Business Risk Vs. Gambling

I have some confusion sometimes when I'm doing options trading. Some of my friends will just telling me that I'm gambling when I buy a call options to earn money when the stock price goes up. Most of the time, I'll argue that I have done my research before I make the trading decision for the particular stock to go up. Then, he told me that those who are betting money on soccer match also study the players and their winning history before they make a bet, and they are gambling. This really confusing and project a very thin line differentiate Business Risk and Gambling.

Yesterday, I felt so lucky when I read an article that help me to differentiate Business Risk vs. Gambling on Stock Market. And, the main difference between business risk vs. gambling is the Money Management and Risk Management.

For Gambling, one is just look to be lucky and excitement to get the return. Normally the naturally strategy is to bet more when they win which is a losing strategy since when you win u win small, when u loss u loss big. And, emotions affect the decision of a gambler the most.

For Business Risk, like doing business, we always compare our risk and reward ratio. For every opportunity present, we would definitely calculate the potential profit vs. the cost of the item. Besides, for business Risk, we always study the market, and record down every of our decision making for future reference and correction. Therefore, Business man always depends on the data and record to make a business decision.