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Tuesday, November 15, 2005

GAMBLING VS. TRADING

Some people compare trading with gambling. They tried to trade and lose or reject the concept of trading at all. Of course there are some similarities: the fact that no one can predict the future and no one can predict with certainty the next movements on the markets.

Though this may be true, there is one very big difference between trading and gambling. The main difference is the influence a gambler and a trader has on the outcome of his action. With a gamble, be it the casino or the lottery or whatever, the gambler has no influence on the result he gets. He can jump, shout, walk away, yell but this will have no effect. He can do nothing on the result.

The outcome of a trade, on the contrary, solely depends of the trader. He decides when to stop a trade and this decision will make his system a winning or a losing one. If the markets turns against his position he decides how big his loss in that particular trde will be. If the market moves with him he decides when to take profit. This is the most difficult part of trading but also the the most important.
Exits my friends!



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