is share trading close to gambling

  1. 754 Posts.
    I think trading in share market is very close to gambling. It is just because gambling is a dirty word people don?t own up they are gambling when trading.

    I gave an example of heads and tails of tossing a coin a little while back. Heads like bulls and tails like bears.

    If you get 5 tails in a row, more likely you will get a head.

    But every toss of a coin is an independent event where it can be either head or tail. Same as trading the next day.

    There are a wave of conflicting opinion whether the next day it share will go high or low, for the simple reason, that it impossible to predict the next toss of coin.

    Technicals are also done in casino ? people look at how many times heads came in last 10 throws, or in roulette, the number 7 not come for last 20 spin. But it is still not possible to predict whether next toss will be head.

    But sometimes it works ? I mean the law of average and patterns.

    Courier Mail gives the number of games since a number has not appeared ? again technicals, but no surety that it will appear in next, of next 100 or 1000.

    This is because of unpredictability. Same in share market.

    Law of averages and previous patterns are held as basis of predictions (technicals) in gambling ? same as share market.

    But when taking law of average and pattern for technicals, different people have different results. Because some take 5 toss of coin/spin, some 100, some 500, some in thousands and others in millions. Akin to 5 minute chart, hourly chart, daily chart, weekly, yearly, last 10 years, last 100 years etc. Nobody knows which game we are playing.

    The concept of support is more akin to herd mentality than any support. Because a number of people who look at charts and trade accordingly, hence a number of people sell/buy together around those figures. They force the support etc rather than it happening other way round (did chicken or egg come first)

    The new wave of trading by hedge funds, bot trading, shorting, etc have also brought in more unpredictably in share market and closer towards gambling. Some shares will rise 50% in a day, fall back very soon, go back again etc. There are patterns of gambling. In some you make money in others you lose. With experience you can gamble better by looking at patterns etc.

    People who hold most of our wealth, banks etc, who have large teams looking at these technicals, come with completely opposite results. Eg Westpac said no rate rise till 6 monrths, ANZ said next week. Or Westpac said dollar very high when it was in late 80?s and it will go to 70?s soon, since then for a long long time it is stayed up. Close to gambling, but of course with law of average and patterns, it is better able to predict.

    People will say, one day this will happen but I don?t know when. Yes, if the number 7 has not come in roulette in last 20 spins, it will come soon. But when, next spin, next 10 spin, next 100 ? we don?t know. But we can confidently say it will definetly come, sooner than later.

    --dc1234
 
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