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Insider Knowledge: Exploiting the House Money EffectIntroduction In trading and investing, psychological biases significantly influence decision-making. One such bias is the "House Money Effect." Understanding this effect can help traders avoid common pitfalls and take advantage of this phenomenon. What is the House Money Effect? The House Money Effect is a psychological phenomenon where individuals are more likely to take risks with money they have won rather than their initial capital. In trading, this means traders become more risk-tolerant after experiencing gains, treating profits as "house money" and taking on higher risks than they would with their own capital. Why Does It Happen? The House Money Effect occurs due to several psychological factors: Mental Accounting : People tend to treat money differently based on its source. Profits are often seen as less valuable than initial capital. Overconfidence : After a winning streak, traders may become overconfident in their abilities, leading to riskier trades. Loss Aversion : Gains are perceived as a buffer, reducing the fear of losses and encouraging riskier behavior. Example of the House Money Effect on Crypto In the 2021 Crypto Bull Market, we saw Bitcoin soar to all time highs. This subsequently caused many altcoins to rally really hard resulting in some 100-500x and numerous 2-3x tokens. If you observed at what point in the timeline this happened, this happened towards the end of the bull run, when everyone already knew about crypto and everybody was seemingly getting rich by buying cryptocurrencies. This was the peak of retail activity, which includes newcomers as well as those who got rich from holding tokens earlier. This is a perfect example of the phenomenon with several key characteristics Was after a period of extreme gains Was causing risk assets to outperform, suggesting a higher risk tolerance in the market Immediately after the markets tanked, clearly indicating this was a massive retail loss By understanding and spotting the House Money Effect, traders can better manage their emotions and make more rational trading decisions. Recognizing this bias is the first step toward mitigating its impact and maintaining a disciplined trading strategy. We hope you enjoyed reading this idea.
INDEX:BTCUSDEducation
by AlgoAlpha
2
$MEME / memecoin / memeland macro analysis ⏰It's one of my favourite coin 📌 which i invested only gamble liquid 💰 just 5% of my portfolio 💰 Buy :-: $0.045 below always #buy 🎯 :-> $0.098 is key 🗝️ resistance 📌 Main target => $0.26 🎯 get ur liquid 💰 + 1x profit ( principal trade with +100% ) Expecting top 🔝 $0.8 / $1.55 ( assumption ) Invalid 📌 below red line 📌 backup plan comes 🫴 into play ▶️ Just follow article , give boosting 🚀 share ...... Follow updates 👇 .... 🔜 Soon I will submit more details / information ℹ️ under this ..... ❤️‍🔥
Long
by raj5_7_5
Is trading really gambling? Yes and no!I know why you’re NOT trading. You think trading is nothing more than gambling. I get emails every day from members saying things like. “Timon trading seems like going to the casino”. “Timon I don’t want to put money into something that’s gambling” “Timon thanks but I don’t gamble” So you’re not trading because you think it’s like gambling. Well, before you send me another email like this – Please make sure you read this carefully. Let’s dive into the heated debate and let’s see if I agree whether trading is just gambling. Does Timon think trading is just gambling? YES! I do believe trading is a form of gambling. BUT – hold on… Gambling exists in two realms. Chance vs. Strategy There is chance gambling and strategic gambling. Chance gambling is similar to playing slot machines, lotteries, and coin tosses. It’s 50/50. And it’s all up to chance. Have you ever heard of a professional slots player or coin flipper? I don’t think so. Then in the other realm of gambling is known as strategic gambling. The strategic domain is where skill, knowledge, risk management, methodology, probabilities and decision-making play crucial roles. And that my friend, is why I believe trading is a form of strategic gambling. You do get professional and successful poker and black jack players, sports bettors and of course traders. Right? And that’s because you need skill, strategies and the right techniques to WIN as oppose to mere luck. So before you quit trading because you think it’s nothing more than gambling, allow me to go one step further. Let’s talk about the similarities between certain strategic gambling games and see how we can learn from them with trading. Strategic Game #1: Trading and Poker – The art of strategy and risk management Poker and trading share a few similarities. They both emphasize skill, strategy, and a sprinkle of luck. But you need a deep understanding of the rules. You need keen observation of the competitors. You need adeptness at risk, reward and money management. Poker players and traders alike must know when to hold their ground and when to fold. Poker players put their cards down when the probability is low. Traders either don’t take the trade, risk little in medium probability trades and use tools like stop losses to risk little. Poker also teaches the importance of emotional control and patience. And these as I have written many times before, are crucial in trading. Because emotional decisions can lead to significant losses with both poker and with trading. Next game… Game #2: Trading and Roulette Playing the probabilities It may seem at first that roulette leans more towards chance. Red or black, odd or even etc… But the fact that you have a choice, means that it offers you some form of probability. A fundamental concept in trading are probabilities. Traders, like professional roulette players, use statistical analysis to help make informed and better decisions. It is unpredictable what the ball will land on. Just like it is unpredictable which way the market will go. But if you have a sound system, proven track record and winning strategy – you will be able to base the probabilities and tilt the odds in your favour – over time. In trading, while certain market movements can’t be predicted with absolute certainty, we rely heavily on technical, fundamental, statistical analysis and probabilities to make trading decisions. Trading, much like roulette, is where you need to diversify your positions and bets. And you can WIN in the long run if you follow your high probability strategy. Game #3: Trading and Blackjack How a maths boffon can win overtime In blackjack, players make strategic decisions to outmaneuver the dealer. The main goal is to try and get the cards we’re dealt to hit 21, be close to 21 or be closer to 21 than our opponent’s hand. Bet too high past 21 and you burn (lose). This is similar to trading. You need to be able to analyse the marker conditions. You need to be able to calculate your position sizes and risk management according to your trade line up. Both games need you to have a balance of risk, strategy, and knowledge to succeed. Game #4: Trading and Horse Racing Know your horse! Now this is a game that has turned many statisticians into multi millionaires. Horse racing is where you need to know and choose the right horse that will win based on its: Form Characteristics Conditions of the race Weather on the day and other factors. They study the characteristics, and race conditions to a T. They calculate based on past performance on which horse has the higher probability of winning. Traders need to know their horses (markets) too. Every market you choose to trade, has its own personality, form, movements, and style. You need to check to see if the chosen market has worked for your trading system and portfolio over time. And you need to choose the right time, market environment and other factors – before you take on the trade. In horse racing, experienced bettors also diversify their bets across multiple races and horses to spread risk. With trading we diversify our portfolios over different accounts, markets, sectors, instruments and types. Finally let’s talk about the last game: Game #5: Trading and Sports Betting The power of predictive analysis Sports betting, much like trading, relies on predictive analysis to almost see potential outcomes. If you understand a team’s performance, strategy, and conditions – You will be able to make better betting decisions for the next game. As a sports bettor you definitely need to know how to analyse a team’s or player’s form, weather conditions, past scores and more to predict an outcome. Whether it’s football, rugby or cricket – you need to have your winning game plan to increase your chances of winning the bet. Traders do the same. They have different markets like sports bettors have different games. Traders also conduct similar technical, fundamental, sentimental, volume analyses to help predict potential market movements. Both activities involve calculated risk-taking, aiming for high-probability successes based on thorough research and analysis. Final words: So, as you can see trading is MORE than just gambling. Unlike games of pure chance, trading is a disciplined, analytical pursuit that shares more in common with skill-based gambling. It does require you however to have the right knowledge, strategy, and strong risk, reward and money management. Let’s sum up the games and sports vs trading so you can remember what we’ve covered today: Game #1: Trading and Poker – The art of strategy and risk management Game #2: Trading and Roulette – Playing the probabilities Game #3: Trading and Blackjack – How a maths boffon can win overtime Game #4: Trading and Horse Racing – Know your horse! Game #5: Trading and Sports Betting – The power of predictive analysis DO YOU THINK TRADING IS LIKE GAMBLING?
JSE:J200Education
by Timonrosso
Let’s Compare INVESTING, TRADING and GAMBLING Hey traders, In this post, we will compare investing, trading and gambling . 📈 Investing Investing is the act of putting money in a financial market with the expectations of a long-term positive return. The investing decisions are usually made using fundamental analysis. The main goal of an investor is to predict the long-term market trends and benefit on them. Professional investing also involves assets allocation and diversification aimed to hedge potential risks. 💱 Trading Trading is the process of selling and buying financial instruments expecting a short-term (occasionally, mid-term) profit. The trading decisions are usually based on technical and fundamentals analysis. The goal of a trader is to predict local price fluctuations and catch them. Professional trading implies strict, rule-based actions following a trading plan. 🎰 Gambling Gambling is the act of betting on a specific event with the expectations of winning some value. Being completely luck-based, gambling usually involves get rich quick schemes and pursuit of easy money. What differs professional trading and investing from gambling is the fact that professional trading / investing involves objective analysis and strict planning, while gambling remains purely intuition based. Unfortunately, most of the market participants pretend that they trade and invest professionally while acting as gamblers in fact. Remember that long-term, consistent profits can be achieved only with the plan. Your intuition may bring some short-term profits, but in a long-run it will most likely lead you to a bankruptcy.
OANDA:XAUUSDEducation
by VasilyTrader
4
Is Trading Gambling?How many people lost money within the past 60 days? How much invalid effort has been made? Trading crypto assets is basically gambling. Based on my experience and the traders I've dealt with, I haven't seen any traders who consistently use leverage and make a fortune. It's common for traders to see 100% return on investment (ROI) in a month, then lose everything in a single day. To repeat, Trading crypto assets is basically gambling!!! Because of the weakness of human being: Lack of discipline, improper position sizing, and canceling stop-loss orders are all recipe for disastrous risk management. Emotions: Fear and greed Loss Aversion, Humans feel the pain of losing more intensely than the pleasure of winning. Sunken Cost Fallacy: People are reluctant to walk away from something they've already invested in, even if it's a losing proposition. Confirmation Bias: Seeking out information that confirms your existing beliefs about a position, while ignoring contradictory evidence. etc.......... So if you are human being, stay away from trading, consider exploring alternative investment options like AI-powered signals, automated services, or ETFs with a history of consistent returns. However, remember that even these involve risks, so thorough research is crucial.
Education
by go8686
6
Delta corp is bottoming out Soon Delta Corp is Bottoming out soon irrespective of any news !! Stock is near long term support of 90-100 Currently stock is in a falling channel and prices may continue to go down unless it don't breaks the upper resistance of the channel Every time stock comes around long term support we can see huge upside of 200-250% in few months Keep it in watchlist and take your own decisions !! Disclaimer : We are not SEBI registered analyst. Do your own research before taking any investment decision.
NSE:DELTACORPLong
by FiveCircles
1
Trading &/or GamblingThe difference between trading and gambling. This article will shine a light on the most frequent mistakes that traders make. These mistakes blur the thin line between trading and gambling. Many people have spoken on this topic, but we truly believe that it is still not sufficient, and traders should be better educated on how to avoid gambling behaviour and emotional outbursts. When we speak about trading versus gambling, we define gambling as the act of making irrational, emotional and quick decisions. Most of the time, these decisions are based on greed, and sometimes fear of the trader. Let’s dive into the exact problems we have personally experienced thousands of times, and want to help others avoid. 1 ♠ Bad Money Management This is something that everyone has heard at least once, but seems to naively ignore in the hopes that it is not that important . It is the most important . When a trader enters trades, it is exceptionally alluring to enter with all of their money, or close to all of it. In gambling terms, that is going “All in”, or “All or nothing”. As a rule of thumb, both traders and gamblers should only place or bet money that they can afford to lose. Thankfully, at least in trading one can limit their loss for that specific trade, by placing a stop loss or exiting before total liquidation. In Poker, you can’t fold when you are “All in” and take a portion of your money back. However, that does not mean entering trades with full capital, even with a stop-loss, is going to give you exponential returns and feed your greed for profits. Traders should enter positions with a small amount of their full capital, to limit the damage from losses. Yes, you also limit the possibility that you win a few trades in a row with all of your money and… There goes the greed we mentioned. The “globally perfect” percent of equity you need to enter trades to reach that balance between being too cautious and too greedy does not exist. There are methods, like the Kelly Criterion, as described in our previous Idea (see related ideas below), that help you optimize your money management. Always ask yourself, “How much can I afford to lose?”. Aim for a balanced approach. This way you can position yourself within the market for a long and a good time, not just for a few lucky wins. Greedy money management, or lack thereof, ends in liquidations and heartbreak. 2 ♣ The Use of Leverage Anyone who has tried using leverage, knows how easy it is to lose your position (or full) capital in seconds. Using leverage is mainly sold to retail traders as a tool for them to loan money from the exchange or broker and bet with it. It is extremely profitable for institutions, since it multiplies the fees you pay them ten to one hundred-fold. In our opinion, leverage isn’t something that should be entirely avoided. However, it should be limited as much as possible. We cannot deny that using 1-5x leverage can be beneficial for people with small accounts and a thirst for growth, however as the leverage grows, the more of a gambler you become. We often see people share profits made using 20+ times leverage. Some even use ridiculous leverages within the range of 50-125x. If you are doing that, do you truly trust your entry so much that you believe the market won’t move 1% against your decision and liquidate you immediately? At this point, the gambling aspect should be evident, and it goes without saying that you should not touch this “125x Golden Apple”, like Eve in the Garden of Eden. Especially when you see a snake-exchange promote it. If you use a low amount of leverage, and grow your account to the point where you don’t need it for your personal goals in terms of monetary profit. You should consider stopping the use of it, and at least know you’ll be able to sleep at night. 3 ♥ Always Being In A Position Always being either long or short leads to addiction and becomes gambling. While we don’t have scientific proof of that, we can give you our own experience as an example. To be a profitable trader, you do not need to always be in a position, or chase every single move on the market. You need to develop the ability just to sit back and watch, analyse and make conscious decisions. Let the bad opportunities trick someone else, while you patiently wait for all your pre-defined conditions to give you a real signal. When you think of trading, remember that the market has a trend the minority (around 20-30%) of the time. If you are always in a position, this means that 70-80% of the time you are hoping that something will happen in your favour. That, by definition, is gambling. Another aspect, that we have experienced a lot, is that while you remain in a position, especially if you have used leverage, you are constantly paying your exchange fees. You can be in a short position for a week and pay daily fees which only damage your equity, and therefore margin ratio. So why not just sit back, be patient and define some concrete rules for entering and exiting? Avoid risky situations, and let the market bring the profits whenever it decides to. 4 ♦ Chasing Huge Profits Hold your horses, Warren Buffett. Through blood, sweat and tears, we can promise you that you cannot seriously expect to make 100% every month, no matter what magical backtesting or statistics you are calculating your future fortune on. Moreover, you will realise that consistently making 2-5% a month is an excellent career for a trader. Yes, the markets can be good friends for a while, you may stumble into a bull-run and start making double-digit profits from a trade from time to time. Double-digit losses will also follow if you lose your sight in a cloud of euphoria and greed. Many times, you can follow the “profit is profit” principle, and exit at a small win if the risk of loss is increasing. 5 ♠ Being Sentimental Towards Given Assets You may have a fondness for Bitcoin and Tesla, and we understand that because we too have our favourites. Perhaps you’re deeply attached to the vision, community and purpose of certain projects. On the flip side, there may be projects that you completely despise and hope their prices plummet to zero. What you personally like and dislike, should not interfere with your work as a trader. Introducing such strong emotions into your trading will lead you into a loop of irrational decisions. You may find yourself asking, “Why isn’t this price going parabolic with how good the project is?”. This sounds, from personal experience, quite similar to sitting at a Roulette table and asking: “Why does it keep landing on red when I’ve been constantly betting black? It has to change any moment now”. First and foremost, you may be completely wrong, but most importantly – it could go parabolic, but trying to predict the exact time or expecting it to happen immediately and placing your “bet” on that is again, gambling. Don’t get attached to projects when trading. If you are an investor who just wants to hold their shares in an awesome company, or cryptocurrency, that is perfectly fine, hold them as much as you want. The key is to make an important distinction between trading and investing, and to base your strategy on the hand that the market provides you with. 6 ♣ Putting Your Eggs In One Basket We all have heard of diversification, but how you approach it is crucial. A trader should always have their capital spread between at least a few assets. Furthermore, the trading strategy for each asset must be distinct, or in other words – they should not rely on the same entry and exit conditions for different assets. The markets behave differently for each asset, and you cannot be profitable with some magical indicator or strategy with a “one-size-fits-all” style. Divide your trades into different pairs and asset classes, and study each market individually to properly diversify. Manage the equity you put into each trade carefully! Conclusion The takeaway we want you as a reader to have from this article is that trading without consciously controlling your emotions inevitably leads to great loss and most importantly, a lot of stress. We hate stress. Trading and life in general is exponentially harder when you are under stress. Control your risk, sleep easy, and let the market bring you profits. Reaching this level of Zen will not be easy, but it is inevitable. Be happy when you make a profit, no matter how small or big. A lot of small profits and proper money management complete the vision you have of a successful business. Ultimately, trading is just that – work, not gambling or a pastime activity. Treat it as work and always remember to never rely on luck. The advice we’ve included here is written by a few experienced gamblers… Oops, I meant traders 😉. We hope that some of the lessons we’ve had to painstakingly learn through trial and error can now be shared with those who are interested. Of course, none of this constitutes investment advice. It’s merely a friendly heads-up.
Education
by sofex
PUT TO BED: Trading VS GamblingIt’s a big debate that runs the financial market. Is trading gambling? Well I’m going to try put it to bed in just a few sentences. There are two types of gambling. Gambling by chance and total randomness like slot machines, lotteries, Bingo, Wheel of Fortune and flipping coins. And strategic gambling which allows you elements of control of coming out with a probabilistic chance of winning. I believe trading is a form of strategic gambling. Let’s talk about the similarities between certain strategic gambling games and see how we can learn from them with trading. Game #1: Trading and Poker: Skill, Strategy, and a Bit of Luck In poker, each player gets a unique hand of cards. To win, players must devise a strategy based on their understanding of the game, their observation of their opponents, and their willingness to take risks. Players can choose to play, bet or fold. The same principles apply to trading. Traders have their ‘hand’ in the form of markets to choose to trade. To yield profit, they must understand market trends, observe competitors’ behaviours, and manage risks. In poker, one needs to know when to fold and when to bet aggressively. In trading we have stop losses to get us out of the trade. We have take profits to bank our wins. We have volume choices of how much to buy or sell. And we have the choice to stay out completely. Poker also teaches the importance of emotional control and patience, which are crucial in trading, where emotional decisions can lead to significant losses. Game #2: Trading and Roulette: Understanding Probabilities Roulette is largely a game of chance where players bet on numbers, colours, or sets of numbers. You choose whether you want to bet on red, black, even, odd, specific numbers and so on… Although the outcomes are random, players can use probability to guide their decisions. In trading, while certain market movements can’t be predicted with absolute certainty, we rely heavily on technical, fundamental, statistical analysis and probabilities to make trading decisions. Trading, much like roulette, is where you need to diversify your positions and bets. But instead of placing chips on certain numbers, we place deposits (margins) in the hopes of a probable outcome. Game #3: Trading and Blackjack: Playing Against the Market (House) Blackjack involves strategic decisions, where players decide to ‘hit’ or ‘stand’ based on their current hand and the dealer’s visible card. The main goal is to try and get the cards we’re dealt to hit 21, be close to 21 or be closer to 21 than our opponent’s hand. Bet too high past 21 and you burn. In trading, technical analysis serves a similar purpose by predicting future market movements based on past data. Bet too high with trading and you stand to lose a lot more. And if you can’t count with Black Jack, then you have a much bigger disadvantage to the game. If you don’t have strong and stringent money management principles, then good luck trying to maintain, preserve and protect your portfolio. Game #4: Trading and Horse Racing: Know your horse! Horse racing involves choosing the right horse based on its: Form Characteristics Conditions of the race Weather on the day and other factors. This is like trading. You need to understand each market you trade. It has its own personality, form, movements, and style. You also need to know which market is conducive for your trading portfolio. And you need to choose the right stock or asset to trade based on its performance history, current market conditions, and other factors. In horse racing, experienced bettors also diversify their bets across multiple races and horses to spread risk. With trading we diversify our portfolios over different accounts, markets, sectors, instruments and types. Game #5: Trading and Sports Betting: Predictive Analysis and Risk Sports betting also works similar to trading. You need to know how to analyse a team’s or player’s form, weather conditions, home and away records, and more to predict an outcome. Whether it’s football, rugby or cricket – you need to know your team players, strategy and likelihood of who is to win what game. Traders also conduct similar analyses, studying companies’ financial health, market trends, and technical indicators to predict market movements. And as always, there are both risks that need to be calculated and managed for high probability successful outcomes. So next time when someone tells you trading is just gambling. You tell them, they are right but it’s strategic gambling rather than gambling by chance.
TVC:SA40Education
by Timonrosso
📈Investing vs. Speculating: Understanding the Key Differences📉Navigating the Financial Landscape: Investing vs. Speculating for Smart Financial Growth In the intricate world of stock trading, distinguishing between an investor and a speculator is vital, despite their mutual interest in market analysis. Each follows distinct approaches and objectives, and understanding these differences is paramount before venturing into the stock market. With diverse individuals seeking to capitalize on opportunities and make profits, this article delves into the contrasting methods and goals of investors and speculators, shedding light on their unique strategies. Understanding the Distinction: Investor vs. Speculator At first glance, differentiating between an investor and a speculator might seem challenging. After all, both activities involve buying and selling stocks and require initial market analysis. However, the nature of these two approaches varies significantly. Before delving into the world of stock markets, grasping the difference between investing and speculation is essential. Each day, the stock exchange witnesses countless transactions, leading to continuous price fluctuations. Behind each trade lies an individual with their own motivations, strategies, and rules, all driven by the common desire to make money. However, their approaches diverge; some choose to invest, while others opt for speculation. Let's explore the dissimilarities. Who exactly is an investor? Investing involves purchasing stocks of companies at their intrinsic value, with the expectation of long-term growth and subsequent profitability. As the definition suggests, patience is required, as companies do not experience substantial growth within mere weeks. Investors build portfolios of stocks with a focus on the years ahead. Moreover, investors can generate income through means other than price appreciation alone. By becoming shareholders, stock buyers become co-owners of the company. They can participate in general meetings organized by the company and receive dividends, which are a portion of the company's profits shared with its investors. This way, investors receive periodic returns. Investing necessitates comprehensive analysis of the company whose stock one intends to acquire. The objective is to enhance the value of the acquired assets over the long term. Evaluating the prospects of a specific sector and the company itself entails reading recommendations, staying informed about market trends, and skillfully combining relevant information. Proficient investors are capable of constructing portfolios that yield consistent profits year after year. On the other hand, a speculator approaches the stock market differently. Speculation involves buying and selling stocks with the anticipation of profiting from short-term price fluctuations. Speculators typically focus on quick gains and may not be concerned about the company's long-term prospects. Their decisions are often driven by technical analysis and market trends, aiming to capitalize on short-term price movements. While both investors and speculators participate in the stock market, understanding their differing approaches and objectives is critical for making informed choices and achieving financial growth. Meet the Speculator: Focused on Profits and Market Swings Speculators are individuals whose primary focus is on making profits in the stock market. Unlike investors who carefully analyze the specific stocks they buy and the performance of the underlying companies, speculators are more concerned with the high volatility of prices that offers potential for quick gains. They may not be as concerned about the long-term prospects of a company; what matters most to them is the opportunity to capitalize on price movements, whether upward or downward. Unlike investors who prefer to hold stocks for the long term, speculators aim to quickly buy and resell stocks to profit from short-term price fluctuations. They may even utilize financial instruments such as contracts to benefit from falling prices. For speculators, the direction of price movement becomes inconsequential; they can make gains regardless of whether stock prices rise or fall. One instance of speculation occurred during the aftermath of the Brexit referendum when stock prices plummeted. Speculators saw an opportunity to acquire stocks at low prices, and many stocks rebounded in the following days. By investing in undervalued companies and taking advantage of people's tendency to overreact, speculators made significant profits within a short period. Unlike investors who focus on a company's financial performance and long-term growth prospects, speculators rely more on charts and market sentiment. They are sensitive to emotions in the market, such as fear during potential financial crises or uncertainties surrounding elections, which can significantly influence price swings. Speculators thrive on exploiting these rapid price movements, finding ample opportunities for their trading activities. However, it's important to note that speculating in the stock market involves heightened stress and risks due to the significant price fluctuations. As prices can change rapidly, speculators need to be prepared for the potential downsides and be well-versed in managing risks effectively. Timing Matters: The Distinct Approach of Traders and Speculators Distinguishing between traders and speculators becomes evident when considering the time factor in the world of stock trading. Investing in stocks requires patience, relying on a company's future growth, financial results, and potential dividends. Successful investing often involves waiting for several years to achieve substantial growth, surpassing the performance of other instruments like funds. On the other hand, speculation hinges on understanding short-term market sentiment and making quick decisions. Swift reactions to market changes are necessary as the stock market is prone to significant sell-offs followed by potential reversals. Speculators closely monitor the market and wait patiently for opportune moments to capitalize on rapid price movements. The paradox of speculation lies in the contrasting time frames involved: speculation itself is brief, but speculators invest considerable time observing charts compared to traders who simply maintain open positions. Combining Investment and Speculation In principle, one doesn't have to exclusively choose between investing and speculating. However, effectively combining an equity portfolio with a speculative portfolio demands substantial experience and time. It's essential to bear in mind that speculation carries significantly higher risks compared to investing. A seasoned investor can gradually construct a small speculative portfolio while allocating the majority of funds to long-term investments in stocks. The stock portfolio consistently builds capital, while the speculative portion can potentially yield an additional "bonus" when favorable market opportunities arise. Investor Sleeps Well: The Patient Approach of Investors While speculators engage in the challenging pursuit of profiting from daily price fluctuations, investors adopt a different approach. Investors carefully select stocks for their portfolios and patiently wait, exercising risk control. This approach enables them to focus on their professions or businesses while allowing their savings to grow through capital appreciation. One notable example of this investment strategy is Warren Buffett. Buffett has dedicated years to constructing portfolios by choosing shares of reliable companies that consistently share profits with their shareholders through dividend payments. This straightforward strategy, employed for decades, surpasses the performance of speculators and aggressive mutual funds. Success in investing relies on an investor's knowledge and understanding of prevailing market conditions. While the latter remains beyond anyone's control, the former depends solely on the experience gained with each subsequent trade. Investing is a gradual process, and as experience accumulates, positive results are more likely to emerge. Patience, discipline, and a long-term perspective are key traits of successful investors. The Best Approach: Investment or Speculation? The question of whether to invest or speculate ultimately depends on your individual goals, risk tolerance, and time horizon. Both strategies have their merits and cater to different types of traders. Investing is a long-term strategy that involves buying stocks of companies at their intrinsic value with the expectation of long-term growth and profits. Patient investors hold onto their stocks for years, conducting thorough analyses of company prospects and making informed decisions based on research and market information. They can also benefit from dividends as co-owners of the company, providing a steady income stream. Investing requires a disciplined approach to constructing portfolios that generate systematic profits over time. On the other hand, speculation is a short-term strategy driven by the desire for quick profits. Speculators are primarily motivated by profit and take advantage of high volatility in stock prices. They may not necessarily focus on a company's financial performance or the overall state of the economy. Speculators need to react swiftly to market changes, capitalizing on price swings. However, this approach involves higher stress and risk. Speculators can profit from both rising and falling prices, and their success relies heavily on understanding short-term market sentiment. While both investment and speculation have their merits, it's essential to note that speculation is generally riskier and requires a deep understanding of market dynamics. Combining an equity portfolio with speculative positions can be challenging and time-consuming. Most investors prioritize investing in stocks for long-term growth and stability while allocating a smaller portion for speculative opportunities. Ultimately, investors tend to have a more relaxed approach as they carefully choose stocks for their portfolio and patiently wait for their investments to appreciate over time. This approach allows investors to focus on their other commitments while still profiting from capital appreciation. Warren Buffett, a renowned investor, exemplifies this strategy by building portfolios of reliable companies that consistently share profits with shareholders. Investing is a continual learning process, and success depends on the investor's knowledge, experience, and ability to adapt to market conditions. So, the best approach boils down to aligning your trading style with your financial goals and risk tolerance. In the dynamic world of financial markets, the choice between investing and speculating is deeply personal, guided by individual goals, risk tolerance, and time horizon. Investors embrace a patient, long-term strategy, seeking gradual growth and sustained profits through careful analysis and informed decisions. On the other hand, speculators chase short-term gains, leveraging market volatility to capitalize on rapid price swings. While a combination of both approaches is possible, it demands expertise, time, and experience. It is crucial to recognize that speculation involves higher risks, making it essential for traders to approach it with caution and a deep understanding of market dynamics. For most investors, allocating a smaller portion of funds to speculative opportunities while predominantly focusing on long-term stock investments offers a balanced approach. In the end, regardless of the chosen path, success in financial markets requires a thoughtful and disciplined approach. Armed with knowledge, experience, and a clear strategy, traders can navigate the complexities of the market and work towards achieving long-term financial prosperity.
Editors' picks
OANDA:XAUUSDEducation
by FOREXN1
27
DKNG Long Continuation TradeDNKG has an uptrend from a triple bottom in mid-March. As shown on the 2H chart volume especially buying volume is increasing while on the RSI indicator, relative strength is rising confluent with the price action. This looks like a quality swing long setup during the NFL draft and upcoming playoffs in professional hockey, basketball and baseball potentially boosting earnings The stop loss here would be $ 0.05 below the previous high of the year in February since price is now above that support. Targets are the highs of February 2022 and then the distant final target is the neckline of the 2021 head and shoulders pattern ( all time highs ).
NASDAQ:DKNGLong
by AwesomeAvani
GMBL | My Favorite Play | LONGEsports Entertainment Group, Inc. operates as an iGaming and entertainment company in the United States and internationally. The company operates Vie.bet, an esports focused platform; Sportnation.bet, an online sportsbook and casino; iDefix, a casino-platform; Bethard, an online sportsbook and casino; Vie.gg, an online esports wagering website; and ggCircuit, a local area network center management software and services for managing mission critical functions, such as game licensing and payments. It also organizes online tournaments and player-vs-player wagering. The company was formerly known as VGambling, Inc. and changed its name to Esports Entertainment Group, Inc. in May 2017. Esports Entertainment Group, Inc. was incorporated in 2008 and is based in St. Julian's, Malta.
GLong
by DivergenceSeeker
3
Time To Drop The Aussie? Yeah nah yeahAlright the AUD has had a short bearish rally and stalled. Now retracing, we are faced with the question: Is this a new trend, or just a pullback in the bull market. Bullish factors: - Bounce from the 50D moving average - Yesterday closed bullish - RBA has addressed that further interest rate hikes will be needed Bearish factors: - Potential pricing in of future rate raises into the market already - Recession, strong US jobs data - 1H chart entered a bearish market - broken double top neckline Comment what you think! I am going short here but we shall see what happens.....
Short
by tomstewy
EBET | Its Not A Gamble | BounceEBET, Inc. develops products and operates platforms to provide a real money online gambling experience focused on esports and competitive gaming. The company operates a portfolio of proprietary online casino and sportsbook brands consisting of Karamba, Hopa, Griffon Casino, BetTarget, Dansk777, and GenerationVIP. It also provides iGaming, which include online casino and table games, such as blackjack, virtual sport computer simulated games, and slot machines, as well as traditional sports betting. The company was formerly known as Esports Technologies, Inc. and changed its name to EBET, Inc. in May 2022. EBET, Inc. was incorporated in 2020 and is based in Las Vegas, Nevada.
ELong
by DivergenceSeeker
4
SBET | I'll Bet On This One | LONGSharpLink Gaming Ltd. operates as an online technology company that connects sports fans, leagues, and sports websites to sports betting and iGaming content. It operates through Affiliate Marketing Services United States, Sports Gaming Client Services, Enterprise Telecom Expense Management, and Affiliate Marketing Services International segments. The company collects information on potential U.S. domiciled sports bettors, connects them with contextual sports betting content, and converts them to paying sports betting customers, as well as offers sports betting data to sports media publishers. It also provides development, hosting, operations, maintenance, and service of free-to-play games and contests; and solutions for telecommunications expense management, enterprise mobility management, call usage, and accounting software, as well as iGaming and affiliate marketing network, which focuses on delivering quality traffic and player acquisitions, and retention and conversions to global iGaming operator partner worldwide. The company was founded in 2019 and is headquartered in Minneapolis, Minnesota.
NASDAQ:SBETLong
by DivergenceSeeker
1
Is Trading Like Playing Poker? Is trading a form of gambling? With hesitance, I would say yes. However, I would rather call trading a form of strategic gambling as both require elements of risk, reward, strategy and decision making. In the next two weeks or so, I’m planning to publish a new online FREE book called “Poker Vs Trading”. Who knows, by the end of it all you may take up professional poker playing as well as trading… Let’s start with the similarities. SIMILARITY #1: We can choose when to play (Strategy) Traders and poker players don’t play every hand that is dealt to them. With poker, when a hand is dealt, we can choose to either play the hand, based on how strong it is, or we can choose to fold and wait for the next hand… With trading, we wait for a trading setup based on the criteria of our strategy i.e. MATI Trader System. You’ll then have the exact criteria and money management rules to follow in order to take a trade or wait for the next trade. SIMILARITY #2: Amateur poker players and traders tend to go the ‘tilt’ (Emotional roller-coaster) Emotions are a main driver which leads to traders losing their cash in their account or poker players losing their chips very quickly. With poker, you get players who let their emotions take over where they start betting high with an irrational frame of mind. These emotions lead them to losing their chips very quickly. This is when they enter the state of what is called ‘going the tilt’. With trading, amateur traders also tend to act on impulse and play on gut, instinct, fear and greed after they’ve undergone a losing streak or a winning streak. This often leads them to: ~ Taking a series of losses. ~ Losing huge portions of their portfolio. ~ Holding onto losing trades longer than they should. ~ Entering a mindset of revenge trading. SIMILARITY #3: We know when to hold ‘em and when to fold ‘em (Cut losses quick) We have the choice to reduce our losses when it comes to betting a hand or taking a trade. With poker, if the players start upping the stakes and you believe you have a weaker hand in the round, you can choose to ‘fold’ and lose only the cost of playing the ‘ante’. With trading, if you’ve taken a trade and it turns against you, you have a stop loss which will get you out at the amount of money you were willing to risk of your portfolio… SIMILARITY #4: We know the rake (Costs involved) There are always costs associated with each trade we take or each hand we play, which eats into our winnings. With poker, it’s the portion of the pot that is taken by the house i.e. the blinds and the antes. With trading, it’s the fees charged by your broker or market maker, in order to take your trade. These fees can be either the tax, spread and/or the brokerage. SIMILARITY #5: Aggressive trading and betting before the flop (High volatility) There will always be a time of strong market moves and high betting. With poker, you get times where players like to bet aggressively and blindly before the flop is revealed. It’s these times that lead to the amateur poker players losing their chips very quickly. With trading, you get economic data i.e. Non-Farm-Payrolls, black swan events and Interest Rate decisions when big investors and traders like to drive the market up or down before the news even comes out. NOTE: I ignore both forms of hype as it is can lead to a catastrophic situation. SIMILARITY #6: We bet and trade based on the unknown Every bet and trade we take and play is based on incomplete information of the future. With poker, we are dealt hands then bet on decisions based on not knowing what cards our opponents have and/or what is shown on the river. We then have the options to call, bet, raise or fold during the process.With trading, we take trades based on probability predictions without knowing where the price will end up at. This is due to new information which comes into the market including (demand, supply, news, economic indicators, micro and macro aspects). SIMILARITY #7: We lose A LOT! (Losses are inevitable) Taking small losses are part of the game with both poker and trading. With poker, it is important to wait patiently until you have a hand with a high probability of success. Some of the best poker players in the world, fold 90% of the starting hands, they receive. Some professional poker players can go through weeks and months without a win. With trading, we can lose over 40% to 50% of the time. In general, I expect around two losing quarters a year. I know that when there are better market conditions, it will make up for the small losses. SIMILARITY #8: You must learn to earn (Education is vital) You need to understand and gain as much knowledge as you can about poker and trading before you commit any money. With poker, you need to understand: • The rules of the game. • The risk per move. • The amount of money you should play per hand. Once you know these points, you’ll be able to develop some kind of game plan with each hand you play. With trading, you need to understand: • The MARKET (What, why, where are how?)NB* • The METHOD (What system to follow before taking a trade). • The MONEY (Risk management rules to follow with each trade) • The MIND (The frame of mind you must develop to succeed) SIMILARITY #9: Perseverance is the key ingredient to success You need to take the time and have the determination to become a successful trader and poker player. With poker, you’ll need to keep at it and apply strict money management rules with each hand played. With trading, you’ll need to know your trading personality, know which trading method best works you and understand your risk profile… I’ll leave you with a quote from Vince Lombardi (American football player, coach, and executive): “Practice does not make perfect. Only perfect practice makes perfect” Do you think trading is like poker? If you enjoyed this daily lesson follow fore more! Trade well, live free. Timon MATI Trader
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JSE:J200Education
by Timonrosso
26
A Buck Gets Ten that Gold Opens The Week DownHowdy readers! Those of you cunning enough will have opened a short prior to NY close last week, anticipating a gap down at next weeks open. Gold has rallied aggressively through the last few days - most likely due to the USD downside (Ukraine war seems to be unwinding, China has lightened covid19 restrictions; both of which have attributed to risk on sentiment). I anticipate some relief to happen early next week, starting with gold opening down.
OANDA:XAUUSDShort
by tomstewy
INVESTING VS TRADING VS GAMBLING | Know the Difference Hey traders, In this post, we will compare investing and trading with gambling. 📈Investing Investing is the act of putting money in a financial market with the expectations of a long-term positive return. The investing decisions are usually made using fundamental analysis. The main goal of an investor is to predict the long-term market trends and benefit on them. Professional investing also involves assets allocation and diversification aimed to hedge potential risks. 💱Trading Trading is the process of selling and buying financial instruments expecting a short-term (occasionally, mid-term) profit. The trading decisions are usually based on technical and fundamentals analysis. The goal of a trader is to predict local price fluctuations and catch them. Professional trading implies strict, rule-based actions following a trading plan. 🎰Gambling Gambling is the act of betting on a specific event with the expectations of winning some value. Being completely luck-based, gambling usually involves get rich quick schemes and pursuit of easy money. What differs professional trading and investing from gambling is the fact that professional trading / investing involves objective analysis and strict planning, while gambling remains purely intuition based. Unfortunately, most of the market participants pretend that they trade and invest professionally while acting as gamblers in fact. Remember that long-term, consistent profits can be achieved only with the plan. Your intuition may bring some short-term profits, but in a long-run it will most likely lead you to a bankruptcy. ❤️If you have any questions, please, ask me in the comment section. Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
10