The scope of trade permeates all fields of human life. Trade not only fulfills the demands of man but is also a big source of income for millions of people. People debate about the modern stock market and many different trading activities and argue that these are just like gambling.
But some people give the opposite statement. What is reality, and how can we go deeper into it?
Why is trading not gambling? Here we take a look at the different types of trade and how they differ from gambling.
Trading is quite different from gambling. Unlike gambling, in trading, you have to decide everything like, when to enter, how much to risk, which method is suitable, when to exit and how to examine the market. You have all those instruments that increase the chances of profit.
Gambling is a game for a chance at money. Gambling only involves winning or losing. There is no other option while the profit in trading can be anything from 0% to 100%. So, trading has a higher success rate than gambling.
Trading vs Gambling
Many questions arise about this issue but the answer is not easy. We are trying to find some best words for justification.
Trade is an act of buying, selling, or swapping things or services. Gambling is just playing; you may win or lose.
Gambling automatically creates a negative expected value. It leads to the ultimate success of casinos and bookmakers in the end even though they lose some rounds.
In trading, using previous knowledge and strategies can change the negative expected value to a positive desired value. That’s the reason experienced and talented traders consistently make a profit in financial instruments like stocks, cryptocurrencies, derivatives, and bonds.
The possibility to create positive expected value through ingenious decisions, good strategies, and an understanding of the market is a big difference between gambling and trading.
Why Forex Trading Is Not Gambling
Forex is not a game of luck. This structured and systematic skill can be acquired through extensive experience and sound knowledge. These things are not required in gambling.
When you are involved in the forex business you consistently apply logic and skills. Traders understand the psychology of other traders during the ups and downs of the market while gambling does not depend on business wisdom. It is only based on luck.
Is Trading Gambling in Islam
Allah has permitted trade and forbidden usury’’Ayat 2;275.
Buying holding and selling of lawful things is allowed in Islam. But gambling is strictly forbidden. Here we check three main points that differentiate trading from gambling.
- The investor knowledge is linked or relevant to the outcome.
- An asset is purchased.
- Both parties plan to benefit from the transaction.
Is Options Trading Gambling
Options permit potential profit in both volatile times, this is possible because prices of acquisitions like stock, currencies, and commodities are always moving. So due to options strategy, they can take advantage of those conditions to profit. So they take a high-risk step to win or lose money at the same time. So, some people think it resembles gambling.
In options, strategies cover call is the safest option strategy. This permits selling a call and buying the underlying stock to lower the risk.
Why Stock Market Is Not Gambling
The stock market is an active spot for investment. Different companies trade heavily daily. Unlike gambling investing in stock makes you the owner of some shares that distribute profit after 6 months or a year.
In gambling, you are not the owner of any assets. You bet on something that may result in a success or defeat. It is a recreational activity that gives you fun, but for true earning you should have a sound source of income.
Which One Is Profitable Trading or Gambling
Different research on the outcome of different markets shows that trading grows while in gambling your capital shrinks. If you have some jackpot and earn a lot like the lottery or in any other form of gambling, your money is readily reduced in the temptation to earn as much as possible (because gamblers often put more and more money to make more profit.
This will lose all the money that they earn in betting). This is the reason there is no growth occurring in gambling. Only casinos benefit from this.
If you check the stock market, forex market, or cryptocurrency market, their assets increase daily, but there is no record of any casino or gambling market.
Why Trading of Cryptocurrency Is Not Gambling
Cryptocurrency is based on mathematics and cryptography but gambling is based on chance. In gambling, you are betting on money against the casino house.
In crypto, you compare other people with the same type of money as you do. Cryptocurrency trading, especially bitcoin or ether, is a highly fluctuating market. You may earn a lot in its dealing but sometimes it causes short-term loss.
In cryptocurrency gambling, bitcoin gambling is the most common. You may avoid this by using different software like Gamban, Gamestop, Netnanny, Betblokers, and Gam Block to help block access to these sites.
Is Day Trading Gambling
Different people have different opinions about day trading. Some economists thought it is gambling because it involves risking a small amount of money and expecting a huge outcome
While some critics argue that day traders use skills and after careful analysis predicts the future market.
Common traders and day traders differ in taking decision time, day traders are much faster than other traders or investors. That’s the reason most of us think it resembles gambling because both are fast, quick decisions, win or lose in the same style. What’s your opinion?
What are the best skills a trader posse but a gambler does not
Every person has some special skills which he uses in his work. Traders and gamblers sometimes behave in similar styles but they differ greatly in their work. These differences describe their mindset more clearly.
It indicates that a trader can change the method or plan according to the circumstances of the market.
But the gambler is compelled to face the fixed condition.
This skill supports traders in estimating details to determine what decision they should make. This involves the trend and direction of the market. This skill is not needed in gambling.
A trader’s most essential skill is deciding which trade is beneficial and which is not. This requires quick judgment and following demand and supply rules.
It enables the trader to use mathematics to solve real problems. It
includes mathematics and its application.
It relates to the ability of traders to determine which actions are necessary to
reduce the risks from occurring. It is helpful to avoid bad trade and financial loss.
Frequently Asked Question
Why is trading beneficial, not gambling?
Trading commodities and other necessities increase the market flow and benefit both consumers and traders
But gambling is beneficial only to one who wins or benefits from casinos. It is a recreational activity that ends in winning and losing.
Is the stock market similar to gambling?
In the stock market, you invest your capital in some stock with the hopes that its value will increase and you will get your profit.
But in gambling, you bet on money or some asset and try your luck to win. Mostly it is taken as a game, not a method of earning because they mostly lose their money.
Trading is crucial for reducing poverty in the world. The countries that are actively participating in international trade are more productive, rich, and developed. There is positive competition for good services and products. These countries provide good facilities and high quality of life.
On the other hand, gambling reduces the efficiency of people because when they lose their hard-earned money they become frustrated and often lose all their capital.
So, trading is not like gambling; it increases the prosperity of the state