Is stock market trading the same as gambling?

Stock Market Numbers Increasing

Source: Pixabay

Have you ever heard of big-city investors buying up thousands of shares just because they felt ‘lucky’? Probably not. And everyone knows that gambling with a Canada online casino is not the same as investing in the stock market. Yet there are a number of similarities between stock market trading and gambling online. Both have the element of risk, both can be done remotely, and both offer the opportunity for great profits.

It’s definitely an interesting comparison to make, so let's consider how luck and judgement apply to both casino gaming and dealing in shares, especially in terms of winning payouts.

Gambling vs Investment: Similarities and differences

Whether you gamble or invest, you’re still staking your own money expecting to make a profit. And likewise, serious gamblers and investors each try to minimize the risks they take, while at the same time trying to maximize the rewards they hope to gain. But gamblers don’t have many ways to minimize (mitigate) their risk of losing, while investors usually have a range of mitigating options. This includes, for example, easy access to a variety of sources of information about any potential investment they may wish to make.

For gamblers, there is always the house edge – an inbuilt mathematical advantage over the player – which they can often reduce but never eliminate. But for investors, the stock market is expected to constantly grow in value over the longer term. Of course, that doesn’t rule out occasional poor-performing stocks which make a loss, nor does it mean a gambler won’t ever pull off a massive jackpot win. But it does mean that, if both kinds of player remain ‘in the game’, as time goes on the odds increasingly turn in favour of the investor and work against the gambler.

Loss mitigation for investors and gamblers

Gamblers know their only way to mitigate their losses is to adopt strategies that will reduce the risk they take on with each bet. So in games like blackjack, for example, experienced players in online casinos in Canada make note of the cards in order to recognize moments when the game odds are more in their favour.

By contrast, investors have sophisticated mechanisms they can use to secure at least 90% of their risk capital. So just imagine a match-play sports betting situation where you name the striker who will score the next goal: If you get it wrong, you lose your stake – unlike investors who can pull out of poorly performing deals and hopefully walk away with most of their investment!

Hand Holding Two Ace Cards

Source: Pixabay

Day trading for a quick profit

Day traders seek out advantageous short-term share transactions on the market and usually look out for a bargain, low-risk option. That means they won’t make much per trade, but instead rely on identifying plenty of profitable opportunities to make money. So provided they turn over a profit on more than 50% of their bulk transactions, things will always work out in their favour.

In day trading, the investor has far less time to research each investment. Thus, in effect, day traders accept the pressure of making quick decisions because they know they will make at least some good deals. Purely speculative market investors also accept much greater risks than run-of-the-mill investors. But that’s because they know that, while some deals may fail, others will be sure to really pay off big.

So day trading and stock market speculation may seem to have some elements of gambling, and in that sense are perhaps close cousins of casino online Canada gaming. Nevertheless, in both these activities, professional investors hedge their bets by spreading their risk broadly enough to ensure they will always do far better than just breaking even.

The bottom line

It’s clear that risk and choice is involved in both gambling and investing – and in each case players stake their own capital in the hope of making a future profit. However, online casino games in Canada typically offer players a relatively short-term experience, while most forms of investment are longer-term options. Statistics also suggest that, although gamblers can hit a lucky streak, they should on average expect a slightly negative return. Investors on the other hand, even though there may be an occasional wipe-out, can typically expect to make a return – both on average as well as on long-term holdings. But no matter which avenue you choose to pursue in the hopes of a profit, you'll always have fun with an online casino!

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