Trading online and playing poker online, just what is the difference and you will really see why trading is not for everyone. At least when you play the casino, you know the game really well and the only thing you need to be worried about are your odds, the dealers odds and luck. Skill is only about 5% of gambling, and this is why it is called gambling in the first place. How do you trade online and what route do you want to take depends on just how much of a risk taker you are. Remember, banks offer high returns for those who open up high risk portfolios.
But now, let us spin this around for a moment and you must understand that gambling and trading, while seemingly the same thing, are completely two different worlds apart and you need to know why. Trading In Stock market For example, trading is all about the balance of probability and how you manage that balance, and this is taken in a very specific and non gambling sense of the word. What is probability in the first place? It is the possibility of a favourable outcome when compared to the possibilities of unfavourable outcomes all working against you. It is sort of like a dice. If you want a six to come out, there are 5 other outcomes all working against you at the same time.
These are your probable odds, 1 – 6 change that your 6 will come out and you will win some money. What is important as a trader that you need to understand is that the ‘6’ or the profitable result is one that always tends to clump together at a single level. We always reach the same conclusion no matter what market we look at. Stock, currency, commodity, futures, the results seem to be magnetised to one another and stick together. In market terms, sometimes reaching certain level of profits is always easier than reaching others. So where do we go. If you did not understand any of what was discussed earlier, then let me break it down.
You need to trade where the total number of possible combinations are the largest, and this is where your odds decrease and you will be able to get some profits down from a good trade. Where would you fish? In a pond where there are 5 salmon and 40 piranhas or 5, 000 salmon and 40, 000 piranhas. Where there are more probabilities is where the market will tend to favour the trader, as the chances are much higher, in a sense, of you catching that nice Alaskan salmon for dinner. Thus, you need to be observant of these clumped areas and observation is really the core of a trader that knows what they are doing. These are something’s you need to know about managing the probable odds of the market. The general advice here is that you need to research more on the market of your choice and remember, profit comes from careful observation.