Rabu, 27 April 2016

Is Trading the Same as Gambling?

Is Trading the Same as Gambling?

Maybe yes, maybe no; it very much depends on your definition of gambling and whether or not you have an 'edge'. The official view The definition of ‘gamble’ in the Oxford Dictionary of English (2nd edition, revised) is

1. play games of chance for money; bet: he gambles on football. [with obj.] bet (a sum of money): they gambled their money on cards. 
2. take risky action in the hope of a desired result: he was gambling on the success of his satellite TV channel. Noun [usu. in sing.] 1. an act of gambling. 2. a risky action undertaken with the hope of success: we decided to take a gamble and offer him a place on our staff. Clearly, according to the dictionary, any kind of trading or speculation in the financial markets most definitely is gambling. No ifs, no buts. However, based on this broad definition, walking down a flight of stairs or crossing a road could also be thought of as gambling. In fact, one could argue that living is gambling, as a great deal of our daily lives involves taking some ‘risky action in the hope of a desired result’. Two extremes At one extreme, many people would not consider crossing a road as gambling. Most of us achieve the desired result – i.e. reaching the other side – safely, every time. However, it involves some risk and a few unfortunate souls have accidents, sometimes fatal ones. At the other extreme, most people would consider betting on the result of the 3.30pm at Chepstow as gambling, as the desired result of your horse winning the race can’t be achieved with any degree of certainty. So, this begs two questions. Firstly, where is the dividing line between ‘not gambling’ when crossing the road and ‘gambling’ when betting on the gee-gees? Secondly, and more importantly, which side of this dividing line does trading fall on and why? These questions - and more - will be addressed in the Long Answer . . .

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