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

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.

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.

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