Futures are often compared to casinos due to high risks, speculative nature, and psychological factors that make them similar to gambling. Here are the key reasons for such associations:
1. Leverage: 'All or nothing'
Futures allow trading with leverage (for example, 10:1 or 50:1). This means that:
- With an investment of $1,000, you control a position worth $10,000–$50,000.
- Even a small price movement (1–2%) can bring +100% profit or a complete loss of the deposit.
Example:
If Bitcoin is priced at $70,000 and you open a long position with 10x leverage, a price drop of 10% to $63,000 will wipe out your capital. This is reminiscent of betting on 'red/black' in roulette.
2. Volatility and unpredictability
Cryptocurrency futures are traded 24/7, and their price depends on:
- News (regulatory decisions, hacks).
- Manipulations by 'whales' (large players).
- General market sentiments (FOMO, panic).
Consequences:
Sharp price jumps (as with meme coins like PEPE) turn trading into a game with unpredictable outcomes.
3. Margin calls and liquidations
Exchanges automatically close positions when the liquidation level is reached (when collateral does not cover losses).
- In May 2024, positions worth $3.2 billion were liquidated in one day due to the drop in Bitcoin.
- Beginners often lose their deposit within hours, unable to react.
4. The psychology of gambling
- Dopamine traps: Quick profits (as in scalping) create addiction, leading to increased bets.
- The 'replay' effect: After losses, traders invest more, hoping to recover the money — like in a casino.
- The illusion of control: Technical analysis and indicators create a false sense of predictability.
5. Statistics against the trader
- 95% of traders lose money on futures, according to a study by **CCData** (2024).
- Fees and spreads: Even in a neutral market, fees 'eat away' at capital.
- Odds like in roulette: In the long run, the expected value is negative for most strategies.
Why are futures not a casino after all?
They remain a tool for professionals who:
- Use hedging (insurance against risks).
- Trade according to a clear plan with stop-losses and risk management.
- Analyze fundamental factors (e.g., halvings, macroeconomics).
Example of success:
Hedge funds profit from arbitrage between spot and futures markets, but this requires algorithms and deep knowledge.
How to reduce risks?
1. Do not use leverage (or limit themselves to 2–5x).
2. Trade only on the spot market until you gain experience.
3. Learn
4. Avoid emotions: Determine entry/exit points in advance.
Conclusion
Futures are compared to casinos due to high risks, excitement, and statistics showing that most lose. However, in the hands of professionals, it is a powerful tool for hedging and earning. For beginners, they often become a 'financial roulette', where the odds are against them.