A lot of people assume that stock market is like gambling as you do not know what will happen to the stock next day. This perception is completely wrong. Investing blindly in the market will never make you rich or earn money for you, whereas investments based on solid research and analysis will earn money for you, if not always. Stock market investing is generally not well understood and many people compare it to gambling. Given that both involve a degree of risk and that it’s possible to lose money when investing in. Stock market investing is generally not well understood and many people compare it to gambling. Given that both involve a degree of risk and that it’s possible to lose money when investing in.

Have you ever heard someone tell you that investing in the stock market is no different than playing at a casino?

I certainly have. When I bought my first stocks, my father told me that the safest way to double my money was to fold it and put it back in my pocket.

Yet there are successful investors with track records that would indicate there’s a little more than plain old luck involved. Take Warren Buffet, the second richest man in the world, for example, or George Soros, the famous day trader who has accumulated a fortune worth $8 billion trading the markets.

How can some people make money consistently by trading stocks if it’s just like playing slots? Could it be that the old folk wisdom that trading stocks are the same as playing casino games is wrong?

I’ve been playing casino games and trading stocks for over 15 years. There are similarities and fundamental differences between the two, and a lot of it comes down to what “methods” you use to trade the markets.

Let’s look a little deeper now at the question making up the title of this post.

Some Different Ways to Trade Stocks

I mentioned above that some forms of trading stocks are closer to gambling than others. Before we delve deeper into this point, I’ll give you a quick rundown of the different ways people play the markets.

This is by far the best-known way to get involved in the stock market. When you decide to invest in a given company, you buy some shares in it, which is a little like buying a certain number of slices of a pie or pizza.

The hope, of course, is that the value of those slices will increase over time. Stock traders hope to buy shares in Apple at $150 and sell them at $200 or more, just like slots players hope to put $100 through a machine and walk away with multiples of that amount.

Another way to earn money from owning stocks is by collecting dividends, which is your share of the profits from the company you’ve bought into. Not all stocks pay dividends, but if they do, you’ll get your slice of the profits for as long as you hold the stock.

This is the most common way for the everyday John and Jane to get involved in the stock market. It’s as simple as picking up the phone and calling a broker, or more likely registering a stock trading account online and trading yourself from your computer.

Is Stock Trading Gambling

Spread betting is a very common way to access the financial markets in Europe and the UK. It’s a great way to trade markets because you never actually buy the underlying stock or asset; you just bet which way the price will go.

Let’s say I have reason to believe the economy is booming and the price of Walmart Inc. shares will increase over the next year. I can place a spread bet on this at $1 per penny, and for every penny the price of Walmart rises, I’ll make $1. Betting that a price will rise is called going long.

Of course, for every penny the price of Walmart falls below the price I bought at, I’ll lose $1. I can place a “stop loss” in place to make sure I don’t lose more than a predetermined amount, though.

The best thing about spread betting is that I can bet on the price of a stock or asset to go in either direction. If I think the market is a bubble and stocks are going to come crashing down soon, I can bet that the price of Walmart will drop, and using the above numbers, I can profit $1 for every penny Walmart stocks drop by. Betting a price will fall is called going short.

Incredible amounts of money can be made by spread betting, but it also carries a lot of risk. It’s important to be careful and really know what you’re doing before getting involved.

Options are one of the most popular ways to bet on the stock market. They’re time-limited, and so can lead to big returns quickly.

As the name suggests, you will have the option to purchase or sell something at a specific price in the future. There are options of varying lengths, for example, 1 day or 30 days. There are even options for seconds or minutes, known as binary options.

An example will make this easier to understand. Let’s say I believe the price of Apple Inc. will be higher in 30 days because they will release great earnings next week after releasing a killer new product.

I can agree to buy Apple at today’s price of $178 in 30 days time, even if Apple is worth $200 on that day. The difference is my profit and is mine to keep. The right to buy is known as a call option.

Likewise, if I believe Apple will release a terrible earnings report next week after its latest product has bombed, I can purchase the right to sell at today’s price in 30 days, even if Apple’s price is much lower on that day. Again, the difference is mine to keep.

It’s a wise decision to know a lot more about options before getting involved. It’s not exactly something beginners should dive into head first. This is just touching the basics, and it would be wise to do a lot more research before trading options.

These are just some of the ways to get involved in trading the stock market.

As you can see, comparing them is like comparing chalk and cheese. So, to determine if trading stocks is really like gambling at a casino, it’s necessary to first determine which method of trading we’re comparing it to.

Each method has its own risks and rewards. It’s important to investigate each before deciding how you’re going to get involved in the stock market.

Some Different Trading Strategies

Not only are there different ways to get involved in the stock market, but there are different strategies for trading, too.

The strategy used will also determine how similar or different to casino gaming any given trade is.

Any of these strategies can be used with any of the methods of investing mentioned above. Just keep in mind that some of them might not be suitable for trading options, which have a time limit on them by their very nature.

To buy a stock and hold it for the long-term, hoping the value will rise, can be like gambling depending on how much research you do.

If you read all of the published literature from a given company and determine its vision, direction, and future, as well as its financial reports to determine how competent the management is, then stock trading is totally different from gambling at an online casino.

On the other hand, if you just take a casual approach and decide to buy into a few different companies because you’ve heard they might be “hot,” then stock trading is basically the same as gambling.

Nobody can predict the future with perfect accuracy, but the success of an investor like Charlie Munger and the fact that he spends incredible amounts of time and energy researching stocks before getting involved isn’t a coincidence.

I remember making thousands of dollars in a few days back in 2011 when I learned that the CEO of Olympus, Michael Woodford, had been ousted because he exposed a huge scandal involving the company hiding massive losses.

How in the heck is it possible to make money from this? Well, I JUST KNEW the stock would crash and burn as investors panicked and bailed out until the storm was over. I was right, and I placed a short bet that it would happen.

This sort of strategy is known as trading the news. To use it, you simply wait for either positive or negative news surrounding a company, and you ride the wave up or down. It works best when the news is unexpected, so investors haven’t had time to prepare in the time leading up to it.

This method is a lot more like casino gambling than the fundamental research approach discussed above. It’s based on nothing more than a strong gut instinct and a hunch.

If using this strategy, you’ll likely have to use spread betting or options trading, as you need to act incredibly quickly. This makes it even more like gambling since both of these methods are riskier than good old buying and selling actual stocks.

There are also many financial events and announcements each month which amount to news and can be traded.

The GDP growth of a given country can send the entire stock market of that nation rocketing up or plummeting down.

Trading the news is a form of day trading, which brings me nicely to the next point.

There are too many day trading strategies to cover here. In fact, entire volumes of books have been written on the different day trading strategies by people who spend their lives using them.

The objective of day trading is to place short-term trades which follow the mantra “get in and get out.” Again, any of the methods of investing we talked about earlier can be used.

One popular day trading strategy is trend trading. This is when you look at whether or not a stock is trending up or down, and you simply ride the wave to financial prosperity.

There are different ways of assessing whether a stock is in an upward or downward trend, such as plotting the 30-day average price (called the moving average) on a graph.

Again, this is a lot more like casino gambling than fundamental research and value investing. It involves trying to predict something that’s truly unpredictable, that being when a trend has developed and more importantly when it has ended.

Stock Market Investing Pdf

There are thousands of trading strategies and a wealth of YouTube videos explaining the basics of most of them. Don’t be put off by the graphs and charts involved. It’s not much harder than pouring over historical data of horse races or learning to read blackjack strategy charts.

Penny Stocks vs. Penny Slots

At this stage, you might have smoke coming out of your ears if you’re new to stock trading. If you’ve grasped everything I’ve covered so far and fully understand it, congratulations; you might have a talent you didn’t know about until now!

If you feel a little confused, don’t worry; just take it a step at a time and re-read the sections you didn’t get yet.

In this section, I’ll cover some of the similarities and differences between trading penny (small cap) stocks and playing penny slots. Hopefully, this will solidify some of the abstract ideas we have looked at so far.

It should be noted up front that trading penny stocks is a lot different than trading huge, blue chip stocks. The primary differences are their volatility and growth potential.

• Both can make your initial capital multiply incredibly quickly but can lead to it vanishing just as fast. Returns of 1,000x aren’t uncommon with either.
• Both can be accessed without much capital. You’ll only need $100 or so to get started trading penny stocks, and even less to start playing penny slots.
• Both are extremely volatile and can take you on a rollercoaster ride. You can be up, then down, then up again, then down, then incredibly rich by the end of it all.

• Penny stocks can be traded randomly or by doing in-depth research about which companies have the most promise. There’s not much to research about penny slots, though, other than the game payouts and features.
• Accessing penny slots is a lot easier than accessing penny stocks. Casino accounts can be set up in a couple of minutes, whereas brokerage accounts take a little more time to set up and learn how to use. Unless you’re American, of course, in which case accessing stocks is much easier.
• Trading penny stocks and playing slots will likely involve different timeframes. You could hold a penny stock for weeks or months, whereas playing penny slots will be a much quicker affair.

How to Pick the Best Stocks or Casino Games

By now, you should have a solid idea of which you think is better for you as an individual. Perhaps you’ll want to try your hand at both. Either way, you’ll want to be able to increase your chances of winning by picking the best stocks to trade or choosing the right casino games.

Let’s look at stocks first, then turn our attention to casino games.

Finding great stocks to invest in is an art form in and of itself. Finding the best ones comes with experience, but here are some easy tips to get started.

Follow Experts. Experts don’t always know what they’re talking about, but there’s a good chance they know more than you as a total newbie.

If George Soros is buying it, there’s a good chance it’s going to blow up. There are even some trading platforms which let you copy experts.

Research Fundamentals. This could take a little time, but if the profit is right, it will be worth it.

Learn how to read a financial report and assess if a company is being managed well or mishandled. This could save you endless amounts of money, not to mention making you some.

Watch and Learn. If you opt for some of the shorter-term strategies, such as trading the news, why not watch and learn?

Turn on CNBC or Bloomberg and just take it in. When bad news hits, stock prices fall. When good earnings are reported, prices push upwards.

Once you see it happen 100 times, you will develop confidence in the process. You’ll also learn a lot about investing in the process.

Find the RTP. RTP stands for return to player and is extremely important to research when picking gambling games.

This is the percentage of each dollar bet a game returns to players over the long run. 97% is much better than 92%, naturally.

Only play games with lower RTP percentages if there’s a chance of winning a colossal jackpot in the long run.

Learn Game Strategy. Not only do games themselves have odds, but game strategies can alter your chances of winning.

Playing certain video poker variants with a perfect strategy can actually tilt the odds in your favor over the long run.

Perhaps that’s why you don’t see too many casinos offering free bonuses on video poker!

Research the Software. You’re guaranteed to lose when playing a rogue or fixed casino games, and sadly, there are some out there. Learning which software companies you can trust is crucial.

Big names like Microgaming, NetEnt, IGT, and Playtech are safe and secure. Learn all you can about the various casino software firms, and you’ll be able to play games you actually have a chance of winning.

How to Get Involved

Getting involved in playing casino games is easy. Just read some of our reviews and pick a site. Signing up will take two or three minutes, and you’ll be spinning the reels or playing cards before you know it.

Getting involved in trading stocks is a little more complex, but still quite simple. You can follow this three-step process.

First, you’ll need to decide which of the trading methods is for you.

Then, you’ll need to find an online brokerage which facilitates that kind of trading.

Lastly, you’ll need to sign up. The registration process won’t take any more than five or ten minutes, and you might be asked to verify your identity.

That’s it! Whether you decide to play casino games, trade stocks, or both, getting started is as easy as ABC thanks to the various online services offering both.

So Is Stock Trading Gambling or Not?

If you came here looking for a cookie-cutter answer, I’m sorry to disappoint you, but it’s a little more complex than that.

Sure, there are some definite similarities between stock trading and gambling, since you can make and lose a tremendous amount of money doing both. There’s also an element of randomness involved, which is uncontrollable, meaning both are ultimately determined by chance, at least to some degree.

Yet there are also some big differences. If you do your research, you can definitely increase your chances of making money by trading stocks. Warren Buffett would argue that when approached correctly, it’s not the same at all, and his bank balance would be a major piece of evidence in favor of his argument.

Ultimately, how similar stock trading is to gambling depends on you. It depends on the method of investing you choose, the stocks you pick, the strategy you decide on, and the risks you take or don’t take.

If you do decide to get involved in trading stocks, I hope to see you on the cover of Fortune magazine soon. Remember me if you make it, and feel free to send me a percentage of your fortune!