11. Finding God's Purpose in the Financial Trading Marketplace 3 - Kingdom Building & Conclusion

"You are the salt of the earth. But if the salt loses its saltiness, how can it be made salty again? It is no longer good for anything, except to be thrown out and trampled underfoot. You are the light of the world. A town built on a hill cannot be hidden. Neither do people light a lamp and put it under a bowl. Instead they put it on its stand, and it gives light to everyone in the house. In the same way, let your light shine before others, that they may see your good deeds and glorify your Father in heaven." ...Matthew 5:13-16  

We have discussed in my previous post Finding God's Purpose in the Financial Trading Marketplace - Kingdom Transformation, that God's main purpose in the financial trading marketplace is the extension of His Kingdom in the financial marketplace. God not only wanted to extend His Kingdom in the marketplace, but to all nation, reaching out to the corners of the earth to build His Kingdom. In order to do that, God's resources generated from the financial trading marketplace can be channeled into the other part for His great Kingdom Building plan. In the "Parable of the Bags of Gold" (Matthew 25:14-30), Jesus shared about the three men who were each given a bag of gold (with different amount of gold in each case).  The bags of gold symbolize gift or talents God gave us so generously. Although the parable is telling us to invest the talents or gifts given to us for His kingdom, it is also saying whatever belongs to God, will be returned to our Master in Heaven. God has the plan to prosper you (Jeremiah 29:11 "For I know the plans for you...to proper you and not to harm you, plans to give you hope and a future."), however we need to be aware that God's plan is to serve His purpose, not ours on earth. and the profits from our investments should be returned to Him for His purpose.

 

So, are we doing enough with the gifts and talents God have given us in the marketplace? 

 

Different people is given different gift and there is one that most of us is able to do by God's grace, that is giving. For those who are blessed abundantly from the financial marketplace, you are given the gift to gain from the financial marketplace and the gift of giving to the needy. As stated by Paul in Romans 12:6 "We have different gifts, according to the grace given to each of us,....if it is giving, then give generously,...". But rest assured, God will not give anyone of us the gift of giving if He does not give us the gift of making money. But the question is what are we doing with God's resources? Is His resources being used effectively for His purpose or for our earthly pleasure? 

 

Exodus 4:17 says "But take this staff in your hand so you can perform the signs with it". God have given each one of us a staff in our hand. In our context, it is the talent to gain from financial trading or investment. Moses miraculously turned the Nile into a river of blood, and parted the Red Sea with his staff by simply obeying God. It is only through yielding to God's command that He is able to do great things with the staff given to us. Have you given the staff for God's purpose in Kingdom Building? 

 

Matthew 5:13-16 says "You are the salt of the earth. But if the salt loses its saltiness, how can it be made salty again? It is no longer good for anything, except to be thrown out and trampled underfoot. You are the light of the world. A town built on a hill cannot be hidden. Neither do people light a lamp and put it under a bowl. Instead they put it on its stand, and it gives light to everyone in the house. In the same way, let your light shine before others, that they may see your good deeds and glorify your Father in heaven."  If God's purpose of creation (see previous post on Finding God's Purpose in Financial Trading Marketplace - Kingdom Transformation), is to bring everything He created under His Son, Jesus Christ, then we were tasked to be "Salt and Light" of Jesus. Do not hide your talent under the bowl where no want is able to see the light of Christ. See that the saltiness in you is able to bring flavor to those who need it. Otherwise, you are wasting your talent given by the grace of our Heavenly Father. Proverbs 3:9 says "Honor the Lord with your wealth, with the first fruits of all your crops". Honor God and give your wealth to the needy, for Kingdom building and be the salt and light of Jesus Christ. 

 

Matthew 5:13-16 apparently is also the objective of GiFT Ministry, which I hope those brothers and sisters in the trading marketplace who are also driven by the Spirit to serve the same purpose would join God at work in the financial trading marketplace. God is calling, are you willing to join Him!

 

Conclusion

God has commanded us to invest the resources and talents given to us and expected the resources plus the profits to be returned to Him for His purpose. The financial trading market allows us to do that in a fair environment without being controlled by individuals who are driven by greed. God does this for all those who loves Him. However, God did this, not only for us, but for His purpose, to bring His Kingdom onto earth. We are all commissioned to share the gospel to the corners of the earth, especially the marketplace where most of us spend majority of our time in. We are commissioned to make disciples and teach them to obey His Words so that the demons can be driven out of the marketplace. Finally, we are told to be "Salt & Light" of Christ by honoring God with the fruits we gained from financial trading and investment. Being the light of Christ by doing good deeds and allow all to see the glory of our Father in Heaven. These, I believed are God's purpose in the financial trading marketplace. 

10. Finding God's Purpose in the Financial Trading Marketplace 2 - Kingdom Transformation

"Therefore go and make disciples of all nations, baptizing them in the name of the Father and of the Son and of the Holy Spirit, and teaching them to obey everything I have commanded you. And sure I am with you always, to the very end of the age."...Matthew 28:19-20 

Is protecting those He loves the main purpose? 

 

I would like to look at it in God's perspective and thought the question can be answered from the original purpose of creation, for everything we experience in the pass, in the present and in the future started from creation. The bible did not give a direct answer to this question. Some says it is to glorify God himself, but I found the best answer in this article by Ernie and Mary Kroeger on "God's Purpose for All Creation". The answer is found in Ephesians 1:9-10 where apostle Paul gave us a rare insight into God's wonderful plan - "....with all wisdom and understanding, he made known to us the mystery of his will according to his good pleasure, which he purposed in Christ, to be put into effect the times reach their fulfillment - to bring unity to all things in heaven and on earth under Christ.". Ernie and Mary Kroeger explained that God's will and plan for creation has been a mystery to us because we did not know the future. A mystery has a hidden answer, but it remains a mystery until the answer is revealed to us. Here we have the answer: "...to bring unity to ALL THINGS...under Christ".   It is reaffirmed in Philippians 2:9-11.. "Therefore God exalted him to the highest place and gave him the name that is above every name, that all the name of Jesus every knee should bow, in heaven and on earth and under the earth, and every tongue acknowledge that Jesus Christ is Lord, to the glory of God the Father."

 

 

How then can this purpose be fulfilled other then the great commission to extend His Kingdom to all nations commanded by Jesus Christ in Matthew 28:19-20 "Therefore go and make disciples of all nations, baptizing them in the name of the Father and of the Son and of the Holy Spirit, and teaching them to obey everything I have commanded you. And sure I am with you always, to the very end of the age."

 

Surely God has a purpose for investors or traders in the financial marketplace just like God has a purpose for every entrepreneur. The point is whether Christian financial investors/traders in the trading marketplace, like Christian entrepreneurs, are able to identify that purpose using their influence in the marketplace to change the world and most importantly to fulfill the great commission, to extend His Kingdom to all nations on earth. 

 

For those who are in the financial trading marketplace, are we doing enough to answer the most important call from our Lord, Jesus? 

 

In the book "Anointed for Business" Ed Silvoso said "To be anointed for business is to be set aside by God for service in the marketplace. Once anointed, we are to use our ob as a ministry vehicle to transform the marketplace so that the gospel will be preached to, and heard by, every creature in our sphere of influence.".  Christians who are placed in the financial trading marketplace, God placed us in where we are now is not just to make a living, we are called to use our influence as gifted traders or investors, brokers, financial analyst, wealth mangers to reach out to the unreached. Transforming the current spiritual desert of the financial marketplace into God's kingdom. Many of us, including myself, find it difficult and uncomfortable to live a secured life in a secular world. Those with influencing power and talent due to their God given gift in the financial world has the greatest opportunity to do so. But many find it most difficult with the fear of loosing his or her reputation or with the possibility of loosing their customers. Some financial marketplace Christians might even avoid being involved in any kind of marketplace outreach given the opportunity to do so. Here you are, the answer to your question of God's purpose in the financial trading place, now are you willing to join in God's work to fulfill the purpose given the fact that you are already in the middle of His office?

If your answer is still no, then what are the reasons of your reluctance? This leads to the question we have to answer ourselves, is it God's Kingdom that we are extending or our kingdom of wealth that we are expanding through the God-given talent of trading or entrepreneurship? 

 

Jesus in Matthew 6:20 said "But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal". And for treasures, Jesus said in Matthew 13:44 "The kingdom of heaven is like treasures hidden in a field....". Are we constantly seeking to build up the kingdom of heaven in the marketplace or building our earthly treasures from the marketplace? Are we constantly looking out for how God is working in the marketplace and how we can join Him in His work, even better if we consciously make our trades a tool to serve God's purpose? Or are we only interested in drawing out whatever we can to satisfy our greed and personal materialistic gain or wealth status from the financial trading marketplace where God created for His purpose?   Maybe Matthew 6:21 "For where your treasure is, there your heart will be also" will help us to understand your position and where you stand in identifying God's purpose in the financial trading marketplace.

 

Jesus said to the rich man who asked Him what he can do to get eternal life in Matthew 19:23-24 "Truely I tell you, it is hard for someone who is rich to enter the kingdom of heaven. Again I tell you, it is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God." I believe this applies to some of us who has a certain status in the marketplace and unwilling to let go the "rich" reputation of the position they are holding. 

 

This is exactly how the demons wanted us to feel and act. He wanted Christians to compartmentalize our time between the secular and secured world, reserving only Sundays for God. This attitude gave the demon a huge chunk of opportunity and time to contaminate the financial world with sin.  The result is the demons winning in the financial world. The most obvious outcome was shown in the 2008 sub-prime financial crises which wiped out billions of dollars from the market, making thousands of innocent people loosing their savings, their jobs and their homes. Are you prepared to give up your reputation for the kingdom of heaven? If you are those who restrict your service within church premise and have the Sunday Christian mindset, think again for Paul and all the other disciples of Jesus Christ did not spend their lives giving sermons in church but risk their lives in the marketplace to extend His kingdom. So, are you willing to join force with like-minded marketplace Christians to do His work in the financial marketplace? The key point is that we all are strategically placed by our Creator in the financial marketplace, and we are called to minister in those places for His purpose...the great commission of making disciples! 

9. Finding God's Purpose in the Financial Trading Marketplace 1 - Protect Those He Loves

"And we know that all things God works for the good of those who love him, who have been called according to his purpose"...Romans 8:28

 

We have now come to the core of our whole discussion on God in Financial Trading Marketplace, which is the God's purpose in the financial trading marketplace. I am sure everyone of us have a reason why we have taken up financial trading or financial investor as a career or why we took up hours in a week analyzing technical charts, keeping updated with economic trends and news or investigating companies fundamentals. Some of us,like myself ,may be doing this to earn a living,  some may be doing it to earn a passive income while having a full time job, some may be doing it because you are doing what you like to do, some may be doing it thinking you can have a good life and have a early retirement. Whatever the reasons, have you ever thought of God's purpose in the financial trading marketplace? 

 

Like most of us, the life of a financial trader consists of many ups and downs just like the stock market. It was one of those series of consecutive downs that strike me thinking God's will for me in financial trading. I asked myself if earning money the main reason? Is there a divine purpose other then earning a living? It was when I was studying "Experiencing God" by Henry & Richard Blackaby that I noticed that asking for God's will for me was not the right question. The proper question should be, "What is God's will?". Using God's gift of logical thinking, I started off searching for an answer if financial trading is something God approved in the first place. The answer was explained in my first few post on "Role of a Trader", "Is Trading Sin?" and went to some extend trying to answer the question "Is Trading Gambling?". The research clarify my thoughts and opinion on financial trading. There is perfectly nothing wrong or sinful in financial trading. Just like money which is not a sin by itself, it is the love of money that is evil as stated in 1 Timothy 6:10. In fact God has instructed us to invest in Luke 19:13-27..."Actively invest or trade until I come". 

 

God has approved financial trading and investment, but He also knew that the financial marketplace must function fairly so that those who obeyed God to invest their money in the financial market like stock market are protected from the monopoly control of price. The same reason why God gave Moses the 10 Commandments to the Israelites that is to protect His people knowing the Israelites would fall short in their walk with God. However Romans 8:28 says..."And we know that all things God works for the good of those who love him, who have been called according to his purpose". Thus, I can concluded that one of the God's purpose in financial trading is protect the retail investors like most of us so that there is a fare market where investors are able to purchase stocks or currencies at fair price not manipulated by a single or a handful of big dealers in the market. Knowing the sinful nature of man, He placed people in the financial marketplace to create a financial system that is fair and manage it so that it is stable for the global economy to function effectively. The most fundamental purpose of financial trading is to protect those He loves and the reason is because He loves us. 

 

The next obvious question that most of us would ask is .."Then why are there so many financial crises caused by men's greed in the financial marketplace?" The most recent in 2008 which wiped out billions of dollars from the financial market, causing many to loose their life savings and retirement funds. The first answer to the question of God's purpose in financial trading will not be complete if do not attempt to answer this doubt.

 

It all started with God's gift of freedom of choice to man.  He did not create robots. He created human beings not only with emotions and feelings, but God also gives human the power of logical thinking and the freedom of choice. Every suffering that we experience in our life, all started from the Fall of man.  Man were given the choice to obey or disobey. Obedience leads to life and disobedience leads to death. Those men and women that God placed in the financial marketplace chose to disobey because of the sin of greed and the love of money.  They have turned something that God designed to be good into something evil for their selfish desire.  It is very easy to blame God whenever something bad happens in our life. But it is in such time that God is able to separate the goats from the sheep. It is in crises that our faith is tested and polished. It is through bad times that we are made small and Christ made big. These are God's purpose in the financial trading marketplace. The only way to overcome this endless war with sin is through the great commission of Jesus Christ. 

 

8. Where is God When Our Trading Fails?

...I Cried Out to the Lord...

"Staring at the monitor, looking at the charts and the value of your portfolio sinking every second...This can't get any worst. I called out to God...Why?"

 

 

For traders who are Christians and makes their living by trading, does this looks familiar to you? I am very sure at one point of your trading life, you might have wondered if God was ever there whenever you trade. Especially, for those who walked with God closely, serve the Lord as much as they could, tithing and giving offerings with his earnings from the profits of his winning trades. Like most entrepreneur, one of the most trying moments are when everything seems to be pointing south and the strain of looking at the value of your portfolio shrank by half in a matter of seconds and the concerns of providing for your family in the coming days. This toll can cause us into grief and self-doubt.  Many times, testing our faith to the limit. 

 

Although my initial experience in financial trading started off with occasional success, but there are probably more failures then success. There comes to a point when I asked myself, should I give it all up. 

 

Psalms 18:6 says "In my distress I called to the Lord; I cried to God for help. From his temple he heard my voice; my cry came before him, into his ears.". 

 

- I called out to God. But nothing change, in fact it got worst. 

 

Jeremiah 29:11 says “For I know the plans I have for you,” declares the Lord, “plans to prosper you and not to harm you, plans to give you hope and a future". 

 

- But my funds were reduced by more then half of my initial capital. Where is God? Is He for real? 

 

It may sound familiar to some of you. These are the questions and doubts that circles around in our mind during the time of panic and fear. If we fail, not only will we have real worldly consequences, we sometimes feel that we are not able to glorify God in our trading business as the world do not see God in our work.  However, there is this fundamental error in seeing the logic that God sees success the same way we do. Does being an obedient and committed Christian guarantee success in our trading or in everything we do in our life? I do not see any evidence in it but see otherwise instead. We probably experienced more failure then success in life. That does not make God any lesser in our strive to be a successful trader. God need to test our faith occasionally in our walk with Him. What better way to test us then using failures in our life. 

 

As Henry Ford said "Failure is the opportunity to begin again, this time more intelligently". The reason why God allows failure in our lives is not to break us down, but to provide us opportunities to be broken down and then built us up again into what God intended us to be. Moses did not succeed at the first try in asking Pharaoh to set the Israelites free. He failed nine times before finally Pharaoh agreed to set the Israelites free. 

 

Isaiah 55:8-9 : “For my thoughts are not your thoughts, neither are your ways my ways. As the heavens are higher than the earth, so are my ways higher than your ways and my thoughts than your thoughts."

 

As Christians, we are very often guilty of judging ourselves and others by results rather then by actions. Or at least, most of us are more concern with the results instead of the effort we put in to glorify God. But our definition of failure is probably different from God's. God is more concern about the relationship with Him, our character development, our trust and obedience to Him then the outcome of our effort or the work that He called us to do. The question we should be asking is "Are we wiser after the failure?" For being wise, It has to be in God's perspective. Are we a step closer to what God want us to be? 

 

I know it is hard to embrace failure for I will be lying if I say I can rejoice in every failing trade. But it is through these failures that I became a better trader and through these tests, my faith became stronger. 

 

It is through those failures in my financial trading that I understand God's plan for me. The plan to develop my patience and wait for His timing to enter and exit the market, the plan to teach me the sin of greed through effective money management, the plan to show me His wisdom in understanding through education of the tools I required to learn in order to equip myself in the financial trading battle ground, and most importantly, the plan to build up my faith and trust in Him in every trade I made believing His plans are to prosper me, not to harm me even if the trade is not profitable. His plan is to make me rich, yes, rich in character. His plans to give me hope and a future, a future far beyond my time on earth so that I am ready and developed into someone according to His will. 

Jeremiah 29:11- “For I know the plans I have for you,” declares the Lord, “plans to prosper you and not to harm you, plans to give you hope and a future". 

7. Finding God in the Financial Trading Marketplace

Is God working in the financial trading marketplace?

If you have read my first few blogs, I wrote about why trading is not a sinful activity. It seemed like I was just trying to defend my position as a trader.  Don't get me wrong, I was not trying to promote financial trading in any way.  In fact, financial trading is a very a risky business. It is definitely not the most glorified business as far as value added to the society is concern.  The society tends to see financial trading a "a sinful, non-value added" way of earning a living.  Even the idea of giving money profited from trading, to the needy can sometimes seen as "Robin Hood style giving".  The society often see financial trader's method of gaining profit by taking advantage of the financial system and exploiting the weakness of the general public due to the lack of knowledge of the system, "immoral and evil".  When traders give to the needy, they are viewed as "Robin Hood" giving to the poor, especially for those who intentionally trade to give to the poor.

So, let us come back to the basic question..."Is God working in the financial trading marketplace?"

 

There is always a reason and purpose why God placed us in a specific job in a particular time of our life.  Some may be doing something that they like, some may be doing it for money and survival, but ultimately, it is for His purpose as stated in Proverbs 19:21..."Many are the plans in a person's heart, but it is the Lord's purpose that prevails." Surely, God would not be placing a person in a particular job if there is no purpose. In fact, I believe that God has a plan for everyone and everything He created in the universe and the only reason for Him to create all these is to glorify Himself for He is the creator of all things. God has called man and given them the wisdom to create a financial system so as to benefit the world He created. Jeremiah 29:11..."For I know the plans for you," declares the Lord, plans o prosper you and not to harm you, plans to give you hope and a future". If God has a hand in the creation of the financial system, then, does not it make sense that God is also working in the financial trading marketplace? 

 

The next logical question most people will ask, "If God is good and He created the financial system for the good of man, then why is there so much sins and evil in the financial world? Why is the money of so many innocent people, especially Christians who committed their lives to Him, lost their investments in the financial system?".

 

A lot of us, especially those who experience the pain and agony of loosing all their life saving overnight in the global financial crises in 2008, found ourselves asking these questions, many doubting the existence of God. Much faith were tested and lost. Firstly, if the purpose of creating the financial system is good and God's purpose of this creation is to glorify Himself, logically, the last thing God would do is to create something that will defeat that purpose.  Secondly. the answer can be found in John 3:19 (NIV)..."This is the verdict: Light has come into the world, but people loved darkness instead of light because their deeds were evil." or  MSG version says..."God's light streamed into the world, but men and women everywhere ran for the darkness. They went for the darkness because they were not really interested in pleasing God."  Men and women who were called to serve to create and manage the financial system which is for the good of the people, decided to do it not for God's purpose but for their own gain. 

 

Then why did God allows this to happen?

 

I found a good answer from an article "Why Does God Allow Evil?" written by Rick Warren in his website Daily Hope with Rick Warren on May 21, 2014.  Rick Warren said, the answer lies in what is both our greatest blessing and our worst curse: our capacity to make choices. God has given us the freedom to decide how we will act and the ability to make moral choices. Every one of us is capable of making selfish, self centered or even evil choices...which ends up as sins. Unfortunately, sin always hurt others, not just ourselves.  God could have eliminated all evil from our world by simply removing our ability to choose. But God doesn't want us to be puppet. He wants to be loved and obeyed by creatures who freely, voluntarily choose to love him and each other. Love will not be genuine if people are not given the freedom to choose. So don't blame God for all the bad things that happened to us that are created by men and women by their own choice.

 

Whether is it in church or at home or in the marketplace, God is always working for His purpose. Romans 8:28..."And we know that in all things God works for the good of those who love him, who have been called according to his purpose.". The truth is God is working amongst us in the financial trading marketplace, but He is asking whether you are willing to join Him in His work for His purpose and for the good of those who love him, who undoubtedly includes you.

 

Romans 8:28..."And we know that in all things God works for the good of those who love him, who have been called according to his purpose."

6. Is Trading Gambling?...Conclusion

Is Trading Gambling?...How to Differentiate?...Conclusion

We have looked into various comparisons of gambling, trading and running a business in the last two posts. Let us summarized the similarities and differences in the following table: 

Characteristics	Business	Trading	Gambling
Risk taking required.	X	X	X
Uncertain Outcome	X	X	X
New wealth created.		O	O
Success achieved in a short term.		O	O
Outcome totally by chance			O
Outcome affected by economical, political and environmental factors.	X	X
Part of the outcome can be controlled by participant.	X	X
Value Add to the society or the market	X	X
Probability of success increase with knowledge and effective market study and analysis.	X	X
Pits their skills against the market players.	X	X
Can withdraw from the activity anytime.	X	X

Are we able to clearly differentiate gambling and a non-gambling from the comparison seen above? As you can see, there are only two characteristics of trading that are similar to gambling. They are: 

• No new wealth created and 
• Success achieved in a Short term. 

Unfortunately, these are the two reasons why trading is perceived as gambling for most people, which was discussed in my first post on Is Trading a Sin...A view from Michael J. Gutmann.

There are obvious characteristics in gambling that are similar to trading and running a business. In fact, some these  We can see that all three activities requires some level of risk taking and all three do not have a 100% certainty in their outcome.  Just like a lot of things in life which do not have complete certainty in their outcome, we do not claim all these to be gambling if one participates in it. A good example is investment which has a lot of similar characteristics to running a business, like risk taking and uncertain outcome. But very few people will say one is gambling if he invested his savings in stock or bonds, hoping for a return of investment which is higher than putting in a bank to earn interest. Like trading and running a business, he is also participating a some level of risk taking. So, is taking risk gambling? Well, not everyone will agree with this statement. 

Let's take another point in the list above, the amount of time within risk taking activity, to see if this is a good argument to say an activity is gambling or not. Take the example of the chicken seller who who chose just to do his trade only within the business day and do not leave any overnight. Does that makes him more a "gambler" then those who do their business with a longer term view? Is there a big difference between a day-trader and the chicken seller with the way he conducts his business in a short time frame? 

We can go through the same argument over each of the points stated above and you will notice that there is a counter gambling argument for every gambling characteristic. However, in a closer look, I felt that there is a set of key characteristics when combined, can almost always say the activity is gambling if all of the following are present: 

• When risk taking is required and the outcome is uncertain. 
• There are no new wealth created. 
• When the activity does not add value to anyone other then the participant himself. 
• When the outcome of the activity is completely or almost totally by chance. There are a couple of scenarios that this can be met:
• When one continues to participate in the activity without any knowledge of the probability of the outcome that is able to guide him to a reasonable and logical decision whether or not to participate in the activity. Any favorable outcome from it is totally by chance.
• When one continues to participate in an activity knowing that the probability of a favorable outcome is low.  Any favorable outcome from it is totally by chance.

The above four characteristics are always found in an act of gambling whether it is done in the casino or in the trading market or even in running a business. For example, you will notice that both business and trading can both be made into gambling if one chose not to ignore some of the important factors or characteristics stated above. A trader is considered to be gambling if he enters a trade without a thorough analysis to understand the current state or trend of the market. There are traders that make their decision purely based on recommendations from brokers, analyst or even based on the high volume of participation in a particular market, without any knowledge or without any analysis of the stock that he is buying. Any outcome regardless whether it is favorable or unfavorable is totally by chance. There are also traders who did all the necessary analysis and found that the odds is not in their favor but still continues to proceed with the trade hoping they will be "lucky" to get it right. In most cases they will be wrong for they are gambling in the financial trading market. 

Conclusion

The most basic characteristic of gambling is risk taking. But there is a difference between "calculated" risk and "mindless" risk taking. "Risk" is taking a chance and "calculated risk" is taking a chance after considering the probable outcomes. One must factor in the implication of the outcome as well as the probability of such outcomes. Gambling is risking taking without the process of understanding the probable outcome or taking risk knowing the probability of the outcome is unfavorable.

I once read an article from Jason Zweig who writes The Intelligent Investor for Wall Streets Journal. 

He said: “We underestimate the likelihood and severity of common risks and overestimate the likelihood and severity of rare risks. When we feel we are in charge and we understand the consequences, the risks will seem lower than they truly are. When a risk feels out of hands and less comprehensible, it will feel more dangerous than it actually is.”

Life is filled with opportunities for risk taking. Be it in business, at work, trading, or even deciding which destination for your vacation.  The question is whether efforts were made to understand what one is stepping into so as to increase the probability of a favorable outcome. For non-traders who thinks trading is gambling, maybe the lack of knowledge or understanding of financial trading makes you feel that it is more dangerous than it actually is...thus claiming it to be gambling.

Proverbs 2:11...Discretion will protect you, and understanding will guard you.

5. Is Trading Gambling?... Part 2

Is Trading Gambling?...A view based on the legal definition of gambling.

Michael J. Gutmann tried to answer the question by comparing the differences and similarities of trading and gambling. Now, let us look a little deeper into it from a different point of view. We will start from the definition of gambling and see how or how not financial trading fits into gambling. 

Gambling is an activity of betting or wagering of something of value on an event with an uncertain outcome with the primary intent of winning something of value. In another words, to take a risk in the hope of gaining an advantage or a benefit. The legal definition of gambling: "includes any activity when a person pays something of value (consideration) to participate in an event that presents the possibility of winning something of value (prize) whose outcome is determine at least in part by chance". (Rose, 1986). 

In addition to the definition, ProblemGambling.ca, also included the elements of gambling. 

• One needs to realize that by gambling, something valuable is being put at risk.
• The outcome of the act is determine by chance.
• Once a bet is made, it is irreversible. 

From these definitions, the outcome of gambling is uncertain and determined by chance. Regardless of what one does prior to taking the risk, the probability of the outcome is almost 50/50. Nothing or very minimal can be done prior to the action to study the probability of the outcome which is able to help in the decision whether to proceed with the action, except "hoping".  If a fair dice is thrown, the outcome of the number facing up is completely by chance. Likewise, the outcome from the jackpot machine is also totally by chance although many may say that the algorithm in a electronic jackpot machine may has some effect over the outcome. But this is not the correct platform for this discussion. However, like all games, some level of skills is required to increase the probability of winning just like any other games. Comparing it to running a business, say selling shoes; although the outcome is not 100% certain in a long run, but efforts can be done prior to starting the business by studying the probability of success through market study and analysis. Although, there is some element of risk, but there is an higher level of confidence of success through effective decision making. 

Hoping

We can also apply the same argument in financial trading.  One major factor for a trader to make money from the fluctuation of prices is the ability of trader to analyze the market data accurately to enter and exit the market at the correct time. The science of determining the time to enter and exit the market is call Technical Analysis. It makes use of past data and statistics to help traders to study the demand and supply of stocks in the market. It can also determine the price momentum of which indirectly shows the market sentiment of a particular security. Traders can also use fundamental performance data of a company to decide if he or she should invest their money by buying their shares. We call this Fundamental Analysis. Comparing trading with doing business, Technical Analysis and Fundamental Analysis is similar to market analysis, although not completely. What is similar is that market analysis, like technical analysis, is able to help businessman to determine when to enter the market and how the product should be sold as stated in the previous paragraph. 

There is also something in common for financial trading and running a business. Both outcome although uncertain and face the possibility of losing all or part of the money they put into the activity. But both are largely dependent on the market sentiment. The outcome of trading depends on market forces which is driven by the millions of traders, investors and thousands of institutional players participating in the market. Except for a few individuals that have enough resources to manipulate the market, in most cases a single trader may not be able to influence the price movement. As the number of available shares per stock are limited in the market, the key reason for the price to move up or down is demand and supply respectively, like the the prices of chickens explained in the section on "The Role of a Trader".  Unfortunately, the cause of the supply and demand to change can also be caused by greed which drives the market up and fear which drives market down. Very often, greed and fear is triggered by economic, political and environmental factors, which directly affects the supply and demand of securities, bonds, products and services, with the final impact on price. When we compare this with gaming in which all can be used for gambling, the gambler and the number of gamblers is not able to (or at least legally not supposed to) influence the outcome of a fair game. The number of players putting a bet on a specific number in the game of Roulette will not be able to influence the outcome of the winning. The number of people betting on a particular horse in horse racing will not be able to influence the winning horse. Thus, the outcome of gambling in a game does not depend on the number of participants unlike financial trading or running a business. 

Technical Analysis & Fundamental Analysis

The other point to note is gambling is irreversible once a the gambler committed in the game by making his bet. The gambler will only know the outcome after the completion of the game. In another word, the person who took the risk have completely no control or influence over the outcome of the event the moment after the bet is made. Once the token is inserted into the jackpot machine, the gambler must complete the process to decide how much he will get back. When a poker player places his bets on the table, he will not be allowed to withdraw partially of fully from the game until the round of the game ends. Unlike selling shoes, the shoe-maker can at any time in the process of business can stop selling shoes for whatever reasons. Also, unlike financial trading, the trader is able to withdraw from the trade anytime he wants without loosing all his money in that trade. 

Well, I hope there are enough examples from this and the previous section to finally conclude if trading is gambling or not. We will conclude this in the next section. 

Proverbs 10:2-5...
2     Ill-gotten treasures have no lasting value, but righteousness delivers from death. 
3     The Lord does not let the righteous go hungry, but he thwarts the craving of the wicked. 
4     Lazy hands make for poverty, but diligent hands bring wealth. 
5     He who gathers crops in summer is a prudent son, but he who sleeps during harvest is a disgraceful son.

4. Is Trading Gambling?... Part 1

Is Trading Gambling?...A view from Michael J. Gutmann (Futures Magazine)

This topic is one of the most hotly debated issue in trading. However, before we start the discussion, I think it is important to start with a neutral mindset and not be prejudice over any perspective or opinion. Although we may still have a different conclusion or opinion at the end of this discussion, but it is important that we discuss this with an open mind and take effort to understand and hopefully agree with the facts. 

Trading and gambling has many similarities. Both require risk taking. Both is a zero-sum game. Meaning, there is a winner in every looser, it is purely a transfer of wealth from the looser to the winner with no additional wealth created. But is trading totally gambling? Most people who are not directly in the financial trading marketplace would think so.  I once came across an article in the Futures Magazine website posted as a blog by Michael J. Gutmann entitled "Are Trading and Gambling the same?". Gutmann had discussed the topic quite comprehensively, especially on the reason why society has a negative view on trading. 

Gutmann mentioned in his blog that one of the reason why people are skeptical about trading is because the outcome, like gambling is unpredictable. Society generally prefers the shoemaker-type endeavor because it creates something others find valuable. New wealth creation simply means capital gain out from an effort put into an activity that creates value to whoever is willing to pay for that effort. For example a shoe-maker. Trading and gambling are both fundamentally stochastic, that is unpredictable, and because of this they are often viewed negatively. We feel an “honest effort” has more predictability to it. However, most people will have a more positive view on an investor when compared to a trader even when both investor and trader involve in taking risk in the financial market. Gutmann said that this is so because investment enable new wealth creation because it involves delayed gratification – new wealth can be realized after a longer period time either due to appreciation of the stock value (note that depreciation of the value can also happen). There seems to be an inherent respect for a long-term investment that turns out well: The successful investor is considered patient and prescient. On the other hand, trading and gambling have a get-rich-quick aura to them and are often viewed with disdain because of it.

Gutmann went on to discuss the differences between trading and gambling in terms of how each of them executes their trades. From the article, traders may view themselves more technical, even scientific, than gamblers, relying on intricate formulas and algorithms for success. But there are professional gamblers who use probability and statistics to help them increase their chances to win. There are gamblers who have invested equally in their success relative to the sophisticated traders. One obvious different which I see is that traders pits their skills and knowledge against the vast market. Gambling generally pits individual against another individual. 

Although the blog did not end with a very clear conclusion for our question, Gutmann did however said that whether trading and gambling is the same or not, very much depends on the individual involved.  His statement probably sum up my thoughts. However, before we conclude my position on this question, I would like to discuss, in my next section, with a few more points not covered by Gutmann in the second part of this discussion on "Is trading Gambling?". Hopefully, we are able to draw a better conclusion. 

Proverbs 18:2... Fools find no pleasure in understanding but delight in airing their own opinions.