Gambler or Speculator?

[caney]

An Extract from Trading and Exchanges by Larry Harris-

Lots - Likely most - traders who gamble at financial markets are unaware that they are gambling. Many beleive that they are pursuing other objectives. Traders need great discipline to discriminate betetween prudent risk taking behavior and gambeling. Many traders traders who beleive they're speculating actually are gambling because they don't recognise that the information upon which they trade does not provide them any advantage over other traders. Traders who bet can sometimes be identified by their own enthusiasm for trading and from their own inability to clearly articulate their motives for trading.
The notion that some traders are gamblers is contentious. Many regulators fear the harm that they can do to themselves and to the markets. They especially worry that players can make the markets more volatile.
Betting is not necessarily bad for monetary markets. Since players are uninformed traders, they tend to lose to educated traders. When lots of gamblers are found, educated trading can be quite profitable.
Like other utilitarian traders, gamblers like to trade in liquid markets. The low transaction costs in these markets allow them to aquire and divest their possitions cheaply.
Gamblers also like to trade volatile instruments since they typically provide the best potential for exciting entertainment. The great popularity of public lotteries indicates that some gamblers like bets that win large with low likelihood and lose little with high probability.

[Palen57]

Hey Leon, did You finally buy the book?

[caney]

Hey Leon, did You eventually buy the book? Yep,

I found a Used, but great condition (earlier I spilt some tea onto it) copy. #30 on amazon, fantastic thing. I may need to go through the book again however, takes some time for things to stick. Then Ill either highlight or create coppies of pertinent info I need to put more thought in to.

Im really happy with it.

[pilamixu]

I spilt some tea on it You formally broke it ! LOL


I'll wager (pun intended) that the more you consume the book (like the book absorbed your tea), the further you go along this development:
Gambler gt; Speculator gt; Pro Trader.

I am buying that damn book now! I can feel my mind hurting already. LOL!

All the best Leon!
Brent

[caney]

You formally broke it ! LOL


I will wager (pun intended) the more you consume the book (like the book absorbed your java ), the farther you go along this progression:
Gambler gt; Speculator gt; Pro Trader.

I am buying that damn book now! I can sense my head hurting already. LOL!

All the best Leon!
Brent A lot of this data is quite basic, but not basic in the sense of'stuff I already knew'. Fundamental in the feeling of,'stuff I must have known before I made my first transaction'.

I have not anticipated a book to make me profitable, original idea's are exactly what earn money. However, the comprehension of how the markets really work is a step in the ideal way to formulating a strategy that really means something.

[Amalinga]

Things in life is a gamble.

You open a garage to repair automobiles - you put in your cash.
You can lose nearly everything!!!

Which you put in cash to date a girl - no gaurantee you will get her to become your wife!!

In everything, have a fantastic stop reduction - handle it well.

When the connection is not fruitful, stop persuing it.
When the garage do not bring in clients, sell it before the bankruptcy government arrive.

[pilamixu]

Fundamental in the feeling of,'stuff I should have known before I made my first transaction'. My guess is that trading using an almost total absence of knowledge about how
the markets work is a massive factor in the 95 percent crash-and-burn statistic
that we all hear about.

Q: How many people know it BEFORE they place in their first trade?
A: No way it can even be.1%.

[supemleiva]

Glad to see you have enjoyed that publication Leon. Even though it is somewhat outdated it is among my favorites and I would advise it to anyone. You seem to be aging as a trader of late, am I correct? I just spotted your journal and it appears you're getting some nutritious screen time; you're eduing yourself on a few of these fundamentals, and are finding the intricacies of the word professional in regards to trading (according to your comment about how distinct this learning procedure is in a different thread). That is wonderful. I started posting in this forum for some rather different reasons but find myself almost nostalgic as I identify with younger traders (trading age mind you) who are going through what I have gone through myself. You seem to have potential.

Anyway, keep at it. You may make discoveries in system development and profit yields; you may have great leaps of comprehension because you discover the intricacies of financial markets, you may even fully understand an edge or two; but your place about the learning curve just advances as soon as your textbook eduion turns into real-life experience. Experts often stick out in their ability to discern prime market conditions due to their specified system. To do so, your mind has to be conditioned in order to filter and translate the relevant information that is affecting the market as you choose on a trade.

What is your plan now, Leon?

[caney]

Glad to see you've enjoyed that publication Leon. It is one of my favorites though it's somewhat dated and I would recommend it to anyone. You appear to be aging as a trader of late, am I right? I only spotted your diary and it seems you're getting some nutritious display time; you're eduing yourself on a few of the fundamentals, and are discovering the realities of the word professional in regards to trading (based on your remark about how distinct this learning procedure is in a different thread). That is wonderful. I started posting in this forum... Yes Gaston, I feel like im maturing in general.... And I hope I have some possible, lol.

Applied understanding is the only way forwards, so I guess my plan is to keep learning and keep brain-storming on how best to use the things I understand for my trading. Writing my idea down and then trying to dissprove them as trading egies that are legitimate is what I will be doing next.

If you dont mind me asking, How did you stumble into trading? And have you always been a trader?

Good day,

Leon

[caney]

An Extract from Trading and Exchanges by Larry Harris-

Many - Likely most - traders who gamble in financial markets are unaware they are gambling. Most beleive they are pursuing other objectives. Traders need great discipline to discriminate betetween prudent risk taking behavior and gambeling. Many traders traders who beleive they're speculating actually are gambling because they don't recognise that the information about which they trade doesn't provide them any advantage over other traders. Traders who bet can at times be identified... A thought Ive had....

So many folks in the forums online have a very hard time keeping in the dark when investing Demo and micro accounts. But when trading like this there is always a counterparty Imaginary(demo) or your own broker ((micro) who expects you to lose anyway).

Chosing good entrance and exit points is half of the struggle, the more worrying part is attempting to locate somebody that will take the other side of the transaction when you're trading substantial money.

Looking from this perspective, it ought to be simple to trade profitably in demo. Whats going on?

This should be more worrying for the brief timeframe momentum traders.

[supemleiva]

Yes I feel as though im maturing in general.... And I certainly hope that I have some potential, lol.

Applied understanding is the only way forward, so I guess my strategy is to continue learning and maintain brain-storming on how to apply the things I learn to my trading. Writing down my idea and then trying to dissprove them as legitimate trading egies is exactly what I will do next.

Should you dont mind me asking, How can you stumble in to trading? And have you always been a personal trader?

Good day,

Leon I've always had an interest in financial markets. Even as a young boy I remember having discussions with my dad about how stocks functioned. I had been quite young at the time but only the mere concept of profiting from price fluctuation was strangely intriguing. I wasn't only interested in making money though, because at that age what is money anyhow. I simply found the topic alone extremely confusing, and therefore fascinating. This was significant.

However, it wasn't until I had been in school with a spouse a children I found myself looking into alternative ways to encourage my family. I was browsing another forum one day when someone was speaking about day trading stocks. I did a fast search of the term”day trader”, fell in love with the concept, and began my life long pursuit of financial success.

The very first time I opened a chart I saw that which everyone sees with virgin eyes: randomness. But the more I exchanged along with the deeper I heard the more sense was created of the markets. My passion for studying drove me to great lengths to find real answers to the mysteries of the market. But don't get me wrong, I had my period of inexpensive indior-ridden trading such as the rest of us online fish caught by the hook of badvertising. This phase was naturally temporary for me personally. Such fictitious systems expectedly offer only cheap answers which are evident to anybody with a mind. Success came shortly after this realization. I needed real answers, and I had been great at asking the right questions.

I have not worked for a bank or some other financial institution either. This ought to offer hope to some because all of my questions have been answered by my research. There are very few”secrets” to trading. You may have to dig a bit, but all the info required to become successful is at your fingertips, you only have to have the brains and balls to piece together the mystery.

[pilamoxeslme]

Most things in life is a gamble.

You open a garage to repair automobiles - you put in your cash.
You could lose almost everything!!!

You put in cash to date a woman - no gaurantee you'll get her to become your spouse!!

In everything, have a fantastic stop loss - manage it well.

If the relationship isn't successful, cease persuing it.
If the garage don't bring in customers, sell it until the bankruptcy authorities arrive. I concur - What is a gamble. You need to understand how to increase your likelihood of success. Before going to a date, As an example, you brush your teeth. You've improved your likelihood of obtaining a kiss. Flip it to trading - you use some kind of indiors (I hope) when deciding to go long/short. Again, your odds raised. Still a gamble...

J

[caspkjammslmokg]

I urge any trader here who's serious about trading to see this novel. It wont help you trade specifically but will aid you with the market microstructure of all markets, market participants and they types of traders on the market.

I believe this knowledge is essential for a trader and would decrease the many questions on this board about people stating asking why some spreads and quotes are different across brokers.

Additionally it will clear alot around ECN (electronic communiion market) as I dont think this is a true interbank market as some people today call it .
The sole interbank market here is through reuters 3000 additional.

But I think that it would be safe to assume that some traders on here are bettors without recognising it and will keep trading even though they are not earning money, maybe the delight of trading attracts them? But it needs to be unstood that markets are are a zero sum game, (negative sum game if you regard broker spreads) and gamblers, neophytes are wanted for this market to endure.

[supemleiva]

Additionally it'll clear alot around ECN (digital communiion market) as I dont think this is a true interbank market as some folks call it here.
The only interbank market this is via reuters 3000 extra. Reuters (and EBS) simply consolidates bid/ask prices in the participating banks on the interbank market. Reuters is not in itself a market, just a service for your market. The banks are still trading with one another on a daily basis, and so the term interbank is applied to this level of exchange. A bank can trade with another bank with no Reuters service also and its considered interbank.

[caney]

However, it has to be unstood that markets really are really a zero sum game, (negative sum game should you consider broker spreads) and gamblers, neophytes are wanted for this market to endure. This reminds me of something else I have been interested in and wanted to talk.

Due to the intention of this market, there's possibility that the psycology of market moves is much less significant, because industry are just making trades to lock in prices... they will probably not care what's happening on an Intraday chart. This would presumably create technical trading quite hard.

On the flip side, the uninformed descisions(and transactions ) being forced to lock in prices should be offering a great deal of liquidity to all those traders with a border.

Any ideas?

[fllkey]

Most things in life is a gamble.

You open a garage to repair cars - you put in your cash.
You could lose nearly everything!!!

Which you put in cash to date a woman - no gaurantee you will get her to be your wife!!

In everything, have a good stop loss - handle it well.

When the relationship is not successful, cease persuing it.
When the garage don't bring in clients, sell it before the bankruptcy government arrive. Agreed 110%

If we are comparing this to the casino or track (i.e. real gambling), forex/trading wins hands down.

50:50 opportunity to profit from forex/stocks from an easy coin toss. Add your advantage, method, system (whatever you want to call it) and the odds increase in your favour.

Show me a casino or track that provides this type of chance...

[caney]

There are very few”secrets” into trading. You might need to dig a little, but all the information required to be successful is at your fingertips, you only have to have the brains and balls to piece together the puzzle. Thank you for shairing your trading History.

I dont think anybody can make a livelihood out of this unless they had a terrific deal of curiosity about it, rather than simply the money that can be made.

[caney]

on account of the purpose of this market, there's chance that the psycology of market moves is much less significant, since industry are only making trades to lock in prices... they are unlikely to care what is happening within an Intraday chart. This could presumably create technical trading quite tough.
This point/thought troubles me quite a bit, the'Psycology' aspect is that I can think to build trading concepts from. Any order antisipation egy requires the beleif that others are trading technically, doesnt it?

The process I had been using in my journal was based simply buying/selling in a disscounted price behind many levels of SorR, Not quite technical in my eyes. Entries could have been produced randomly possibly as long as I had been trading at the trend direction.

[fllkey]

....Forex is made primarily for businesses, banks, and governments to exchange currencies in very large quantities, it doesn't behave itself in a consistent issue. At any time or place someone, bank, govt., business can exchange a huge quantity of currency and it will not have anything to do with Fundamentals or Indiors or any combination of both. Every system ever developed could be disrupted with these exchanges and thereby ruining any egy....
...I reasoned that you are able to research to your hearts content everything about Forex trading it is possible to locate but when GM cashes a billion dollar check because it sold county X trucks no system could cover these events.
We just need to live with this reality...

Trade your charts/fundies/quant/anything and utilize sound MM. Accept the fact that you will never have the ability to derive a 100% ideal method, system or edge.

Gambler or Speculator? Take your choice, whatever makes you sleep better at night.

It's not the type of gaming you do at the casino or track, the chances here could be pushed much further into your favour.

[caney]

We just have to live with this reality...

Trade your charts/fundies/quant/anything and utilize sound MM. Accept the fact that you will never be able to derive a 100% ideal strategy, system or edge.

Gambler or Speculator? Take your choice, whatever makes you sleep better at night.

It's not the sort of gambling you do in the casino or track, the chances here can be pushed much further into your favor. It appears ive confused folks by going off on a tangent. Im not debating anything, simply rambling about different things regarding trading.

I originaly posted the extract from TE to make folks believe a bit, and as a talking point.

The posts which you quoted are operating on the assumption that FOREX is a speculative market untill a large order comes In from a company and disrupts the speculators. However, couldnt it also be possible that 90 percent of what we see is exactly that, company transactions that needed to be made regardless of what was occurring on your intraday chart?

[fllkey]

It appears ive confused people by going off on a tangent. Im not debating anything, just rambling about different things regarding trading.

That I originaly posted the extract from TE to make people think a little, and as a talking point.

The posts which you quoted are working on the assumption that FOREX is a speculative market untill a large order comes In from a company and disrupts the speculators. However, couldnt it also be possible that 90 percent of what we see is exactly that, company transactions that needed to be made regardless of what was happening... The only confusion that I entail is the point of dissecting the Gambler or Speculator question. How is this going to make us better traders?

Yesit may be 90 percent whatever the charts/fundies say. How you'd determine the exact figure I do not understand.

And no, the quotes aren't working on the assumption that it is speculative before a large order comes in. It's indiing to us just what forex really is based from - one currency being exchanged for another and the one of countless ways it could be transacted.

[fllkey]

People have already addressed in the ribbon.

Everything in life is a gamble.

You gamble with your own life once you walk outside your front door and cross the street. Chances of being run around are just 1 in a thousand (exact figures I don't understand ), so does this stop you from ever leaving your house?

[caney]

The only confusion I entail is the point of dissecting the Gambler or Speculator question. How is this going to make us better traders?

I did not dissect anything, I presented the infusion and then left that stage alone. There's a difference between both different types of trader.

Yes, it could be 90 percent whatever the charts/fundies state. How you'd determine the specific figure I do not understand.

It's indiing to us precisely what Foreign Exchange really is predicated on - a currency being traded for the one of millions of ways it can be transacted.

If that is all that the quotes are all saying then there was little desire in posting them here. Im sure most of us recognize that.
__________________________________________________ __________________________________________________ ____________

Some folks here make transactions based on the premise that the market prices move in a predictable rythem untill a massive order comes in that sends the price in the contrary direction, IE- A random event that disrupts this rythem. For price moves to become predictable then they would have to be made by speculation.
If price moves are non-speculative in majority then the Intraday tendencies we see are random events all lining up to induce price in thesame management.

Now, the important part is the difference between non-speculative and speculative trading. Most on this forum try to forecast price moves using technical analysis, for eg. Breakouts, These things depend on psycology, attempting to ascertain what traders can do next and trading before they do.

Simply set, Plogy, and so charting bare's no weight in Forex IF it is not a speculative market.

Did anybody follow that above? I am hoping I set across my thoughts clearly. Lol.

[supemleiva]

There seems to be some confusion about gambling and risk. In life there are risks all of the time: walking accross the road, leaving your garage open, all. I do not consider this gambling. Trading is the same. When you exchange you always take on a risk, even when you profit.

If you gamble, you just take on exactly the very same risks but do not profit from it. That is exactly why Larry Harris says that some traders believe they are speculators but since they lose money and do not recognize that it they're bettors. A pure gambler is a utilitarian trader, meaning his profit is not based upon his performance on the market. Rather the gambler derives enjoyment out of gambling, and so profits from enjoyment even when he loses some money.

Savvy?

Edit: Plogy in trading as regards to technical levels and this is a whole nother issue altogether. I will touch on that at a later moment.

[caney]

You gamble with your life once you walk outside your front door and cross the road. Odds of being run over are 1 in a million (exact figures I don't understand Ha!

You dont know the older woman that drives a beatle who lives on our road, have been on our 3rd now.... And the other two had 9 lives left once we got them.

Leon

[fllkey]

There appears to be some confusion regarding gambling and risk. In the Oxford dictionary:

Gamble:
1) Play games of chance for money stake
two ) Risk substantially for good gain
3) Risky undertaking

So my analogy from this Risk undertaking by crossing the street, is still in-fact a kind of gambling. According to Mr. Oxford at the least.

That said, I still agree with you and with what Larry is attempting to point out that there are two types of traders.

Someone has already mentioned that it is the pathway to becoming a trader/pro/expert, and I agree to an extent.

You basically start as a gambler (very small to no knowledge), move onto speculation (acquired some knowledge) and then (maybe) achieve trader status (expert/pro).

[Luchymj]

J Pual Getty


Gambling is taking uncalculated risk, Business is taking calculated risk

[caney]

Edit: Plogy in trading as regards to technical levels and such is a whole nother topic entirely. I will touch on that in a later moment. I sure hope that you do. Would really like to listen to (?) Your thoughts.

[mupbumn12]

To be eligible as'not gambling' you want to have adequate information and the result must at least be appropriate more than 3/4 of the time.
In forex, there are too many influenting variables, eg DJI, Fed that would move the forex markets considerably. People fail to predict the above influenting variables, and yet some claim to be able to predict forex that's really a composite of influenting variables united (cental banks, GDP, interest rates, stocks, opinion, people's spending. . .the list goes )

In all trading'systems', the powerful emphasis on cash management that talks about risk:reward ratios and probabilities, points to betting systems.

[caney]

Some Info which Birdt posted in another thread....

Speculative Positions Vs. Commercial Transactions In the global foreign exchange market, insecure positions outnumber commercial foreign exchange trades, which arise because of trade or capital flows, with a massive margin, although the exact extent is difficult to quantify. Http://www.investopedia.com/articles/forex/09/forex-information-currency-market.asp Some quotes indie that as much as 95 percent of foreign exchange trades are speculative. IFSL Reseach - Foreign Exchange 2007 Hedge funds as speculators About 70% to 90% of the foreign exchange trades are speculative. http://en.wikipedia.org/wiki/Foreign_exchange_market

[caney]

Edit: Plogy in trading as it pertains to technical levels and this is a whole nother issue altogether. I could touch on that at a moment that is later.
Just bumping this thread so that Gaston can continue with this If he wants. Im very interested to hear what he's got to say on the topic.

[caney]

Something that would be Interesting to know is the% (money-wise) of Forex Trading People or Entities that use TA asthe pillar because of their own trading, sadly there is not any way to understand or prove opinions. Whether this% was high then I can see there being a use in thinking about the plogy of price moves, ie, trendline breaks, fib bouces ect.

Though plogy is usefull no matter the way you trade in an manner.

'Plogy of the move' is like saying'reason for the move', and I think when creating a method you need to create a situation in your mind(plogy of a move/cause and influence ) around some info you class as'valid' or'usefull' and then establish yourself rite or wrong.

Just thinking out-loud here.

Leon

[vicpkmay]

Hi...

Watched this show on TV the other day....was very intertesting...

About a new science'behavioural economics'

is presently demonstrating that hormones such as cortisol and testosterone may be causing supposedly rational traders to make ridiculous decisions.


http://www.abc.net.au/alyst/stories/2525497.htm