A gambler plays with his own money, a trader plays with his employer's.This gives rise to a variety of agency effects, which drive rational behaviour.A traders risk is bounded from below by zero, so can never leave with less wealth than he started.A gambler does not have such a hedged position, and may lose not only the money he entered with, but may be granted credit to lose all his assets, whether explicitly wagered or not.It follows that one may expect a trader to be less risk averse than a gambler.Firms combat this agency effect by imposing controls, both formal and qualitative. This directly gives rise to more complex agency conflicts.Most professional gamblers return is simply a function of the cash acquired or lost. A trader derives different returns based upon how profit or loss was made.For a trader a virtuous profit will result in a greater personal return, conversely a loss made in a way sanctioned by his employer will impact his rewards less.Since such constraints are arbitrary and based upon personal judgement, a rational trader will expend a proportion of his time in explaing the virtue of his actions in a way directly that makes them more personally rewarding. It follows that the tighter the constraints imposed by an employer, the greater the proportion of trader effort is expened on spin rather than attempts to trade profitably. A successful gambler acquires by these activities more capital to invest, acquired in part from unsuccessful gamblers. Since a casino or other house is taking the other side of a bet, it can also be modelled as a gambler, albeit one with more favourable odds. A gambler is free to invest whatever % of his capital he feels appropriate inThis funding model is very different to that experienced by traders. The nature of investment firms is that unlike gamblers, capital is diverted away from succesful traders towards less succeful ones. This is referred to by bank management as "strategy", however the consensus amongst practitioners is that this is another word for agency activities of senior bankers.The risk aversion of traders vs gamblers is not fully captured by a simple coefficient. Consider the case of a trader who is in a position where his trading has left him with a deficit.If this is beyond a certain limit, his continued ability to earn will be compromised or eliminated. Thus the rational course of action is for him to become as risk loving as he can within the constraints imposed upon him. A gambler by contrast finding that he is consistently losing may simply quit the game.It follows from this that a trader's earnings are more serially correlated, since a gambler doe not usually rely upon external funding for his investments. A trader has a certain amount of reputational capital, which may be valued as his ability to earn money relative to a new trader. Few gamblers have any such utility for reputation, and in the rare cases described in [Thorpe, 1966] external constraints often ensure that gamblers with reputational capital actually reduce their abiltiy to extract value from their market.A trader may observe opportunities to extract value that are within the rules imposed by his employer, but which are not seen as generall virtuous by his employer.He will then avoid such trades reducing the return to both him and his employer, solely to preserve reputational capital.Gamblers have no such constraint, and are neutral to the notion of any restraint other than procedural or legal. Indeed the personal utility of a gambler may be increased by the opportunity to show his prowess by doing something on the edge.A successful trader will be given more opportunities to trade, however a successful gambler will find that other participants in his market decline to gamble with him.