‘Is Day Trading Gambling’? We have been hearing this for too long. Here is the definitive answer.
In the rush to invest in the stock market, some individuals may be worried about losing money in the endless swarms of transactions each day.
In fact, men and women who engage in day trading are not being careless with their hard-earned money. They are instead using reliable financial indicators to buy and sell stocks, stock options, currencies, and futures contracts.
Consider the following ways in which day trading falls outside the gambling arena.
1. Facts and Figures
While true gamblers are simply playing the available odds, day traders always examine the past performance of target stocks leading up to a purchase. As such, traders have a wealth of information at their disposal.
Eschewing pure chance, individuals will be perfectly capable of using the tools of the market to determine which stocks they should buy.
With the appropriate facts and figures, most investment attempts should turn out quite well.
2. No House Advantage
Unlike traditional gambling endeavors, there is no inherent house advantage in day trading!
In Las Vegas, for example, this is how bookies ultimately make their money.
In day trading, savvy investors will be dealing with markets that do not ultimately care whether they win or lose. With enough good information and a strong penchant for analysis (technical or fundamental), day traders will surely succeed in turning a profit.
3. Rationality and Reason
While gamblers are often pulled to their doom by raw emotion, day traders approach their jobs with cold rationality.
If a certain stock is likely to perform badly over the coming days or weeks, most traders will simply ignore that particular stock for the time being.
Men and women who do well with day trading are almost always lifted to success through logic and reason.
→ These 7 emotions can destroy your Day Trading Dream!
4. Slower Profits vs Fast Profits
Day traders are also perfectly happy to accumulate wealth a little at a time. This stands in stark contrast to gamblers, who are often looking to hit it big almost immediately.
With slow, steady gains, traders will usually have an excellent chance of turning a long-term profit. Instead of engaging in hasty, high-risk bets, investors will buy and sell stocks in a coordinated, thoughtful manner.
The Bottom Line
Though day trading entails a certain degree of risk, it should not be intimately associated with gambling. Once people learn a bit about how the market works, they can use a variety of tools to achieve success in the financial arena (they can also read, watch and listen to news on stocks).
Positive results will surely follow quite soon.
More useful resources
Differences between Trading, Investing, and Gambling – Dummies.com