{"id":8873,"date":"2021-03-24T13:25:43","date_gmt":"2021-03-24T17:25:43","guid":{"rendered":"https:\/\/optimusfutures.com\/tradeblog\/?p=8873"},"modified":"2021-03-24T13:25:43","modified_gmt":"2021-03-24T17:25:43","slug":"is-futures-trading-the-same-as-gambling","status":"publish","type":"post","link":"https:\/\/optimusfutures.com\/blog\/is-futures-trading-the-same-as-gambling\/","title":{"rendered":"Is Retail Futures Trading The Same As Gambling?"},"content":{"rendered":"

This article on futures trading and gambling is the opinion of Optimus Futures.<\/p>\n

\"futures<\/a><\/p>\n

\u201cYou can lose everything trading futures!\u201d<\/em> That is what we\u2019ve been told. Another thing we have probably heard from skeptics: \u201cIf you\u2019re going to lose your money, then why do it on futures when you can actually enjoy losing money slower at a casino?\u201d. So, there you have it: the common conception that retail futures trading is tantamount to gambling. Fast money made, fast money lost.<\/p>\n

But is it entirely true? What are the similarities and differences between a skilled gambler and a skilled futures trader? Is a long or short position in the S&P 500 futures the same as a black or red position on the roulette table?<\/p>\n

If you say YES, you are likely wrong, depending on how you view it. If you say NO, you also might be wrong, depending on how you view it. This probably does not make sense to you. So, let’s examine this further and flesh out the similarities and differences. But first, a story.<\/p>\n

Let\u2019s Play \u201cWho\u2019s the Trader?\u201d<\/h2>\n

Let\u2019s imagine three hypothetical traders named Jim, Jeff, and Julia. All three traders were looking to make a profit off the S&P 500 as market sentiment seemed to be running hot toward the upside.<\/p>\n

Jim had a gut feeling that the S&P 500 futures (ES) might move up following the previous day\u2019s pullback. He took a small position on a hunch after reading the news. He speculated the Federal Reserve\u2019s near-zero interest rates would continue to buoy companies and, by extension, their share prices. After all, the S&P 500 is diversified across multiple sectors, more or less evenly unlike the Nasdaq index futures, (NQ) which is tech-sector heavy.<\/p>\n

Jeff used indicators, order flow software<\/a>, and other technical price action setups to get in on his trade. He came to the same conclusion as Jim–that the S&P 500 had plenty of upside to go. So, he opened up a huge position three times Jim\u2019s size<\/em>.<\/p>\n

Julia did the same as Jeff–he constructed his setup using indicators, analytics software, and he went as far as consulting analyst forecasts. He, too, saw plenty of upside for the S&P 500. But his position size was small, equal to Jim\u2019s.<\/p>\n

The S&P 500 advanced by 20 points that day, but only two came out winners.<\/p>\n