That’s an astute observation. Edge is certainly the key ingredient to a successful trading operation, but I still think it’s the consistent application of that edge which separates trading from gambling.

There are literally, thousands of “edges” out there in the form of trading systems and I think you could be successful with many of them, but it’s the consistent application of your edge, through various market conditions, that separates the trader from the gambler, and ultimately, success from failure.

I certainly can’t speak for all traders. Perhaps there are many who are able to systematically apply their edge when they’ve “gone tilt”. I cannot. When I start to think of money as anything else than inventory, I go crazy. My trading decisions in that context have historically been poor.

Thank you for the compliment. I really appreciate you stopping by and sharing your thoughts.

anyway, i disagree with the last and final point you made in this entry that trading is more of a business than gambling, and that sets it apart. gambling can also be treated as a business, making decisions devoid of emotion. i know many online poker players who perform well in tournaments because they are on their game for hours on end (on their game means playing their best and making decisions not based on emotions, or in poker lingo, ‘going on tilt’). in this respect, gambling and trading are still the same.

what i believe sets trading apart from gambling is that you can have ‘an edge’ over other traders. large investment banks have this edge in being more knowledgeable than other individual traders (more information, higher internet bandwidth to execute orders immediately, more people working for them, more capital and therefore more leverage). if you knew inside information on a company, you have an edge over other traders.

in gambling, most players all are in the same position. the only thing that changes is the amount of chips one player has (this is true in poker, players who are shortstacked have a harder chance to win chips). another thing that changes (also in the scope of poker) is that seat position matters, where you are positioned according to the dealer. of course, the dealer rotates so that eliminates this problem over the course of a few rounds. but in almost any other gambling situation, roulette, craps, slot machines, all players (except the house) have equal chance to win money. the only real legit edge is card counting, but, like the theory that says the market will always become more efficient, casinos are working to get rid of card counters (using new decks each round, etc).

the potential edge that traders can have over other traders is what separates trading from gambling.

let me know what you think, your thoughts are most appreciated.