What does Trading Have to Do with Gambling?

Both traders and gamblers are ultimately seeking positive expected value. In trading, this might mean identifying mispricing’s in stocks, options, or crypto markets; it could be recognizing a strategy that is exploiting the current market environment. While in gambling, it means finding soft DFS pricing, inefficient betting odds, or exploitable poker opponents

What does Trading Have to Do with Gambling?

My journey into trading was by the way of poker mainly, but I also played Daily Fantasy Sports (DFS) and sports bet on a profitable level in conjuncture. It is quite remarkable and fascinating to me the similarities between these three activities and trading. There are universal principles that transcend the activity and apply to all gambling; yes trading is considered gambling, but we strive to gamble with an EDGE. We can even extrapolate these principles to any activity in which we are decision making under uncertainty- perhaps a majority of activities and life situations we encounter. With an understanding and a mastery of these overarching principles, one is well on their way to becoming profitable. While understanding the universal principles are vital and will help you become one with the polymath, each respected activity has its nuances that are essential for profitability, but for the purposes of this article won’t be discussed. While knowing this audience is comprised of traders who may have no interest in the other gambling activities mentioned, its worth understanding the principles that transcend just trading. I’ve heard professional athletes credit playing other sports than the one they do professionally, to accredit to some of their success. On a similar note, participating in all these gambling activities has helped me become stronger in all of them. 

Shared Cornerstone Principles

Expected Value (EV) and Edge

Both traders and gamblers are ultimately seeking positive expected value. In trading, this might mean identifying mispricing’s in stocks, options, or crypto markets; it could be recognizing a strategy that is exploiting the current market environment. While in gambling, it means finding soft DFS pricing, inefficient betting odds, or exploitable poker opponents. Understanding variance and sample size is key. Short-term fluctuations do not determine long-term success, but consistent positive EV decisions do.

Risk Management and Bankroll Strategy

Traders use position sizing and stop losses to prevent catastrophic drawdowns. Similarly, professional gamblers follow bankroll management principles to ensure they do not overextend themselves and risk going bust. The aspect of risk management I always wrestle with is the threshold of where aggression borders into reckless; I want to be as aggressive as possible in +EV spots to maximize gain, but not reckless for obvious reasons given variance. 

Psychological Discipline

Emotional decision-making is a major leak in both gambling and trading. Fear and greed in the markets parallel tilt in poker or chasing losses in sports betting. Maintaining a rational, process-driven approach is crucial to long-term profitability in both arenas. The feeling of emotions is OK, letting them drive decision making which isn’t. We stick to our process and system that has been carefully thought out and planned away from performance hours.

The discipline to do nothing is paramount. No action is action. Often times there is no trading to be done; You’re not getting dealt any playable hands in a poker game; Sportsbook lines are sharp, offering no EV. A true practice of patience, but when opportunities arise, one is ready to strike. 

Market Efficiency and Finding an Edge

Just as the stock market has sharp, efficient pricing mechanisms, so do high-stakes poker games and heavily bet sports markets. The best opportunities come from inefficiencies—soft DFS contests, stale sportsbook lines, or mispriced assets in financial markets. The number one question you have to ask yourself? - “where is my edge”. It’s the answering of this question-objectively as possible- and the constant reassessment of this question that keeps one sharp and on top. From trading to poker to sports betting to DFS, these activities have a fluidity and a constantly involving meta. Don’t think you can just show up to the biggest game in town- the stock market- where trillions of dollars are at play, some of the sharpest minds are being recruited to participate, and think you can extract a profit without a fight. 

No one wants to admit they don’t have an edge. Your brain will look for any sign of evidence that you do. You must be able to analyze luck from skill. As soon as you can identify where your edge isn’t, the quicker you can find where it is. 

Self-Review and Opponent/Market Analysis

Both traders and gamblers must analyze their own performance consistently. Reviewing past trades, bets, or hands is essential to refining strategy and identifying mistakes. In poker and DFS, analyzing opponents' tendencies can create an edge; where are our opponents making mistakes and how can we exploit them. Especially in poker, reviewing our own tendencies and stats will make it tougher for opponents to exploit the leaks in our strategy. In trading, while there isn’t a direct opponent, understanding market sentiment and order flow provides similar insight.

You vs. You: Controlling What You Can

In gambling and trading, you do not control external outcomes. You can influence opponents' actions in poker, but you cannot dictate their decisions. The only true control lies in decision-making, process adherence, and risk management. Success comes from optimizing one's own approach. We for sure don’t control global events and policies that shift the market, but we control our relation to it.

Perhaps there are some overarching principles I’ve missed but I think this does a solid job of summing up the core ones. Decision making under uncertainty is no easy task. We need systems and guidelines in place; We need clear headed and consistent execution of these systems; We need through and object review of our systems. Good Luck out there folks

• -Ray (AllxDayxRay on X)

You can learn more from Ray, including trading stocks,. crypto and even play Daily Fantasy Sports alongside him at Microefutures.com where he and his Confessions of a Market Marker co-host JJ @vwaptrader1 offers a FREE 7 day trial to check out the community of edge traders and gamblers.

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