My 2 cents says, “Semantics” Spend your time learning how to put the balance of probabilities of a successful trade on your side; not labeling yourself and comparing your definition to someone elses. At times we’re all three by everyone’s definition.
Ok. So. Who really cares… If you do. This is the only way I look at things
Investing is the commitment of money by which you receive a stake or a share of the thing you are investing in. The classical example would be stocks.
Speculating is the commitment of money by which you have exposure to an underlying asset without actually ownership of that asset with the hope that you can turn a profit. This covers derivative products
Hedging is the use of a derivative or purchase of an asset that protects a current position held within a market.
Gambling is the commitment of money in the hope of making a profit based on a random event or luck.
At the end of the day… who really cares?
Indeed, it is irrelevant, although the OP raised an interesting semantic point… However, whether your hedging is to do with horses jumping over hedges or buying stocks, you are still, in my view, betting on an uncertain outcome… Just like anything in life, past performance does not guarantee future results: predicting the future is a human impossibility; all we have is a game of projected expectations and statistical probability… There is no shame in saying that trading is akin to gambling, just like there is no shame in saying that any risk-laden enterprise in life, from boarding a plane to having a child, is a gamble…Happy trading!
Ps this reminds me of the old debate between burlesque artistes and lap dancers: are they all strippers? Dita von Teese said that they have a lot in common and she respects lap dancers and their skill as much as burlesque dancers… So, it could be said that traders are the burlesque dancers (more sophisticated) and the betting shop gamblers are the strippers of the gambling world, but they are all betting, in the end, and should respect each other! There you go, an unusual twist on the theme!!
Hello traders (and non-traders)!
I was reading Mark Douglas’ [I]Trading in the Zone[/I], and in chaper 7 ([I]The trader’s edge: thinking in probabilities[/I]) I found this passage quite apt to this thread, so I came back to share it with you:
PROBABILITIES PARADOX: RANDOM OUTCOME, CONSISTENT RESULTS
"Here’s an interesting paradox. Casinos make consistent profits
day after day and year after year, facilitating an event that has a purely random outcome.
At the same time, most traders believe that the outcome of the market’s behavior is not random, yet can’t seem to produce consistent profits. [B]Shouldn’t a consistent, nonrandom outcome produce consistent results, and a random outcome produce random, inconsistent results[/B]?
What casino owners, experienced gamblers, and the best traders understand that the typical trader finds difficult to grasp is: even[ts] that have probable outcomes can produce consistent results, if you can get the odds in your favor and there is a large enough sample size.
The best traders treat trading like a numbers game, similar to the way in which casinos and professional gamblers approach gambling."
As someone said in this thread, it can be just about semantics: a winning trader is a winning trader, call him/her what you wish; I just happened to be reading this book, which Fx-Honorary Woman PipNRoll had suggested to me yesterday, and this passage fitted into this thread - take it or leave it.
By the way, the quote is taken from this free electronic version of the book: file:///home/chronos/user/Downloads/Mark_Douglas_Trading_in_the_Zone.pdf
ENJOY and…
Happy Trading.