I recently had a conversation with a long-time associate and fellow trader about trading systems, methods, and strategies and their similarity to gaming systems. My good friend is a brilliant mathematician and was a professional blackjack player. Note that I use the past tense. With 6 or 7 decks in the shoe, along with changes to the house rules, he no longer feels he has a sufficiently significant edge over the house. (I have no idea. I don�t go to casinos nor do I know the house rules for high stakes blackjack.) Sorry for the ramble� Our conversation led to trading and forex � my latest side interest.
My friend shared with me an email solicitation he received. Some of you may recognize the �system�. They have advertised on this very site. I read the solicitation without making an evaluation as to the merits of the particular method advertised. I do not know if the plan will work or not. I am not criticizing the author or his system.
The author suggests that trading [U]is[/U] gambling. He briefly discussed gambling systems (martingale progression) and how casino game rules are manipulated to guarantee profits for the house. One could make similar arguments relative to trading �slippage� and commissions. [U]He suggests, in sum, that your entry method is not important � only your money management is.[/U]
Reading through his reasoning did raise several questions worth addressing for beginning traders and veterans as well. I would like your thoughts and opinions. Please share your personal experiences as well.
In your view:
Can trading be equated to simply gambling?
Is trading different than investing?
Does it make any difference as long as you achieve the desired result?
How important is your entry/exit strategy?
How important is money management?
How are these two related?
Finally, here is an interesting, somewhat amusing, excerpt from the advertisement:
I hate to sound like a pessimist but in case you haven�t figured it out yet, most �trading strategies� are one big lie! During my first two years of Forex trading, I had been lied to by multitudes of companies on the internet. I really feel that I was scammed, conned, lied to, and ripped off by those companies. It�s sad to say but the truth is most trading strategies on the net are one big lie designed to do one thing and one thing alone, and that is� TAKE YOUR MONEY and run! The result is that 90% of all people starting a trading account will never see an income from it.
So, why should you believe that I am any different?
Thanks in advance for sharing your ideas and experiences!