Thursday, February 11, 2010
Trading is a Business
I have been a trader in stock Market for the past 10 years. Whenever I introduce myself as a stock market trader to any new people, they just blink at me and look at me somewhat skeptical at me. The reason is simple. If you are a trader in a speculative market, people look at you as gambler.
Gambling is different from speculation. Playing cards and betting on horses is a gamble. In this two, you are betting on a thing whose performance is not in your command. You are betting on a performance, not on any asset.
But in trading, you are putting money on an asset i.e. stock. The money you have invested in market is backed by the fundamentals of the company. More over you would have invested in that stock after analyzing the performance of the stock fundamentally and technically.
So, here the outcome is predictable. But in gambling the outcome is not predictable. So if the outcome is predictable, then how can we say it is gambling if we trade in stocks.
Every business is risky. The same risk is associated with trading in stocks also. Then why some body say it as gambling. So, stock trading is also a business as some other business.