You're Just Gambling, Dude!

That's what an Englishman told me at a popular hiking trail, after I've told him what I do for a living.

No matter how I tried to explain that trading is just like any other business, he wouldn't budge from his opinion.

Was I surprised by his conviction? That trading is just another form of gambling?

No, because he's not the first one who had blurted that out to me.

And he surely won't be the last one either.

Obviously I don't agree with his view, and here's why....

Yes, there is a risk of financial loss in trading.

Yes, you have no idea how your trade will turn out whenever you put in your order, simply because we're not 100% sure of what the outcome is gonna be.

It could turn out to be a winner, or a loser. Who knows?

So yes, there IS a gambling component on EACH individual trade, even after we've taken the trouble of analyzing our setups before taking that "high-probability" trade (in your opinion, that is).

Just like a flip of a coin, no?

But what if I tell you that if I can find a coin where it would land on its head 65% of the time (this is because of the way the coin was minted, making one side a bit heavier).......which side would you bet on?

If it's just over ONE coin toss, it would STILL be gambling (because we're not 100% sure)

If it's over say, 1000 coin flips, well.....now it gets interesting.

It's VERY LIKELY that the coin would land on its head MORE TIMES, don't you think so? Would you still consider this as gambling, now that you know that you're likely going to win, over a SERIES of coin tosses (instead of a single coin toss)?

Now that coin becomes YOUR EDGE, should you decide to "gamble" using it! Over the long run you'll win more than you lose, unless you lose that coin!

It's the same with trading - we need to find OUR edge. All great traders have their own edge.

Unfortunately, this edge is not easy to get. Requires lots of hard work to develop it.

And you hear talking heads saying that trading is so easy, that even a 6-year old can do it?

Go figure!