Daytrading, Investing and Gambling

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Know that daytrading isn’t investing. Daytrading is also not playing. But the lines between trading, playing and investing can be thin. You should understand where the coaster chit chat difference is. You will be in a better position to follow your trading strategy. You will also bring in more money. You should avoid the trap of playing. This way you will be in a better position to preserve your capital.

What is the difference between investing and playing? It is the risk and return tradeoff. The odds are generally on your behalf in investing. However, it does not mean you will make money. It only means that there is a good chance you will make money if you have done your quest well. Some day traders end up playing.

Investors, traders and gambler have one thing in keeping that you need to understand. They put some of their money on risk. They hope of getting a return if they are right. You should take trading as a business. You should also know about the potential risk. You should also know about the sources of your potential return. This will make you better off in the long run.

What is your reward? Your reward is that you get fair compensation for the risk you took. What is your risk? Risk is that you won’t get the expected return. Risk is the probability of a loss. The riskier something is, the more likelihood of a loss.

The reason there is a balance between risk and reward is that financial markets like the stock markets and the currency markets are reasonably efficient. Forex efficiency means that prices of sec and stock markets reflect all known information about the companies and the economy.

Investing is putting your money in danger to create a return. Investing is the basis of modern day capitalism. It is the way that businesses get started, roads get built and the economy grows. Investing is always focused on the long term. In investing, you get stocks of companies for three to five years at least that are good but have gone out of favor in the mean time.

What is trading? Trading is the act of buying and selling sec. Investors also trade but they trade only when they find a good opportunity. They expect that by investing they will give them a good profit in many years time.

Traders look to take advantage of short term price inacucuracy in the markets. Trading keeps markets efficient by creating short term supply and demand that eliminates price inacucuracy. Questions is related to trading.

A gambler puts the money on line in the hopes of getting a profitable compensation if a random event occurs. The probability of these random event occurring is usually really small. The odds are always contrary to the gambler. They are in favor of the house. However, a gambler always believes that the chances can be usual. He wants to win big.

Always remember, trading is not playing. Traders who do not give attention to their strategy and its performance can cross into playing soon. They view the blips on their display screen as a game that they can win. Soon they are trading like they are in a casino with chances as bad as a slot machine game. They start making trades based on emotions without any regard to the risk and return.

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