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Are You Trading or Gambling?

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Re: Are You Trading or Gambling?

#211

Post by jw1224 »

hourislate wrote: post #186
elygre wrote: post #13

Around 20 years ago, I had the opportunity to listen to a member of Nasdaq top management talk about the stock market. It's all a _tiny_ bit blurry, being a long time ago, but I remember how he talked about three different perspectives for investing in stock: First, the "company perspective". An investor would buy stock in a company they believed in. Maybe they had good products, or good management, or something else…

I believe "Market Wizards - Jack D. Schwager" highlights this. When speaking with some of the best and most successful traders in the markets, he found that the one common thing between them was "Game Perspective". They understood human emotion and had this desire to be the best at the game. The money/wealth was not the focus but the reward. If I remember correctly (read the book a couple of decades ago), most did no…

I’m a terrible trader, and had no shame in admitting it. The moment I saw red, I panicked and sold. If I had open orders on the market, I couldn’t concentrate on anything else. I found trading to be all-consuming, exhausting, and completely demoralising.

But I also couldn’t bear to just let my hard-earned savings sit there, wasting away. A cup of coffee cost more than I was earning in annual interest!

About 3 months ago, it suddenly dawned on me... If I know I’m too emotionally volatile to trade effectively, why not get an algorithm to do it for me? I don’t know much about the stock market, but I’m good with statistics and can write code. Why should the hedge funds have all the fun?

I spent a month researching technical indicators and quantitative analysis, then another few weeks building my automated trading system from scratch. I put it on a server last week, and it’s been chugging along quietly, 24/7, ever since.

I don’t have to get involved in any way — it picks stocks automatically, A/B tests different algorithms against one another, and manages its own budgets. I just set it and forget it.

The only time I hear from it is when it sends me a Slack notification — with moneybags emoji, of course — whenever it makes a profitable trade.

Honestly, it’s been the most fun I’ve had on a personal project for years. It’s taught me lots, kept me busy during lockdown, and might one day provide a little extra cash. We’ll see!

Re: Are You Trading or Gambling?

#212

Post by hckrnrd »

anm89 wrote: post #202

People are gambling when the buy assets you don't like and investing when they buy assets you do like. Pretty cool because it is literally impossible to lose money investing because if you did lose money it turns out you were gambling.

That others don’t see the blatant hypocrisy of the gambling/investing false dichotomy speaks more to their _own_ biases.

Re: Are You Trading or Gambling?

#214

Post by DataWorker »

VectorLock wrote: post #205
hourislate wrote: post #186

Earlier quoted context omitted.

I believe "Market Wizards - Jack D. Schwager" highlights this. When speaking with some of the best and most successful traders in the markets, he found that the one common thing between them was "Game Perspective". They understood human emotion and had this desire to be the best at the game. The money/wealth was not the focus but the reward. If I remember correctly (read the book a couple of decades ago), most did no…

Being amoral loses its advantage when every other player is similarly feckless.

Your point is that everyone who buys or sells assets is implicitly amoral? That seems a bit extreme though you are not the first to say it. One wonders how you can escape such condemnation yourself. Everything is a marketplace in some sense.

Re: Are You Trading or Gambling?

#215

Post by ghjghj666 »

>So why is bet sizing important? This is an often overlooked concept, but it is extremely important to prevent ruin (or losing all your money).

The Kelly optimal bet for many popular investments is over 100% (not that it's a good idea to invest like that). Understanding the KC often leads to less conservative investing, not more.

Re: Are You Trading or Gambling?

#217

Post by kortilla »

drunkpotato wrote: post #114
criticaljudge wrote: post #53

Earlier quoted context omitted.

But it is obviously bullshit, as the real companies behind some stocks have a real value. Like for example they might own a building that is worth one billion dollars (simple example). If you take away all the stock market shenanigans, you still own part of that building via your stocks. As for the usefulness question: providing liquidity is useful. If an investor considers investing in some project, it helps his dec…

I care a lot what other people do with their money. I care if they use it to harm people. I care if they use it to buy legislation to replace pensions with 401ks. I care if they “earned” it through fraudulent means. Some ways to use money are beneficial or neutral, but some are harmful.

> I care if they use it to buy legislation to replace pensions with 401ks.

Pensions are terrible (at least based on performance so far). Not only do they provide worse returns, many are incentivized to lock you into a specific company for many years.

An friend of mine retired in 2013 and had pensions from the first 3/4 of his career and a 401k from the last 1/4. The 401k grew so much it paid out more than all of the pensions together when annuitized (even with garbage interest rates).

Re: Are You Trading or Gambling?

#218

Post by ctvo »

Gambling. Especially in this environment, but the financial markets are both more available and the games have more depth than any casino near me.

The ability to leverage is a lot less frictionless and doesn't include fingers getting broken when you can't cover.

Re: Are You Trading or Gambling?

#219

Post by chrchang523 »

jw1224 wrote: post #211
hourislate wrote: post #186

Earlier quoted context omitted.

I believe "Market Wizards - Jack D. Schwager" highlights this. When speaking with some of the best and most successful traders in the markets, he found that the one common thing between them was "Game Perspective". They understood human emotion and had this desire to be the best at the game. The money/wealth was not the focus but the reward. If I remember correctly (read the book a couple of decades ago), most did no…

I’m a terrible trader, and had no shame in admitting it. The moment I saw red, I panicked and sold. If I had open orders on the market, I couldn’t concentrate on anything else. I found trading to be all-consuming, exhausting, and completely demoralising. But I also couldn’t bear to just let my hard-earned savings sit there, wasting away. A cup of coffee cost more than I was earning in annual interest! About 3 months…

I assume you've heard of index funds; out of curiosity, what makes that investing choice unappealing to you?

Re: Are You Trading or Gambling?

#220

Post by olalonde »

kortilla wrote: post #204
olalonde wrote: post #197

Earlier quoted context omitted.

> There are many ways of transferring money across the internet. Only through a centralized intermediary (e.g. PayPal), which may block the transfer, freeze funds, deny access, go bankrupt, etc. Bitcoin allows direct peer-to-peer money transfers (a bit like cash but digital). > Why is Bitcoin special if that’s the reason for its value? Personally, I feel that the censorship resistant and pseudonymous p2p money transf…

> Its rules are pretty much set in stone. Not quite. The miners collectively decide what rules to follow. A majority of them forming a cartel to collectively skip certifying certain transactions is completely in the realm of what’s allowed by the network.

> Not quite. The miners collectively decide what rules to follow.

I don't mind being nitpicked but what you wrote is more incorrect. Miners can't unilaterally decide what rules to follow even if a majority of the hash power formed a cartel. Non-mining nodes also validate the rules and would reject mined blocks that violate consensus rules. The worse that a majority cartel of miners could do is perform a double spend attack or bring the network to a halt but that's hardly surprising.

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