Do you believe that stock trading is similar to gambling? The truth is that every money-making opportunity comes with a certain degree of risk. The same can be said about stock trading and online gambling. When you invest in stocks, you hope that their prices will rise. On the other hand, when you gamble, you hope your small investment will give you big returns.
Should you gamble or trade stocks? Where are you likely to make money? Read this article to the end as we look at the similarities between stock trading and online gambling.
Risk
There is a risk that you will lose money when you engage in stock trading or gambling. There is nothing like a sure bet in both.
What happens if you bet on Team A but the match ends in a draw or it loses? You lose money. You may be lucky to recover some of your money if the iGaming company offers some form of cashback for lost bets.
You will hope that the stock of a certain company will increase in value when you stock trade. However, the opposite can also happen and you lose a quick chunk of your money or all of it. The stock market might be doing well but you still find the select company’s stock still plunging.
Reward
Risk and rewards go hand in hand. The major difference between gambling and stock trading rewards is that you can predict the rewards for the former. For instance, you can try playing games in New Zealand and wager on a team or player with an odd of 3. If you place a bet of £100, your likely reward will be £300.
On the other hand, it might be hard to determine how much the stock you invest will be valued in 3 months. However, you can also automate your stock trading and take profits after certain conditions are met.
Short-term focus
Gamblers and stock traders speculate for hours, days or weeks. A football match gives you about 90 minutes to determine if your investment pays off. In some cases, you may even win or lose before the 90 minutes end if you bet on outcomes like corner kicks and which team scores first.
Stock trading is no different. The focus is on short-term gains where you can speculate that a stock will rise in value in hours, days or weeks. Stock traders rely on technical analysis and market trends to determine which stocks to invest in. Most such traders automate their process and may also set loss limits to caution them from liquidation.
Regulation
We live in a world that can be chaotic if people and processes are not put in check. Cases of iGaming operators manipulating results and games have been reported in the past. On the other hand, we have also seen companies that misrepresent their financial statements which eventually affects the stock prices.
Luckily, most regions now have regulations that govern the conduct of companies. Some jurisdictions also have punitive measures that make it expensive for companies to engage in malpractices.
Requires a strategy
Luck may play a role in winning in both stock trading and gambling. However, having a strategy is the best approach. If you are a gambler who enjoys sports betting, you can always check the history of a team, wager on home advantage or the current form of the squad.
If you are a stock trader, you can follow recent news and engage in presale just before companies go public. Select a strategy and always ensure that you stick to it.
Chance plays a role
Some things beyond your control might influence the outcome of your trades or bets. For instance, rain or injury to a key player might make your team lose. On the other hand, a lawsuit or even publicity may make the stock you just bought plummet.
Emotional rollercoaster
Gambling and stock trading can lead to profits or losses. If the former happens, excitement will be seen on the face of the trader or gambler. However, loss news can be devastating. The only thing that can save traders and gamblers is knowing how to control emotions.
If you are not sure if you should go with investing or gamble, then we have presented you with some pointers. Both approaches have their benefits and weaknesses. However, always ensure that you do research and avoid relying on emotions as you spend your money.
