How many times has this happened to you? You tell your co-workers, family, or friends about your trading, and after a gasp they say, “Oh my, isn’t that gambling?” You try to assure them that no, you are not a gambler, you are a trader. You have a winning system, and you make money over the course of time. But they still look at you judgmentally and never quite understand. They don’t seem to understand that when they lost half their retirement money with their supposedly safe investing methods, you made double-digit returns over the same period of time.
Here is a quick checklist to see if you are a bad gambler or a good trader:
- Gamblers are always at a disadvantage to the house. Good traders have a system that gives them an advantage over other traders.
- Gamblers always leave the casino with empty pockets, no matter how much money they are up at any point. Good traders make money consistently.
- Gamblers risk money randomly. Good traders risk preset amounts of money on each trade.
- Gamblers don’t understand the odds against them. Good traders understand the risk/reward ratio in every trade.
- Gamblers enter a casino with no understanding of their risk of ruin. Good traders manage their risk of ruin, keeping it close to zero.
- Gamblers use emotions to make decisions. Good traders use a trading plan for each decision.
- Gamblers have big egos win they win. Good traders are humble winners.
- Gamblers go all-in to win big. Good traders trade just big enough to make a meaningful profit.