The Similarities Between Trading and Gambling Could Be Cryptocurrency’s ‘Killer App’
Many traders reject the comparison between trading and gambling. Perhaps that’s because gambling and betting have garnered a negative reputation over the years. Gambling is a highly risky past-time in which, nine times out of 10, the house wins. But trading--especially cryptocurrency trading--outcomes can be equally brutal.
Let’s take a look at the similarities between crypto trading and gambling--and why they could turn out to be crypto’s killer app.
They Both Deal with Odds
Rather than dismiss the business of gambling, life-long trader John Preddy of Lion Asset Management believes that taking time to understand it can be extremely helpful to the success of a trader. For example, trading cryptocurrencies just like gambling requires mathematical prowess--since both past times mean that you’re dealing with odds.
The majority of gamblers try their luck and end up losing their money because they fail to understand that the odds are stacked against them. For a trader to be successful, they must understand how to tilt the odds in their favor, just like casinos do. This requires practice, patience, and discipline.
The Stakes Are High
Depending on how much you’re able to lose, the stakes in both gambling and cryptocurrency trading can be high. Traders and gamblers can win (or lose) vast sums of money and they need to be prepared to have a backup plan.
Unlike gamblers, most traders today are equipped with trading tools to help them minimize their losses in the shape of stop and limit orders to prevent them from losing big in an unexpected market move.
You Need Determination and Nerves of Steel
Both gambling and cryptocurrency trading require determination and nerves of steel. There is not one professional trader out there who hasn’t gotten “rekt” at some point during their careers. The same is true with gamblers since it’s basically impossible to win every bet.
They Are Highly Addictive
We’ve all heard of how addictive gambling can be. But trading cryptocurrencies can be highly addictive as well. This is especially true when talking about day trading and one particular style of trading called ‘scalping’. Scalping requires a trader to take out multiple positions in one day and is very labor and time-intensive.
Scalpers aim to accumulate small profits from even the most minuscule of price fluctuations. They will only hold their positions open for a very short time--sometimes even just seconds--before selling again, making one or two tick profits. This type of trading requires full concentration and no distractions. It’s rather like playing a videogame as if you’re not giving it your full attention, it will soon be game over.
Until now, in the world of cryptocurrency, this type of trading has not been possible because of commission fees. When you pay a fee on every single trade, it cancels out the small profits that can be made--commission fees can even turn a profitable trade into a losing one.
However, as we move into a new year, there is one exchange launching that looks to “level the playing field.” Digitex Futures will be launching its zero-fee bitcoin futures exchange in early 2020. Currently in beta, the exchange incorporates a trading ladder that allows traders to place buy and sell orders with a single mouse click. They can trade over and over as much as they want without being penalized by commissions.
This, according to CEO and founder Adam Todd, will create a whole new generation of traders. They will have the freedom to trade in a fee-free environment and rack up small profits over time. They’ll also have fun doing it since the overwhelming feedback from the beta so far is that it’s “highly addictive.” This could make it very appealing to gamblers, poker players, and gamers.
These Similarities Could Take Crypto to the Massive
An estimated 1.6 billion people in the world gambled this year at some point, with a further estimated 4.2 billion having gambled at some time in their lives. That’s well over half the world’s population! With so many similarities between the two disciplines, there’s clearly huge potential for cryptocurrency trading to be the catalyst that takes cryptocurrencies to the mainstream.
Many existing gamblers, whether in the racing industry or playing poker, share the same traits as cryptocurrency traders. If scalp trading environments like the one Digitex is creating can appeal to this wide net of people, it may be that crypto has, at last, found its “killer app”.