This question is actually popular among those who want to start trading and still not sure if it's just a new fancy name for gambling. But let's think about it for a minute - what you would classify as gambling? Merriam-Webster explanation "the practice of risking money or other stakes in a game or bet". However, trading is neither a game or a match, why does it get compared to gambling? Well, first of all, it's people who have no idea about BOTH trading and gambling who do these kind of comparions, just to create a feud, or driven by other personal interests. Traading is like investing, people spend a lot of time in front of the chart gathering live data and looking at history, at news around the company and utilizing indicators and other analytical tools to make an accurate forecast of what's going to happen. But tell me know, how would you analyze what's going to be next on a roulette wheel, red or black? You cannot, and this is what makes it gambling, because you have little to absolutely no idea on what's going to happen.

However, if you trade CFD without any causion and taking extreme risks, it can surely turn into something that resembles gambling, and these could be the similarities:

* Playing with leverage

From the young age, people are taught not to play with fire, and traders are taught not to play with leverage. People critize CFD brokers for offering too much leverage, like even 1:2000 or more, and this could amplify the losses by a lot. It's a blessing that quickly turns into a curse if you have no idea what you are doing, and alike gambling, the money can be lost pretty quickly. But what if you win? It's not a decent trade anyway, if you show your gamble trade to any pro trader, he will surely tell you that you shouldn't have done it.

* Ultra-scalpers

Short term speculations exist in trading as well, like opening and closing a trade even withing seconds, and some people do employ these strategies to get huge RRs. But the reality is that most of them prolly have 20% winrate, or maybe 10% (if they are hunting 10RRs or above) and this is mostly just not worth it. Also, keep in mind that these are from the top of my head, but effective scalping is mostly done by super experienced traders, and even those people loose in the long term with scalping.

* You don't own anything

This was an interesting argument I saw the other day that compares trading CFDs to gambling, as in both of these spheres, you don't own a thing. True, however, there is a reason why you don't own the assets while trading CFDs - it's a method of simplyfing trading, because some brokers offer a lot of different stocks to trade, like EU, UAE, Chinese, US and other types of stocks. You can't imagine the heachades you need to go through to own those, and each exchange has its own rules, and plus you will get 1:2 leverage max on those, so it means you need a pretty much gigantic capital to make money. For instance, if you make 10% a month on shares, which is not an easy thing to do - then you need 10K capital at 1:1 leverage, not many people have 10k lying around just for trading. However, with balanced leverage (1:20), you need only $500 to hold a 10k trade, which is still not adviced, don't risk all of your equity for a single trade and comparison is just for informative purposes only.

Now let's look at what makes trading different from gambling:

- Skill matters

Those who make decent predictions by properly analyzing the market did spend quite some time learning, and they have the skills to make decent assumptions. Skill does matter here, while gabmlers rely on luck, traders use technical analysis (indicators and chart patterns based on historical data), fundamental analysis (economic news and press around the company for shares) and risk management (setting up proper stop loss and take profit). When you make a bet, you loose all of your money, but in trading, you put a Stop Loss that will stop the trade once the price reaches a certain amount.

- Risk management

To expland this a little more, in trading, you controll the process, you see the price moving either in your direction or away from it. You still have the full control to set TP anywhere you want, and the same with SL, and you can stop the trade any time you want. A proper trader risks no more than 2.5% of his total equity (mostly 1% tho) on a trade, generally it's a sum he is well prepared to loose.

- Loosing is different

When you loose at gambling, what people tell you? Better luck next time, and it's hard to realize that you can only rely on luck. There are losses in trading, sure, but those are disciplined, and at a decent risk as we discussed above, and experienced traders record their losses to review them once they have enough data, so they can reveal their wekanesses and work on mistakes and improve their trading stats.

So when exactly trading becomes gambling, this happens if you:

1) Trade without a plan ( a strategy)

2) Don't use any risk management (YOLO style)

3) Get consumed by emotions (overtrade, revenge trade, fomo and all the rest).

In the end, what I wanna say is that you give a knife to an amateur, he may cut himself, but if you give it to a cook, he can make a nice meal. So trading is a tool, and the tool is all about usage - if you use trading CFDs properly and have a strategy that you follow, then there is absolutely 0 similarities between trading CFDs and gambling.

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