Is trading immoral? Is it a sin? Is it wrong to intentionally take risk? These are questions that some traders face when contemplating becoming a trader, or during the early part of their trading career - particularly those aspiring traders who identify with Jesus Christ.
Is it sinful to trade? I have never thought so. However, I have helped dozens of Christians and church pastors deal with this question.
I begin with a direct quote from the New Testament. The book of Romans, Chapter 14, verse 23 says: “But whoever has doubts is condemned if he eats, because the eating is not from faith. For whatever does not proceed from faith is sin.”
If you don't believe that trading is a right thing to do, then you definitely should not do it.
However, if trading is a sin, then Jesus is twice guilty of advising his disciples to commit sin. One instance is found in the parable of the talents (parable of the pounds) in the Book of Matthew, Chapter 25, verses 14-30, and the other is found in a similar parable in the Book of Luke, Chapter 19, verses 12-28.
In each case, each one of three servants was entrusted with funds in the form of talents to take care of while their employer was away. The servant who traded and gained the most for his employer was given the greatest reward. The servant who did nothing with the funds given to his care was severely reprimanded and punished, and what he was given was taken away and given to the servant who had gained the most for his employer.
A talent was money, the equivalent of 20 years’ wages. One servant was given 5 talents, one was given 2 talents, and one received only 1 talent. Can you imagine if you worked for someone who gave you 100 year’s worth of wages to take care of and invest? More than that, your employer, being a very wealthy man, fully expected you to grow that money.
Jesus talked a lot about money.
- Jesus talked about money more than He did about Heaven and Hell combined.
- Jesus talked about money more than anything else except the Kingdom of God.
- 11 of 39 parables talk about money.
- 1 of every 7 verses in the Gospel of Luke talks about money.
Money was important then, just as it is now.
The lesson given by Jesus was huge. He expects Christians to grow in every lawful activity in which they participate.
Having said that, I will tell you why I trade, and why other Christians trade successfully, and that what we are doing is just as Godly as any other business activity.
False reasoning comes from not understanding what trading is really about.
Trading is a business, and like any other business it has risks. Trading, even when done in ignorance (which is the way that over 90% of traders approach it) is still not sin. Trading is wrong only when the person doing it is behaving foolishly instead of wisely. Foolishness is not immorality, nor is it sin.
You must look at trading for what it is — a business. It has nothing to do with providing a service, or providing liquidity for others, nor does it involve producing a product. Providing liquidity or providing a service may be incidental to trading, but they are not the main purpose for trading.
The main purpose for any business is to create value. Many people erroneously believe that trading, along with every other business on Earth, has the primary purpose of making a profit — but that is incorrect. If a business cannot create value it will ultimately fail, or be replaced by a business that does create value.
What, then, is the value that is created by trading, or investing? To understand, you are going to have to think differently from the way most moralists think. You are going to have to appreciate the many meanings of the word “value”, some of which are esoteric.
Value:
1. An amount, as of goods, services, or money, considered to be a fair and suitable equivalent for something else; a fair price or return.
2. Monetary or material worth: the fluctuating value of gold and silver.
3. Worth in usefulness or importance to the possessor; utility or merit: the value of an education.
4. A principle, standard, or quality considered worthwhile or desirable: "The speech was a summons back to the patrician values of restraint and responsibility" (Jonathan Alter).
5. Precise meaning or import, as of a word.
6. Mathematics: An assigned or calculated numerical quantity.
7. Music: The relative duration of a tone or rest.
8. The relative darkness or lightness of a color.
9. Linguistics The sound quality of a letter or diphthong.
10. One of a series of specified values: “issued a stamp of new value.”
There are probably even more meanings for the word "value," but we will concentrate on the first three above.
When a trader makes a trade, if he is operating according to sound business practices, he is looking for a fair price or return.
Trading is investing time, effort, energy, money, and skill in exchange for a fair return.
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To become a successful trader, a person spends time, money, and energy to learn the skill of trading (the value of his education). An aspiring trader has to also learn how to run a successful business, and all that is entailed in so doing. Trading involves the right application of knowledge (wisdom) to market situations. Also involved are self-discipline and self-control. It takes a lot of self-discipline and self-control to become a successful trader, and there are few who achieve that success. It is one of the most difficult occupations in the world. But after over five and one-half decades in this business, I would have to say that becoming a successful trader brings a person closer to Godliness than any other occupation I can think of.
The Lord says that we are to be in the process of becoming perfect. Trading forces perfection more than anything else I can think of. To win at this business, you have to be as close to perfection in what you do as any skilled surgeon has to be if he is going to cut you open and keep you alive.
The difference between winning and losing is often razor thin. The slightest hesitation, the slightest doubt, can make the difference between winning and losing.
Being successful in the trading business isa fair and suitable equivalent for something else, and that "something else" is a person's skill at trading. The skill is learned through experience. Surviving the experience necessary to become a winning trader is almost always a gut-wrenching experience. It is very costly in time, effort, and money. Back in the 1980s someone (I don't remember who) came up with the figure of $100,000 in education, time, and losses to become a success in the trading business.
You mentioned the morality of trading. Trading is neither moral nor immoral. The morality rests with the trader.
There are traders who would do better to join Gamblers Anonymous. They are not immoral because they trade. They simply have a severe gambling habit. Most traders come into this business with stars in their eyes. The get-rich-quick appeal will always bring suckers into the markets. Those who prey on the suckers by giving them false information are no doubt immoral in their conduct. However, a trader, even if greed is his driving motivation, is not immoral. Greed by itself is not immoral. Greed is emotion. Greed is soon driven out of a trader if that trader is to succeed.
The same thing is true for fear, selfishness, doubt, worry, and any other human emotional weaknesses. Those weaknesses must be overcome for the trader to succeed. The result is a high degree of perfection in the trader who succeeds — at least in the trading part of his life.
Trading is not about providing a service. Trading is about creating value. If all the value acquired goes to the trader, so be it. However, not all of the created value does go to the trader. The trader gets what is left after commissions, fees, and taxes. Indirectly, the trader's business benefits those who live off his efforts. It's not necessary to provide a service to have a successful business. Nor is it necessary to create a product. A business can exist solely to provide money for other things.
When I was 19 years old, I worked for a multi-millionaire. I did the accounting for his $6 million municipal bond portfolio and his $5 million blue-chip stock portfolio. His entire business consisted of owning those two portfolios. He collected tax-free money from his municipal bonds, and he collected dividends from his blue-chip stocks. Was that immoral? No. Did he provide a service? No. Did he provide a product? Again, no! He lived off his investments, which by the way, he inherited. He used some of the money to endow various projects. He and a friend paid for the Los Angeles County Museum. He donated vast sums of money to his favorite political party, and so forth.
When I was in high school, my best friend’s father also lived from his stock investments, as did two other very wealthy gentlemen I knew. In every case, none of those men worked, produced anything, or rendered a service. Their money worked for them.
Would you deny that these men were successful businessmen? Were they immoral?Were they committing a sin?
Any understanding of trading as consisting of only taking is wrong because it fails to take into consideration what might be done with the winnings. I know traders who give away vast sums of money, money they received from their trading. In my own ministry, I support a variety of ministerial activities, including purchasing a very expensive parcel of land for expansion of an existing church, paving a parking lot for a church that had only a dirt lot, and currently building a new church building from the ground up.
Can a person truthfully think that when I profit from a trade, I've given nothing and have only taken? Can a person truthfully tell me I have not given of my time? Have I not given of my money to learn how to profit from trading? Have I not taken risk, for which I deserve to be paid?
An insurance company expects to be paid when they take risk, even if the insured never collects. Why should not a trader be entitled to payment for taking risk?
Is trading purely for the sake of gain? Is it wrong to approach the situation with only profiting in mind, without so much as a thought of giving?
If trading purely for sake of gain goes against your sense of morality; if it bothers your conscience when profit is your only motive for trading, then probably you shouldn't trade, because for you it would be immoral.
Fortunately, that is not the case for many traders. They trade and operate their trading business in order to provide for their families, for their retirement, for their children's education, for charitable and church donations, etc.
The risk factor of trading
Trading is a business, and as a business it involves risk. Every business in the world has risk, not just trading. Life involves risk. You take risk when you are asleep. Who knows what could happen? An earthquake, a hurricane, a blizzard can kill you. An airplane could crash into your house and kill you while you sleep. You could slip in your bathtub and break your neck.
I can directly say that taking risk is not gambling. If it were, then God is a liar, because we read in scripture that time and chance happen to all men.
Let’s look next at other parts of trading that might be considered immoral, or sinful.
Does trading break any of man’s laws? Obviously, not! Society encourages trading. Even some of the most communistic nations allow trading — China and Russia, for example.
Does trading break any of God’s laws? Only if you consider trading to be gambling!
I’ve already shown that taking risk is not wrong. In fact, in certain situations it is encouraged by society because it serves a useful and desirable purpose.
What do I mean by that?
Let’s consider Life Insurance. Why isn’t Life Insurance gambling? You go to an insurance company and you place a bet. You say “I will pay you money now. In case I die before my time, there will be money to take care of expenses, and maybe enough to take care of my family.”
Your bet is that you will die before you have paid in the face amount of the insurance policy. The insurance company takes the other side of your trade, because they know that on a statistical basis you will probably not die right away. They know that statistically speaking they will collect more money from you, which if invested over the years, will result in more money than they will ever have to pay out.
Insurance, then, serves an economic purpose that is beneficial to society. Money will be available to at least cover your expenses, and possibly not leave a widow and orphans without money for them to continue to live. The insurance company is taking risk. They are taking the risk you want to be rid of. The same can be said of any kind of insurance – health, auto, crop failure, and liability.
Let’s go a step further and ask this question: Is a professional poker player a gambler? I contend that he is not! Why is he not? It is because, just like the insurance company, he knows the odds of winning based on the cards he is dealt. He is a businessman who knows the risk and knows how to manage the risk — just as the insurance company does.
Trading is not gambling if it is done by someone who is knowledgeable, knows the risks, and is able to manage the risk. If a person becomes educated about markets, educated as to how to control risk, educated in how to properly run a business, he is not gambling any more than in any other business.
Can you name any business in the world that has no risk? Try! You won’t find one.
Now let’s get down to specifically what would be wrong if you wanted to trade. Apart from ignorance due to lack of sufficient education, there is only one thing that can be immoral about trading. God says, “That which is done in doubt, is sin.”
Gambling is taking risk without sufficient knowledge. Gambling is jumping off a bridge hoping that you will land on a bed of feathers, when the reality is that below you is nothing but rocks. Gambling is an act of foolishness. Trading involves performance by properly educated businessmen.
According to the U.S. Small Business Association, one in fifteen hundred small businesses are successful by the end of five years from the time they begin. Those are horrible odds. The reason for so many failures is ignorance of how to run a business, where to locate, and how to manage money.
My personal opinion, and that of many church officials, is that if you run your trading as a business, applying money, skill, and knowledge, there is nothing un-Christian about it. It's not gambling, and it's not immoral. It's a business, which, if run properly, brings rewards. If you can't see trading as a legitimate business, then by all means run as far from it as you can
