First, let's distinguish the similarities and differences between traders and investors. Trading is part of the investment. Investors do business for long-term returns. They choose stocks that are obviously undervalued, and then wait for the value of these stocks to rise and buy the same stocks, but usually they don't hold them for a long time. Investors may buy Microsoft shares and hold them for three years, but traders may buy and sell Microsoft shares as many as twenty or thirty times in three years. In addition, investors usually don't short, but once the price falls, traders will short to make a profit. If Japan's huge economic recession causes Japan to cancel a large number of wheat orders, traders may take the opportunity to short wheat futures. However, when wheat futures are excessively short, traders may buy wheat futures in turn and wait for a rebound. Investors would never do that. They will wait and see in the short market, wait for the low point to appear before buying wheat futures, and then hold them for a long time.
Give another example to illustrate the similarities and differences between traders and investors. We imagine two people seeing some antique furniture at a second-hand auction that they think is undervalued. Businessmen will buy the furniture, renovate it and sell it in a few weeks at most. Investors will also buy these furniture, but they will never sell it easily.
Now, let's compare the similarities and differences between trading and gambling. Traders don't like gamblers who lost $10,000 in Las Vegas on weekends, and they don't buy five one-dollar lottery tickets, dream prizes or special prizes. Gambling and buying lottery tickets, two random and entertaining behaviors, do not require any effort, planning, foresight or execution ability. Traders are more like professional gamblers who regard gambling as their career. In gambling, the banker always wins, but professional gamblers know how to turn the tables and put themselves in an advantage. Similarly, traders will look for opportunities in areas that other traders have not noticed or are not familiar with. In the early southern United States, there were many ways to scrape catfish scales; Similarly, there are many skills to win a bet, so are the success of a transaction, and the skills are different. I know a very successful trader who is very good at calculating ratios. When he wanted to try his luck in Vegas, the boss of Vegas actually paid him to pick him up in a limousine, plus VIP tickets for superior suites, big meals and cabarets, hoping he wouldn't gamble.
There are other similarities between trading and gambling. First of all, both of them must put their money into an arena full of uncertainty. Gamblers don't know what points will appear on the dice, how the cards will be arranged, and traders can't predict how the price will fluctuate. The difference between trading and gambling may be that trading doesn't have to face a pile of physical chips like gambling.
Second, both trading and gambling need to work hard to find and calculate the maximum return probability. The only sure thing in life is death (some people think it is paying taxes); Therefore, even if your skills in trading or gambling have reached a professional level, at best, you can only predict the possible results of the money invested.
Thirdly, if a trader or professional gambler wants to succeed, he must learn how to manage money and allocate financial resources. A professional gambler will gamble with the money he is willing to take risks. In other words, the money he put on the gambling table is the amount he thinks he can lose. Traders must allocate personal assets according to the following three steps: first, they must decide how much money to put in their personal trading accounts; Then, decide how much money to invest in a specific market; Finally, decide how much risk each transaction is willing to take.