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Trading Vs Game: Same psychology, different results
- Negotiation and gambling are two terms that generate a lot of reactions from people.
- If traders do not want to be paired with bettors, professional bettors are more likely to trade their crafts.
- The volatility of cryptocurrencies has led many traders to turn to games for a quick return.
- Betting traders due to a significant lack of technical analysis and strategy can be identified with a dependency on fast returns.
Imagine this. You open a Binance or Coinbase exchange, buy some coins, close the app and then … A sleepless night, shivering, constant screen checking – is it still there? Did he grow up? You wake up in the morning feeling something that can be called hangover – if you take alcohol. But you weren’t drinking.
What is this feeling and this behavior? Is it normal to feel that way, to act that way? Do all traders feel that way when they invest in something they don’t control their money? Could this behavior become as problematic as alcoholism? Or – because a large number of financial bets are involved in currency exchange – is this a game?
So many questions, but the answer is not necessarily easy to find. We have tried to examine the roots of the subject.
Gambling and Negotiation
The result of winning games is a certain event. In order to be considered an action game, there must be three prerequisites; the bet, the risk that this entails and the reward to be obtained when the event occurred.
The game has been around since the records began. At the beginning of the game, in Mesopotamia, in 3000 BC, there were six dead. IX. Around the turn of the century, they were introduced to playing cards, creating the modern card games we know today. Over the years, the game has taken many forms and forms, such as sports betting, parimutuel betting and the range of casino betting.
Trading, on the other hand, involves buying and selling financial instruments, such as cryptocurrencies, stocks, bonds, derivatives. There are many types of trading, such as high frequency trading, day trading, and so on. Each has its pros and cons.
Historically, the trading of financial instruments in the XVII. The century began after traders formed anonymous markets. In 1602, the Dutch East India Co. the company issued the first registered shares on paper, allowing the shares to be traded. This revolutionary concept spread around the world, creating exchanges such as the London Stock Exchange, which was founded in 1773.
Similarities between concepts – Odds
The main similarities between the concepts of gambling and commerce are clear. The fundamental similarity between the two has to do with the underlying psychological models of the two concepts.
One cannot overemphasize the role of games and odds in trading. Odds are a means of calculating the probability of a particular outcome. For players and traders, every decision is based on the probability of an event occurring – this plays a major role in their decisions.
Each player must consider the odds placed before him before making his choice; the higher the probability, the more difficult it is for a particular result to occur. On the other hand, the lower the probability, the higher the probability of the event.
Probability is also indicative of the potential reward for bettors and traders. The higher the probability, the higher the reward, while the lower the probability, the lower the overall reward.
In trading, the inclusion of a trade with a high probability of success can be described as a trade with a low reward, while traders with a low probability of success get a higher reward.
Since it has been proven that probabilities are a component element of both concepts, it is often in the best interest of players and traders to get good probabilities before entering into a negotiation or making a bet.
To worsen your chances as a trader, it is recommended that you enter fewer professions with higher odds while veteran bettors advise you to play games that will give you an advantage over the home (the person or organization that sets the odds). Traders and players should embrace the virtue of discipline, stick to strategy and know when to cut losses.
Differences between negotiation and gambling
Despite the similarities between negotiation and gambling, there are significant differences between the concepts. The deepest part is that the game automatically generates the expected negative value. This means that in the long run casinos or bookmakers (houses) will always win in the end even if they may lose some games. This scenario is called the expected negative value.
In trading, the use of a proven and proven strategy has the potential to raise the balance from the expected negative value to the expected positive value. As a result, some traders in financial instruments have made steady profits over a period of time. The opportunity to create the expected positive value through trading strategies distinguishes it from trading games.
Gambling and Psychological Bias
Players often experience cognitive biases and may be prevented from thinking rationally. Especially in terms of optimistic bias, players overestimate the likelihood of an event occurring. In addition, players show an unwanted tendency, which can lead to doubts about betting on the desired results.
Reluctantly to bet on the desired results, it exceeds the odds on the players ’preferences, for example, by betting that they support the success of their best teams.
Players are also to blame for the positive novelty, also known as the Monte Carlo fallacy. This bias says that if an event occurs more often than expected, it will happen less often. This fallacy is shown by the events of Monte Carlo in 1913. In that incident, the roulette ball fell on black several times in a row. As a result, players thought he would soon fall into the red. This started pushing the chips, betting that the ball would fall into the red square on the next roulette wheel. The ball continued to fall on the black after 27 turns, by which time the players had lost millions of dollars.
Other psychological biases associated with the game include preferring likely outcomes and if players are drawn from a large sample, players are likely to choose bad odds.
Gamble-Negotiation: Do you act instead of negotiating?
Given the striking similarities between trading and gaming concepts, it’s easy for financial instrument sellers to negotiate a gaming bug instead. It’s almost impossible for a trader with a gambling tendency to accept to negotiate or act rather than “negotiate a bet”.
However, there may be some signs to consider if the individual is playing rather than negotiating. First of all, getting into the trade around an asset can be an indicator of the current momentum because people are in such a hurry, especially if the trader is not making a clear decision.
Another indicator of game trading is when trading is done only on an emotional level, without rationalizing decisions. Entering the trade with the sole intention of always winning can be a sign of the game. The intention to always “win” all trades can be contradictory for traders, as it blurs their opinion, holding them back from losing positions. Making losses in some trades is part of a good trading strategy if you learn the right lessons and keep at least the amount lost.
Another sign that a trader can trade bets is to look at the basics and technical analysis. On the other hand, the betting trader makes typical bet-related fallacies. Some traders make the Monte Carlo fallacy, while others claim that the personal preferences of a stock or cryptocurrency promise to trade above technical and basic analysis.
On the flipside side
- The risk of cryptocurrency involvement has been one of the most frequently asked questions among investors in recent times.
- Jake Hill, CEO of DebtHammer, says cryptocurrencies are caused by artificial inflation Tweets from a billionaire.
- Cryptos ’apparent volatility Michael Shea, financial adviser at Applied Capital, has given advice against crypto settings for the average investor.
Gamble-Negotiation: Do you act instead of negotiating?
It is true that if traders bet, it would lead to losses. One of the trading sectors that has seen growth in traders ’games instead of rational trading is the cryptocurrency sector. This leads to a crisis of dependence on the cryptocurrency game, which costs traders money. According to experts, this phenomenon has been described as a “crack cocaine in the game” to facilitate accessibility and keep the market open 24/7.
In addition, small barriers to entry make it easier to enter the market and the very unstable nature of cryptographic markets makes things more difficult.
According to Tony Marini, the main advisor for cryptocurrency addiction at Castle Craig Hospital in Peebles, it is impossible to know the actual numbers of people affected by their addiction to the cryptocurrency game.
Marini noted that while everyone is talking about what they have earned in cryptocurrencies, “we don’t know about people who are losing money.”
Closing note
Although gambling and trading can become two peas in a pot, they have distinctions that separate them from each other.
Significantly, in the game, the house always wins, the expected negative value. However, negotiating with a strong strategy and adhering to the plan can provide the expected positive value in the long run.
If you’re making big losses as a trader, the bet is to trade. Basic technical analysis and ignorance of arbitrary asset trading are key indicators of game trading. It is important to keep a close eye on the biases that players usually have in themselves.
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