Infographic: Stock broking is essentially gambling


After living through the 2008 financial crisis, it became quite apparent that many of the investments made by stock brokers are closer to gambling than many had hoped. However, that is not the only thing that financial broker and poker players have in common.

Working to generate profits from capital all day, stock brokers tend to be money-focused individuals, a trait that they share with many of the most successful poker players. When we talk about “playing the stock market”, those in the business treat their investments as a game they are trying to win, just like a game of cards.

However, it is not just a game of chance. Brokers spend a lot of time learning their markets to try and beat their competitors to be the first to buy shares in a company that is undervalued before the rest of the market decides to do the same. Huge profits can be made from small titbits of information, just like the tells of opponents giving clues during a game at the tables.

While much of the press about stock broking in recent years has been about algorithmic trading, where computers can trade millions of shares in a fraction of a second after analysing market conditions, all before a human broker could have blinked. However, alongside these instantaneous trades, many have called for traders to look longer term, both for the stability of companies but also the market in general.

Flash crashes like than on 6th May 2010, where US markets crashed up to 10% in value within minutes for an unknown reason are a real worry, and the result of trading bots analysing each others mistakes to escalate the situation. The 2010 crash was only fixed once the market was temporarily closed, giving companies the chance to reset their trading bots, but the issue is much less likely to happen with human involvement in each decision.

Poker players need to play the long game to make sure they don;t crash out too early, and patience is also key for stock traders looking to find the right bet that will produce the best overall results.

Photograph by connorwithonen

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