Updated: Apr 21
"Stock market is gambling." I'm pretty sure that each and everyone who is reading this blog has heard this at least once in their lifetime. Or if you find this weirdly disturbing statement new to you, I would suggest you ask your friends and family to express their thought on the stock market. But is this true?
Let's find out, shall we?
Have ever tossed a coin into the air and picked a side that you think would come up?
We all have done that. Especially when we are trying to settle a dispute. Is that gambling?
Obviously, it is. But what is gambling by the way and how it is perceived by people?
Gambling is staking something of value in hope of gaining something but aware of the loss that can happen. Like flipping a coin or placing a bet on a horse hoping that would win. The result is uncertain up to a certain degree. But that doesn't mean it is unpredictable. You can accurately predict which side of the coin would land up. And you can predict which horse is gonna win (If you are wise enough.)
To make it clearer, when you toss a coin one side is going to land face up and another facing down. It is certain. It is not going to stand upright. In a race, one horse is going to win no matter what. If you're wise enough to bet on the winning horse you're lucky. But people view gambling as a pitfall to put your money for no good.
In our reality, possibilities and probabilities are folded into existence. You can gamble based upon math and science or you can gamble based on sheer faith. It depends upon how you choose to play the game. The same goes for the stock market. There are players who employ math and place their orders in the stock market. And there are believers who place their life savings on stocks 'believing' to double their money overnight.
But even the best minds in the world who have become billionaires in the stock market can't deny the uncertainty that prevails. There is nothing in the world that you can be 100% percent sure of. In the stock market, traders and investors have managed to utilize the slight bias that would indicate the direction in which the market might go.
Successful investors and traders don't stake their money based on faith. They invest based on the company's fundamentals and technical analysis of the price action. You can't expect to cross the shore with a sinking boat. You should see the market in a more logical way than perceiving it as a random chart of price action or gambling. It is certainly one of the best ways to earn money. But the risk is high too.
When you learn to manage your risk and use the uncertainty to your own aid, it will reward you with its fruits. Those who've gambled have also received its punishment.
Be wise, be happy.
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