("Chat, trade, and invest your way to a Brighter and Greener Future.")
About Disciplined Intelligent Speculation from the Trading/Gambling thread: Post#62
As I said gambler, or speculator whats the difference?
Answer = None = same thought process = same exposure to market movement = different execution platform = same result!
It is NOT the same process.+ When you "Gamble"
, you are just betting, ie testing your luck.+ When you make an "Intelligent Speculation"
, you have done your homework first, analyzing things like: a company's fundamentals, the technical position of its stock price, and volume flowing in, or out of its stock. And you intend to manage the position (using stops, or other disciplines) once the trade is in place.+ "Intelligent hedging"
, is yet another thing, where you aim to hold onto an investment position or longer term trade, but reduce the inherent price risk, through options structures, or arbitrage trades. (These "hedges" can be simple or complicated.)
Sadly, I think some here do not understand what work is needed to make an intelligent speculation, and so they disrespect it, and consider it akin to gambling. Here's a key point: Just because an outcome is not certain, and you are taking some probability risk on the outcome, it does not mean you are gambling.
Perhaps this analogy with help:
+ If you go to Vegas and bet on a slot machine, you are gambling,
+ If you are the house and own the slot machines, you are taking a calculated risk spread over many slot machines, where you have a high expectation of making a positive return after a large number of your customers gambling transactions
If the odds are in you favor, and you are relying on the rules of the game (and your homework to improve youyr probability of gaining a profit), you have moved beyond a mere Gamble which relies upon pure chance.
In other words, a net positive return over a large number of transactions is an indication you have moved beyond gambling. I hope the following statement "rings true" to many here and shows more clearly what I mean:"I thought I was making Intelligent Speculations, but after a dozen transactions I realised I was Just Gambling."
For someone who makes a statement like that, they need to rethink their trading methods and improve their technique in selecting trades, doing a better form of "homework" before trading, and/or managing the trades better once they are in place. One of the important missions of GEI is to help in this learning and refining process. (As it says in the logo, GEI's core mission is to help people: "Chat, trade, and invest your way to a Brighter and Greener Future.")