The market conditions of the recent past have been truly thrilling, to say the least. Previously, crude oil might fluctuate by 200 points in a day, but now a single 5-minute candlestick can reach that level. Gold and crude oil are taking off, and nickel is bouncing around like a demon. Many people have been left in a state of shock and dismay.

Recently, the people who have approached me for a chat can be broadly divided into two groups:

One group is filled with regret, lamenting that they missed out on such a great market opportunity. They believe that if they had participated, they would have made a fortune. The other group is visibly distressed, complaining to me about their accounts being wiped out and seeking advice on what to do next.

In fact, the more intense the market conditions, the more they test human nature and reveal the trading character of individuals. Some people just love to go against the trend in a one-sided market, and many do not set stop losses, adding to their positions against the trend, which leads to a blowout.

Today's article will discuss from five perspectives what the differences are between trading and gambling. You can also reflect on your own trading behavior in the midst of this turmoil, so that you can continue to ride the waves in future market conditions.

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1. Trading is about restraint, gambling is about indulgence

People often tell me, "Brother Ba, the reason I trade is that I don't want to see the boss's face anymore, I don't want to live so humbly. I want to pursue wealth and freedom."

Every time I hear these words, I can only smile without responding.

Bosses may sometimes have their quirks, but after they scold you, they still pay your salary. The market is different; it can slap you and take your money, leaving you with no choice but to follow its trends and cater to it, or else all your dreams of freedom and ideals will vanish into thin air.

Those who truly achieve stable profits in trading and can make a living from it are individuals with extremely strong self-restraint. This is because to be profitable, they must etch the word "restraint" on their foreheads.The first character: Wait.

Waiting is not inherently difficult, but in the financial markets, it becomes particularly challenging, such as:

The market has reached a relatively low point, but it hasn't hit the technical level yet, and you can't wait to make a move, resulting in catching the bottom in the middle of the hill;

When the market is running, you can't find a position to enter, but looking at the rising market, you can't wait and just find a random position to get in, ending up buying at the highest point.

When your account shows a loss, you want to break even as soon as possible, but you can't wait for a good opportunity and end up squandering all the remaining capital.

When there is no trading signal, you can't stand the loneliness and have to itch to trade, looking at this product and then that product, seeing trading opportunities everywhere, and ultimately suffering heavy losses after a round.

That's why I always emphasize that trading should be like a wolf in the dark, waiting for your prey to appear, striking decisively and cleanly as soon as it shows up, and leaving without hesitation after the trade is done.

Do not covet anything that does not belong to you, this way you can conserve energy and strength, waiting for the next prey to appear.

The second character: Endure.

Enduring is even more difficult than waiting. It's like when you're on a diet and you see high-calorie food; your brain automatically secretes signals of craving, and at this time, you have to fight against your brain and physiology, resisting the urge to eat.In the financial markets, there is an abundance of interests and temptations. When you make a profit, you worry about giving back the gains; when you suffer a loss, you worry about not being able to recover your investment. You plan to exit after making a profit of $1,000, but once you reach that profit, you can't control the psychological desire for more, which leads to significant losses. It's clear that you've hit your stop-loss point, but there's a sense of luck in your mind, thinking that if you hold on, the market will rebound, and you just can't bring yourself to cut your losses.

I've mentioned before that full-time trading is a very painful endeavor. Although I've achieved stable profits, in a few years, I might leave trading because you constantly have to struggle against your own desires. You understand too well that if you don't restrain your desires, you won't be able to make a profit. Therefore, trading is not joyful; it's restrictive and requires self-control. It's not as free as you might imagine.

Of course, you can also let your desires run wild, treating the trading market as a large casino. As long as you have enough money and aren't afraid of losing, that's also an option.

Gambling, on the other hand, is completely different. I had a friend who was addicted to gambling and lost several million. I took him to consult a psychological expert, and he gave me this analogy: Gambling can stimulate the secretion of dopamine and adrenaline. If eating a favorite food can secrete 70 units of index, falling in love can secrete 100 units, and sexual activity can secrete 150 units, then the moment of winning or losing in gambling can secrete 800 units of index. Some people never forget the feeling of winning money for their entire lives; it's almost become a physiological disease.In the future, there will be hardly any other stimuli that can surpass the thrill of gambling, which is why quitting gambling is difficult. In trading, once frequent trading, heavy position trading, and betting on market trends become the norm, it leads to a "gambling addiction" in trading. The state of a trader who has developed a gambling addiction is as follows:

Trading has become a physiological need, existing in their life just like eating and sleeping. As soon as they open a position, they experience an intense sense of pleasure. Once the pleasure fades, they need to continue opening positions to maintain the stimulation and satisfaction.

At this point, the trader is driven by the pleasure, no longer pursuing profits but the thrill of the stimulation.

Look at those around who suffer losses due to trading; they all know that frequent trading, heavy position trading, and betting on market trends lead to losses and are wrong. After each loss, they regret it so much that they wish they could slap themselves, but they are not in control and continue to make the same mistakes.

Therefore, in the process of trading, never forget that our only goal is to make a profit. Do not let human nature control your rationality, do not indulge your desires in the financial market, learn to restrain, learn to correct mistakes, and we can take the right path.

2. Trading is about pursuing reasonable returns

Gambling is about betting big with small stakes

When Soros attacked the British pound, he made a profit of nearly 2 billion USD. 1 billion came from the pound trade, and the other 1 billion was earned from currency trades in Italy and Sweden, as well as some stock trades.

Many people get excited when they see this number, thinking that 2 billion USD is more than they could spend in several lifetimes. They believe that trading is so profitable and that only the financial market can achieve sudden wealth.My initial reaction was to look up Soros's principal amount; the capital his fund invested in the entire transaction was nearly 10 billion US dollars.

If the media were to change the headlines to "Soros's fund earns a 20% return in the pound sterling attack," what would you think? Would you still find the financial markets magical? Most people would probably find it dull, and even feel that if they had that much money, they could do it too.

Let's look at another set of numbers: from 1969 to 2000, Soros's fund had an average annualized return of 32%.

In the eyes of us seasoned traders, this average annualized return is already very satisfactory, and it has been maintained for so many years. However, many traders would think, "If you're not leveraging, how can you have the face to show your trade statements?"

So, those friends who like to gamble it all, hoping to make ten thousand dollars with a thousand, are most likely to see their invested funds vanish like a stone in the ocean.

The financial market is a zero-sum game; while some people lose money, others must be making money. Countless such "old leeks" who like to bet big with small stakes, keep pouring in small amounts of capital, but alas, the volume is large, and after the drops of water form a river, a vast ocean of capital absorbs these drops away.

So I always say, do you want to stand on the same line as big capital, or with the old leeks?

Big capital talks about tactics and annualized returns, old leeks talk about luck and the thrill or lack thereof in trading. It should be clear with whom we should align ourselves, right?

So the "going with the flow" we often talk about means going with the big trend, going with the market, and the market is made up of countless people. How to grasp the psychology of the majority, and then use this psychological advantage to profit, is the only rule to stand out.

Therefore, trading is not magical; it's just the vast scale of the financial market that has created so many wealth myths. Another point that cannot be ignored is that the wealth legends in the market are created by special times and market conditions, and they are not replicable.So, reasonable return expectations, sound fund management, and prudent risk control, prioritizing risk over profit, are the traits of rational and strong individuals who can survive and make money in the ruthless financial markets.

3. Trading is a game of probability.

Gambling is a game of desire.

I recommend everyone to do one thing: take the last 20 to 30 orders from your account and review them. Record each order on a spreadsheet, including profits and losses, entry and exit points, reasons for opening positions, etc. After completing this table, ask yourself several questions:

(1) Why did you make this trade?

(2) Over this period, how much have you profited? How much have you lost?

(3) Is the position size the same each time? Why or why not?

For more specific advice on how to keep trading records and how to make trading plans, I have written in detail in my public account (Eight-Digit Garden), which you can refer to.

Then you will realize that your trading is like playing house, almost making decisions on a whim, or casually and subjectively judging entry and exit points and market trends, with almost no discipline at all.

Let me tell you about a friend of mine who bets on soccer. He often tells me, "When I don't bet, everything is red (meaning losses), but when I do bet, it costs me money. This team has lost two games in a row; they must win the next one, right? They can't keep losing forever, can they? And I even paid for insider information... and so on, and so forth."Anyway, every time I communicate with him, the reasons for his bets are different. From an objective perspective, it's as if he's just looking for a reason to place a bet, even "convincing" himself to do so.

If your trading records show that the reasons for opening positions are inconsistent, or you open positions without any reason at all, relying on feelings to place orders, then what's the difference between this and these gamblers placing bets based on their feelings?

Therefore, smart people turn trading into a game of probability, while ordinary people turn it into a game of desire.

The correct trading behavior should be like this:

Every trade is opened according to uniform conditions, with stop-loss and profit-taking set. All positions, the percentage of drawdowns, have been tested and verified, and it is a viable trading rule.

Only in this way can you close positions in time when the market is unfavorable, control losses, and grasp profits when the market is favorable. With rules and plans, you will not blow up your account in any adverse market conditions.

Just like recently, several students told me that they didn't expect my trading system to still execute stably and make money in such market conditions, which has completely changed their view of trading, and they expressed their gratitude to me.

4. The risks of trading are controllable

The risks of gambling are unbearable

There is a common saying in gambling, which is "getting red-eyed from losing."A friend of mine from the early days of doing business in Africa, the same one mentioned earlier for betting on sports, is one of the most business-savvy and intelligent people I've ever met. However, due to his gambling, he initially borrowed tens of thousands from me, and eventually, he would ask me for as little as two hundred dollars.

Gambling isn't just about losing money; it's about losing the ability to think, losing one's life, and becoming a slave to desires. That's why I often say that one must trade with their own disposable funds, such as within 30% of their assets, and be prepared mentally: if losing all this money would affect your life, stop or reduce your position immediately.

Because if it's disposable money and it won't affect your lifestyle, your psychological resilience will be greater than that of over 90% of people. Your ability to withstand losses will also be strong, and your trading mentality will be very healthy and rational. This state is key to making a profit in trading.

I myself was once a victim of trading on borrowed money. In the early years of trading, I suffered severe losses. After losing all my savings, I started to overdraw on my credit card and then borrowed from friends and family.

Around the 20th of each month was the credit card repayment date. Once, I needed to repay tens of thousands of dollars on my credit card, but I had no money. Seeing that I had a few thousand dollars in my account, I gritted my teeth and found a support level in the market, going all-in on a long position in gold. My thought at the time was, I'm not asking for much, just enough to cover the credit card debt, and I'll close the position without being greedy.

The result was that I got lucky that time. As the market rose, I saw the profits in my account increasing, and I became very excited, constantly muttering to myself, just a little more profit and I'll close the position, earning a bit extra to cover next month's credit card payments as well.

The final outcome was that my account was wiped out, and my debts increased.

My friend who gambled on sports also discussed this issue with me. He said that when he first started gambling, after losing, he was very unwilling to accept it, feeling that the hard-earned money from Africa was just gone, thinking that as long as he broke even, he would quit gambling.In the end, as losses accumulated, the initial reluctance to accept defeat gradually turned into fear. The fear was that due to debt issues, their spouse and children would leave them, thus falling into this vicious cycle. Once one starts borrowing money for trading, their entire mentality becomes distorted, increasingly favoring heavy and full positions, hoping to recover their capital as soon as possible, and ultimately becoming trapped in a debt abyss from which they cannot extricate themselves.

Many traders have told me that they are just ordinary salaried workers, but due to borrowing money for trading, they have suffered losses in the millions, pushing their lives to a desperate situation. Therefore, despite how many times it may seem like a repetitive reminder, I still want to emphasize it eight hundred times: Do not trade with borrowed money.

As long as you are not in debt, you still have the right to start over; once you are in debt, your risk exposure increases, and you can no longer control the direction of things. Remember, remember.

5. The lifestyle of a trader is good

A gambler's life is reduced to gambling only.

Often, friends tell me that since they started trading, they have lost interest in everything else and have almost no other hobbies, only trading. As soon as they have free time, they will pick up their phones to check the market, their orders, and even on weekends when the market is closed, they will study techniques. Many times, losses in trading lead to low spirits, loss of appetite, and even gradually become irritable, finding fault with the people and things around them.

I deeply understand this mental state. In my early years of trading, I wanted to stick in front of the computer, my girlfriend seemed non-existent to me, and I couldn't even muster interest in intimate activities. Interacting with friends was like being a hedgehog; as long as I was in a bad mood due to trading losses, anyone who approached would be pricked.So at that time, my girlfriend left me, I had very few friends, and my self-esteem was strong, so I gradually seemed to detach from society and became a very lonely individual.

In fact, looking back now, this state is very bad.

Traders also need to go to bed early and get up early, need a healthy schedule, need to communicate with others, need to observe the world comprehensively, and need to have a strong social nature.

On the other hand, gamblers let their desires run wild in trading, let their emotions run wild in life, and as long as the trading is not smooth, they feel that others are looking at them wherever they go, and whatever they do is someone else's fault. This negative emotion will receive more negative feedback, leading to a worse and worse psychological state, a vicious cycle, and trading will become more and more loss-making.

As I mentioned earlier, trading requires a very strong ability to restrain oneself. Mature traders can separate trading from life, have the ability to isolate the negative emotions brought by trading losses, and face life and trading with a good psychological state.

Just like me now, I will hang up the order at the right time and turn off the computer, and do what I should do. I don't look at the market. Sometimes I read books, exercise, go out to eat and drink with friends, and write articles when I have inspiration. Everyone sees me as busy and happy, and my perspective on the world and trading is more comprehensive and different from ordinary people.

So in a few years, I may leave trading, because trading does need to fight against one's own human nature, and it is definitely uncomfortable, but this ability to restrain oneself, I will continue to maintain. Because no matter what you do, this ability is very important.

Summary:

Trading and gambling are actually a fine line, and there are obvious characteristics on the body of those who make a profit, and there are obvious commonalities on the body of those who lose money. How we choose and how we do it, I believe everyone can think clearly.

The financial market is a zero-sum game. If you gamble on the loss of the market, it will all become someone else's profit. This sentence is a bit heavy, but I also want to use it to give everyone a warning. If you don't make a change, you will be a gambler who will never succeed.For many people, I serve as a good teacher and also as a beneficial friend, hoping that everyone can walk on the right path, and I wish everyone smooth trading.