{"id":2086,"date":"2019-03-18T12:58:49","date_gmt":"2019-03-18T12:58:49","guid":{"rendered":"https:\/\/www.planet7casino.com\/?p=2086"},"modified":"2024-03-08T12:06:01","modified_gmt":"2024-03-08T12:06:01","slug":"whats-the-difference-between-speculation-and-gambling","status":"publish","type":"post","link":"https:\/\/www.planet7casino.com\/planet-strategy\/whats-the-difference-between-speculation-and-gambling\/","title":{"rendered":"What\u2019s the Difference between Speculation and Gambling?"},"content":{"rendered":"\n

A card shark in a thousand-dollar Armani suit swaggers into a Vegas casino and lays a huge bet on the outcome of a single spin of a roulette wheel. Miles away, a Wall Street trader in a thousand-dollar Hugo Boss suit struts onto the trading floor and buys up 20,000 shares in a tech startup. Since neither cowboy can see the future, what is the difference between the trader\u2019s speculation and casino gambling? Is there even a difference?<\/p>\n\n\n\n

The Gambler<\/h2>\n\n\n
\n
\"gambling\"<\/figure><\/div>\n\n\n

A seasoned gambler would argue that his betting decisions\nare based entirely on what he calls a \u201cSystem.\u201d The System has never failed\nhim, and he swears by it. He wins more than he loses, and this is the proof\nthat The System works. The gambler is quick to argue that he has spent a lot of\ntime looking at the angles, the odds, and the possible outcomes of each bet.\nBut regardless of how much time the gambler has spent learning the games and\nperfecting his system, to gamble is to risk money in a situation where the odds\nare deliberately stacked against a win for the gambler.<\/p>\n\n\n\n

A gambler relies on luck more than skill, though he would rather not admit it. The simple facts are in the statistics. Hitting a single number on a roulette wheel holds 37:1 odds against the gambler. There is a 50% chance of winning a roulette bet placed on red or black. But the payout for winning the latter bet is lower, so a gambler who is \u2018feeling lucky\u2019 will wager a large amount on the single number in hopes of winning 35x his money (or whatever a particular casino pays out for a win). There are loads of theories about luck, lucky stars, and what makes a player feel lucky. But luck is not a science, nor can it be proven with statistics or mathematical probability.<\/p>\n\n\n\n

Gambler’s Rush<\/h3>\n\n\n\n

Gambling is creating risk for the \u2018thrill\u2019 of beating the odds. A gambler isn\u2019t only in it to win it. Studies show that long term gamblers experience a rush<\/a> even when they lose. While it may be a negative feeling, the buzz is still there, the hook that keeps the gambler coming back for one more bet. A gambling addict isn\u2019t addicted to winning. He is addicted to the thrill involved with the act of gambling. But money is still at the heart of the thrill. Try betting with candy instead of money; that\u2019s a game for children. The greater the risk, the higher amount of the money bet, the greater the reward when it pays off. The down side: failure is all the more devastating when you lose it all.<\/p>\n\n\n\n

The Speculator<\/h2>\n\n\n
\n
\"speculation\"<\/figure><\/div>\n\n\n

A speculator conducts research and calculates risk before\nmaking a financial transaction. Like the gambler, there is an inherent risk\ninvolved in every speculation. The more money the speculator invests in a\nparticular trade (stocks, commodities, or futures), the more money he makes\nwhen his speculation pays off. The speculator is fully educated with knowledge\nof the financial sector and its ups and downs, trends, and bubbles. Knowing\nexactly when and where to invest is more of a science than a gamble, even\nthough markets are not always certain. Just look at the American Great\nDepression of the 1920s or the more recent global\nfinancial crisis of 2007-2008.<\/a><\/p>\n\n\n\n

A speculator is a trader for whom making financial\ninvestments is a job. A speculator can also make personal speculations and\ntrades for his own stock portfolio on his own time, but a licensed trader acts\non behalf of a company (often a brokerage firm). So in essence, trades made on\nbehalf of the firm use other people\u2019s money. A gambler would probably not have\nthe same thrill if he were gambling with other people\u2019s money. In the end, what\ndifferentiates a speculator from a gambler is the skill set. Traders have spent\na lot of time learning a particular set of skills necessary for them to succeed\nat their job – or they wouldn\u2019t have one. So while a gambler swears by a particular\nsystem, the gambler is really just playing with luck. But sometimes he is just very\nlucky.<\/p>\n\n\n\n

Gambling Systems Explained<\/h2>\n\n\n
\n
\"gambling<\/figure><\/div>\n\n\n

Certain systems are available to help gamblers win at the\ngame. While the odds always favor the casino, a certain amount of knowledge\nwill help the gambler develop the skill needed to make smarter gambling\nchoices. Simply stated, these skills make the gambler a better bettor. Using\nroulette as an example, several roulette systems utilize various strategies\ndesigned to improve the odds of winning. Some of these systems are based on\nstudying mathematical probability. While others rely merely on repetition.<\/p>\n\n\n\n

The Martingale System<\/h3>\n\n\n\n

The martingale strategy<\/a> is a popular roulette strategy based on repetition. The strategy is based on the idea of doubling down on 50\/50 bets (red\/black, even\/odds). For each losing bet, you double the bet. Even if you lose several bets in a row, the series of re-doubled bets will become high enough to pay back your original losses. This strategy only works if the gambler has very deep pockets, as true probability suggests that you could just as easily get 30 reds in a row as 30 blacks. Ultimately, this strategy relies on the luck of the spin and the size of the gambler\u2019s pockets.<\/p>\n\n\n\n

Other gambling systems<\/h3>\n\n\n\n

There are many such systems in play, and each one is just as\nlikely to make you stinking rich or filthy poor. Strategies like the Fibonacci\nstrategy (based on the Fibonacci sequence of numbers) is just as much a fantasy\nas it is a reality. The numbers are real enough, but the sequence goes from 1\nto 144 awfully fast, so betting in the amounts listed in the sequence results\nin some very high bets in a very short time.<\/p>\n\n\n\n

Most \u2018strategies\u2019 like the above probably worked for more\nthan five minutes, so the \u2018strategist\u2019 put them down on paper. Unfortunately,\nresults which are truly random (as with games of chance) rarely live up to\nexpectations.<\/p>\n\n\n\n

A Speculator\u2019s System<\/h2>\n\n\n
\n
\"speculation<\/figure><\/div>\n\n\n

There are some maverick traders who have applied the\nmartingale system to trading. Unless that maverick has some very deep\npockets\u2014and can buck any trend\u2014the trader is doomed to fail. When a series of\ninvestors makes the same illogical investments over and over for long periods,\nthis can affect the value of markets and commodities in the long run, and\neventually destroy the system.<\/p>\n\n\n\n

A speculator often deals with future trading and foreign\nexchange trading. He speculates on the shifting price trends and invests\naccordingly. But the difference between trade speculation and gambling is vast.\nSpeculators crunch a lot of data involving each trade. They examine charts,\ngraphs, and financial forecasts to form an opinion on the viability of an\ninvestment. In the case of futures trading, the speculator enters a price\ncontract for a specific commodity. The profit or loss of that commodity for the\nspeculator is determined by the price forecast, the length of the contract, and\nother factors.<\/p>\n\n\n\n

In the end, speculation is a form of gambling, as nobody can\nsee the future. Companies open and close, commodities see shortages and\nsurpluses, and all markets are affected by the activity of the whole group of\ninvestors. But unlike the casino gambler, a speculator follows legal\nregulations for trading and (usually) works within the system. Gamblers follow\nhunches, systems, or \u2018gut feelings\u2019 most of the time. And feelings aren\u2019t\nfacts.<\/p>\n","protected":false},"excerpt":{"rendered":"

A card shark in a thousand-dollar Armani suit swaggers into a Vegas casino and lays a huge bet on the outcome of a single spin of a roulette wheel. Miles away, a Wall Street trader in a thousand-dollar Hugo Boss suit struts onto the trading floor and buys up 20,000 shares in a tech startup. […]<\/p>\n","protected":false},"author":5,"featured_media":2088,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37,38],"yoast_head":"\nSpeculation and Gambling \u2013 What\u2019s the Difference? \u2502 Planet 7<\/title>\n<meta name=\"description\" content=\"What's the difference between speculation and gambling? 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