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Do you think technical analysis is gambling? It’s extremely easy to make it gambling if the method is use incorrectly during practice.
The stock market is unpredictable, and taking a shot without a plan makes trading gambling. But Technical analysis helps you not turn this path into a gambling career.
On the contrary, technical analysis helps you make money, reduce risk, and find opportunities based on historical data on trends, and chart patterns.
Here are 6 reasons why technical analysis is not gambling.
Technical analysis is always focuses on a set of structured indicators, chart patterns, and analytical tools. Unlike gambling, it’s unstructured and often based of intuition or emotional decisions.
Technical analysis is not a guaranteed outcome, but it aims to identify high probability trading opportunities. These trading opportunities are based on historical data on trends, and patterns.
Unlike gambling, it’s based on certainty and aims for a quick win.
A lot of people think technical analysis is only for making money, it’s also a great tool to guide you on stop-loss orders and position sizing. Technical analysis is a great to help you mitigate losses and protect your capital.
Technical analysis promotes risk management unlike gambling that promotes minimal or zero risk management.
Technical analysis provides you with a entry, stop-loss, and price targets. These three pieces of information will help you reduce any emotional decisions, because you have a trading plan that is outlined.
Unlike gambling that it’s often driven by emotions or impulsivity.
Gamblers usually take their bets based on for a quick dose of dopamine, and make their bets regardless of the situation. It takes no patience or discipline.
Technical analysis on the other-hand requires patience and discipline to make the trades.