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What is The Difference between Gambling and Trading?

Date: Tuesday, June 23, 2020 9:18 PM EDT


An overview of Gambling vs. Trading

You probably have heard people saying that trading is just like gambling at a casino such as Wildz Casino. The truth is that trading and gambling involves both choice and risk, particularly, the risk of money with hopes of getting profit. 

Gambling is defined as the act of placing a wager on an unsure outcome with the hope of gaining a more significant return than what you put in. On the other hand, trading is the act of committing money or capital to gain a financial return. Gambling is generally a short-term action compared to trading, which can last a longer time.  

The key differences between trading and gambling

1. Mitigating loss

Another key difference between gambling and trading: You don’t have a way of limiting your losses. If you bet up to $20 on your favorite game and don’t win, you will be out of your capital. When placing a wager on any gambling activity, there’re usually no strategies to mitigate loss. 

But when it comes to stock trading, traders have multiple options to prevent total loss of risked profit. For instance, they can set up a stop-loss order on their stock investment as a way to avoid undue risk. If your stock drops 15% below its purchase price, you can still sell that stock to someone and still retain 85% of your risk capital. 

2. The time factor

Another critical difference between trading and gambling has to do with time aspect. Trading in a company can last many years, while gambling is a time-bound event. With gambling, once the race or game is over, your chance to get profit from your bet is gone. You either have won or lost the capital. 

On the other hand, stock trading can be quite time-rewarding. Traders who buy shares in companies that pay dividends are actually rewarded for their risked capital. Companies will pay you money despite what happens to your capital, as long as you keep hold of their stock. These are some of the things you should never do with your money

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