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Is trading Futures gambling?
By Joe Ross
“ Hey Joe! I want to learn how to trade, but I’m having a conflict. Is trading futures gambling?”
Trading futures is gambling only when you trade them without full knowledge of what you are doing. There is a good measure of self-knowledge required to choose the proper course to follow if you want to become a trader. It has even been postulated that many small traders in the futures markets, without knowing it, secretly want to lose. They jump in with high hopes—but feeling vaguely guilty. Guilty over 'gambling' with the family's money, guilty over trying to get 'something for nothing,' or guilty over plunging in without really having done much research or analysis. Then they punish themselves, for these or other sins, by selling out, demoralized, at a loss.
A trader is gambling when he/she trades from ignorance. The gambler
makes his trading decisions on gut feelings, hopes, dreams of getting
rich quick, tips from the broker, “inside information” from
friends, and from the improper understanding and use of indicators, oscillators,
moving averages, and mechanical trading systems. In general, he is looking
for a way to shortcut having to truly learn what is going on. Unfortunately,
most people who attempt to trade fall into this category.
However, true trading is actually speculation (managed risk). The speculator
is willing to accept the risk of price fluctuation in return for the
greater leverage that comes with that risk in the hopes of earning
a greater profit. The true speculator makes his trading decisions based
on knowledge gathered from Information about the behavior of the underlying,
seasonality, historical and current trends, chart analysis, fundamentals,
the market dynamics, and knowledge of those who trade it.
Joe Ross
Trading Educators Inc.
ProActive Futures
255 Executive Dr, Suite 410, Plainview, NY 11803 Phone: 1-877-393-5916 More
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