How do you know if you’re trading or gambling?

To find out the answer, ask yourself a simple question:

How soon do you judge the results of your trading?

If you judge your performance after anything less than a year, you’re gambling.

If you judge your performance after at least one year, you’re trading.

That’s all there is to it.

Everything else is details.

Now of course, people won’t like hearing this. They’ll come up with all sorts of clever reasons to explain why this isn’t the case.

The truth however, is simple.

A career isn’t built over 3 months, or even 6 months. This is especially true in trading, where short term performance is almost never indicative of long term performance.

Are you aiming to win today, or over the next three years?

If you spend your time optimising for short term performance (i.e. winning big this week/month/quarter), it will come at the expense of long term performance.

For sure, we all fantasize about winning in both the short term and the long term… but the reality is that the two goals are diametrically opposed. The best thing to do in the short term is usually the worst thing to do for the long term.

So if your aim is to gamble, then by all means, focus your decisions around attaining short term results.

But if your aim is to build a trading career, then be prepared to sacrifice short term performance for the sake of long term performance.

You can only optimize for one or the other.

You can’t optimize for both.