i What this calculator does
Every casino game has a known house edge: the share of each bet the house keeps on average. Trading has one too, made of spreads, commissions and the gap between your win rate and your break-even win rate, and it can be positive or negative. This calculator puts the two side by side. It shows the expected loss per R1,000 wagered at European and American roulette, slots, a bookmaker's odds and the national lottery, and the expected result per R1,000 risked in your trading from the statistics you enter, then scales both to a year at your activity level.
The point is not that trading is gambling, or that it is not. It is that the arithmetic is identical, and the only thing that separates the two is the sign of the edge. The article on trading and gambling takes the argument further.
This calculator is for educational purposes only. Results are estimates and may vary depending on market conditions, spreads, commissions, platform settings, and exchange rates. It should not be considered financial advice.
Where each edge comes from
Roulette pays 35 to 1 on a number that comes up 1 time in 37, so the house keeps 1/37 of every rand staked over time, 2.70%; the American wheel adds a second zero and doubles it. Slot machines publish a return-to-player figure, typically 88% to 92% in South African casinos, so the edge is the remainder. A bookmaker prices a two-way market so the implied probabilities add up to more than 100%; the excess, usually 5% to 8%, is the margin, and the bettor loses margin ÷ (1 + margin) of each stake across a balanced book. The national lottery returns roughly half of ticket sales as prizes. Trading's edge is your win rate times your reward-to-risk ratio, less the loss rate, less what you pay in spreads and commissions, and unlike the others its sign is not fixed.
Why costs decide the sign
At a 50% win rate and 1.5:1 reward-to-risk, trading has a gross edge of 25% per rand risked before costs, which sounds enormous. Costs are charged on every trade, win or lose, as a share of the amount at risk; at 5% they take the edge to 20%, and a trader who risks a small amount against a wide spread can see costs of 30% or 40% of risk per trade, at which point the arithmetic looks like a slot machine. The spread cost calculator shows how large that figure is for a given instrument and position size, and it is the number most new traders never compute.
What the comparison does and does not say
It says that any activity with a negative expectancy loses a predictable share of turnover over time, and that volume accelerates the loss rather than averaging it away: a gambler who plays more does not get luckier. It does not say that a positive number here means you have an edge. The win rate and ratio you enter are estimates from a sample, and the luck or skill calculator tests whether the sample is large enough to trust them. The honest sequence is: measure the costs, compute the edge, test the sample, then trade size.
Spotted an outdated figure? If a rate, limit or formula in this calculator no longer matches its source, email us the page and the source. A material correction is dated on the Updates Log.
Frequently asked questions
Is this saying trading is gambling?
It is saying both are bets with an expectancy, and that the expectancy can be computed. Casino games have a fixed negative one; trading's depends on the trader. Whether a given trader is gambling is answered by the sign of the number, not by the label.
Why is the lottery edge so large?
Because about half of ticket revenue goes to prizes and the rest to good causes, retailers, tax and the operator. It is the worst return of any legal wager, which is why it is best treated as a donation with a small chance of a prize.
How do I find my broker's costs as a percentage of risk?
Divide the spread plus commission on a typical trade by the amount you risk on it. A R30 spread on a trade risking R600 is 5%. Tight stops against wide spreads produce very high figures, which is why scalping with retail spreads is so hard.
Does a positive edge mean I will make money?
It means you are expected to over a large number of trades if the statistics hold. Variance still produces long losing runs, and the statistics themselves may be a lucky sample. The losing streak and luck or skill calculators cover those two problems.
Why does the bookmaker figure use margin ÷ (1 + margin)?
Because the margin is built into the odds. If a two-way market prices both sides at 1.91, the implied probabilities sum to 104.7%, and a bettor spreading stakes across the book loses about 4.5% of turnover, which is 4.7 ÷ 104.7.
Are South African casino and lottery figures different from elsewhere?
Roulette is identical everywhere. Slot return-to-player is set by the operator within regulatory limits and is typically 88% to 92% in South Africa; the lottery prize share is around 50%, broadly in line with most national lotteries. The sportsbook margin varies by operator and market and is worth checking before you bet.
Want to embed this calculator on your site?
Embed this calculator
Free to use on your own site. Copy the code below and paste it where you want the calculator to appear.
<iframe src="https://www.tradeanswers.co.za/embed/gambling-vs-trading-house-edge-calculator.html"
width="100%" height="760" style="border:0;max-width:520px"
title="Gambling vs Trading House Edge Calculator - TradeAnswers" loading="lazy"></iframe>
<p><a href="https://www.tradeanswers.co.za/gambling-vs-trading-house-edge-calculator.html">Gambling vs Trading House Edge Calculator</a> by <a href="https://www.tradeanswers.co.za/">TradeAnswers</a></p>