Both traders and gamblers are motivated by the same prospect, that is, the chance of making a fortune, and many lucky individuals have successfully made a living from both types of activities. However, the distinction between investing and gambling is often a hot topic of debate and is perceived by more than a few as somewhat of a slippery slope. Traders, especially those who are investing in financial markets without a solid investment understanding, are said to be in reality gambling albeit perhaps unknowingly.

When you take a look at the text book definition of gambling, one would be inclined to agree that, yes, investing is indeed a form of gambling. You are betting money on the outcome of a game, contest or other event in the hope of gaining an advantage. When you are investing, you are buying or selling stocks in a company on the belief that the market will behave in a particular way. Short of a crystal ball, no investor can ever be 100% confident of what will happen.

No doubt many investors, however, would counter that they are not taking foolish risks like those playing in casinos without thought as to their odds of success and buy and sell stocks and shares according to carefully devised risk management plan based on research and statistical analysis such as that provided by eToro.

However, (hopefully) most gamblers also have a strategy to minimize their losses. For instance, once they lose a certain amount, they simply stop playing or if they win something, they withdraw a certain percentage of their prize money to make sure that they have something to take home at the end of their session.  Some gamblers even stick exclusively to those casino games and bets that have a low house edge.

So what are the differences, if any, between investors and gamblers? A trader can never walk away with less than he began with, whereas it is possible that a gambler could be granted credit and ultimately lose not only the money he began with but more. On the other hand, when gambling, the rules of each game have been clearly set and defined beforehand and in most cases the odds have been set and agreed upon (this is not necessarily true admittedly for sports betting).