Gambling has taken center stage this year with huge crypto betting platforms like Stake partnering up with celebrities.
This has led many novices to believe that you actually have a chance of making a living on betting sports and gambling.
Many critics choose to compare gambling to trading. Some would say day trading even has worse ‘odds’ than putting your chips on red at the casino and hoping for a good spin.
Sure, trading and gambling both have money involved. You could win some, or lose some in an instant, and both involve risk. But that is where the line is drawn.
Gambling is typically a short-lived activity, while trading and investing properly can last a lifetime. How many hedge funds were created from sports betting or roulette?
Let’s dive into the key differences between trading and gambling, how celebrities like Drake are misleading the public, and what you need to know to have a true trading edge:
The Differences Between Gambling & Trading
In both gambling and trading, a fundamental rule to be successful is to minimize risk while maximizing profits. With gambling though, the house always has an edge over you. It always has some sort of mathematical advantage over the player that increases the longer they play, just due to the nature of the games. The casino only allows you to play games where they have a mathematical certainty of winning in the long run. And if you do go on a hot streak, they kick you out.
On the other hand, the stock market consistently appreciates over the long term if you are investing for the long haul, and certain strategy sets have a historically positive equity curve. This doesn’t mean that a gambler will never hit the jackpot, and it also doesn’t mean that a stock investor will always yield a positive return. It just means that over time, if you keep playing, the odds will be in your favor as an investor and not in your favor as a gambler.
Gambling is defined as staking something on a contingency. This means you are risking money on an event that has an uncertain outcome and heavily involves chance. With trading, you are risking money on a proven system with a historically positive track record. Yes, there is some uncertainty, but over the long run especially if you stick to a 1:3 risk-reward ratio and a greater than 40% win rate, you will ultimately end up in the positive territory.
Check out this graphic below that sums up these key differences for you.
Can You Make Consistent Money Gambling?
Many people look at celebrities gambling and making money like crazy and think that there has to be something there. You’ll see celebrities like Drake go and gamble away $200k – $500k in a night, so why shouldn’t you do it too?
In gambling, the odds are never in your favor. These celebrities and big names that gamble a bunch of cash away are just looking to have fun with that money, not pay the bills. If you want to go play blackjack for fun, awesome, go ahead. But if you want to consistently make money, applying the right strategy in the markets is much more realistic than gambling.
These celebrities are also only showing their winning bets on social media. Drake has lost millions from gambling this year. And these guys are getting massive payouts from the betting platforms to promote the platform. They are making whatever they gamble away right back. The millions of degenerate gamblers following their lead are not so lucky.
Here a few key lessons you can learn from Drake’s gambling losses:
- Don’t believe what people post on social media
- Don’t bet what you cannot afford to lose
- Trade with an edge, don’t fall into the gambling trap where you bet out of addiction
Choosing the Right Trading Style For You
Now that you understand that sports betting and gambling have much lower odds of success than investing and trading in the stock market, you need to know how to choose the right trading style in the markets to maximize your chances of success. This video lesson will get you on the right track:
If you are serious about becoming a full-time or part-time stock trader, make sure to enroll in our upcoming Live Trading Boot Camp starting next month:
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