can lose or win pretty quickly.
The one that requires more time is investing; to see profit, investors must study the market carefully, pay attention to some indices and prepare themselves with patience for a pretty long wait.
Certainty is relative
Out of the three, gambling has the most uncertain outcome since it also relies on luck. The other ones could have more predictable results.Slots are an excellent example since they rely on a variable parameter called ‘Random Number Generator’ (RNG), which, ultimately, decides the outcome of the game, irrespective of your skills.
Finding common ground
Both Professional and Amateur
Each and every one of them implies a very high responsibility since both the risk-reward ratio and the allocated sums are pretty substantial. On the other hand, they can be pursued professionally and at an amateur level (with meagre sums).For instance, there are tremendous differences in risk-taking and investment amounts if we look at the New York Stock Exchange in comparison with other smaller stock exchanges.
They all imply extensive and thorough prior research
Any type of activity which relies on wagering money to gain profit must depend on a previous complex investigation of both the industry, the competition and the various strategies that can be involved.For example, when it comes to gambling, it’s not enough to presume the outcome of a game but also to inform yourself beforehand about the general rules, the casino requirements and conditions, as well as the psychology of the game itself.
According to an extensively analysed list, gamblers usually look for:
- The Return To Player and house edge values in online casino games (from Slots to Poker, Blackjack, Baccarat and so on);
- Payment and withdrawal methods and their thresholds;
- Licensing and Terms and Conditions;
- Tutorials or live streams with the actual gambling options to learn the rival's behaviour.
Bottom line
One thing is clear so far: each one of these concepts comes with its own specificities. It's crucial to make the distinction between them, to understand which path to choose further on.Nonetheless, since they have quite a few things in common, if you already have some knowledge about one of them, you might have an ace up your sleeve with another!
