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Why Many People Believe Stock Trading is Like Gambling and Why It’s Not

November 14th, 2012

Many people believe that stock trading is like gambling. I even hear this from my mom who actually trades from time to time. Even she mentioned that stock trading is like gambling. The fact that they could be so far from the truth for a person who is more educated on the market or human psychology. Typically the people that say this, either hear of the bad stories, incur incredible losses, or to simply do not understand the markets. They could also be looking for someone or something to blame to make themselves feel better.

There is a recent post I did on my personal website about the things I study. Primarily most people think I study investing if they hit my Tradersfly.com website, others will say marketing if they visit Marketingkite.com, some may even think Business to Business or Internet SEO. The fact is I study one main topic and one main thing only. That is human behavior and psychology of peoples actions, reactions, and people interaction. Read more from my blog post here.

The financial view of why stock trading is not like gambling

One key principle to understand is in the casino if you walk in, place your bad on black or red, you lose all of your money. The same goes with the slot machine. Every now and then you win and get some money back but this is winning.

With the stock market when you place your bet on a certain stock or company, if the stock does not go in the direction you want to go you can sell it off and get a portion of your initial investment back whereas with the casino you would lose all of it if you did not choose the correct direction.

What makes the stock market much harder is that if you did choose the right direction when do you actually sell in cash in your chips? This is what many stock traders struggle with especially beginners.

The fundamental level of livestock trading is not like gambling

However there is a deeper core I think behind it. If you read my blog posts from my personal website, you already know the answer to this. The reason I believe stock trading is not random is that all of it is based on human behavior. Not just simple one person human behavior, but mass quantities and mass behavior. It has never been random, nor will it ever be random unless you are one of the few that cares to say that to make yourself feel better.

Author: Sasha Evdakov

Sasha is the creator of the Tradersfly and Rise2Learn. He focuses on high-level education speaking at events, writing books, and publishing video courses on business development, internet marketing, finance, and personal growth.

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

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This website and content is for information purposes only as Rise2Learn, TradersFly, and Sasha Evdakov are NOT registered as a securities broker-dealer nor an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Rise2Learn, TradersFly, and Sasha Evdakov cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Rise2Learn, TradersFly, and Sasha Evdakov in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Rise2Learn, TradersFly, and Sasha Evdakov accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.