Day trading vs gambling? Some people question if day trading and gambling are the same, similar or different. I’ll take you step by step on this controversial subject. I am not going to try to persuade you in either direction. Furthermore, I am simply going to lay out the facts, and you can jump to your conclusion. The dictionary definition of gambling is “the practice of risking money or other stakes in a game or bet.” When you place a day trade, you’re betting that the random price movements of a particular stock will trend in the direction that you want. Both strategies can help you make a lot of money by risking a small amount of money.
Day Trading vs. Gambling: Day Trading
Day traders buy a stock at one point during the day and then sell out of the position before the market closes; typically, on the same day, it is not advised to hold a position overnight. The most successful day traders will use a strict methodology to analyze potential turning points in the market for entry and exit points. Traders will often use technical analysis to detect potential trading opportunities throughout the day. Technical analysis is the use of chart patterns and technical indicators to find turning points in the market where buyers and sellers could make a profit.
With trading options, you can purchase a call or a put option. A call option gives you the right to buy a stock and a put option gives you the right to sell the stock. If you believe the market is trending upwards you would purchase a call option. If you felt the market was trending downwards you would purchase a put contract. You would then sell your contracts to either follow your strategy or to minimize a loss. Before you invest a single dollar in day trading you need to learn about the market so you have an understanding of what the overall stock market is doing.
Day Trading vs. Gambling: Gambling
Gambling is the process of putting in a small amount of money with the intent of making a significant return. There are two types of gambling; skill-based and chance-based. Chance-based would be playing the lotto and skills-based would-be blackjack. Gambling happens both online or in several venues like those in Las Vegas, Monaco, or Macau. There are scratch-off tickets as well and even cruises with gambling as options as a form of entertainment. Aside from the entertainment of casinos, some people do get swept into an addiction that far exceeds the entertainment value of the games. Only a small portion of gamblers reach this point.
Gambling inclinations run far deeper than most people originally spot and well beyond the everyday definitions. Gambling can take the form of acting in a way to be socially accepted. This can result in getting involved in a field one doesn’t know much about. Responsible gambling means understanding the odds and knowing how much time or money to spend and when to stop. Knowing the odds is simply the best way to keep gambling in perspective.
The more a player struggles to get ahead, the more they get pulled into additional losses. Odds for each game are stacked in favor of the casino. This means the chances of you walking out of the casino with less money in your wallet is high. Gambling is an inadequate option for those looking to boost their income. While the house advantage varies for each game, it ultimately helps guarantee that the casino won’t lose money over time. While gambling can be entertaining, it’s in your best financial interest not to place bets.
Some experts believe that day trading is a form of gambling, since it includes risking a small amount of money and expecting a bigger return. Others say that trading is not gambling, since it involves a careful analysis of the fundamental circumstances and forecasting the future movement. Making trades without a solid investment understanding and strategy is wrong and seen as gambling. There are many variables in the stock market; like fabrication among traders that creates a gambling setup. Applying a strategy allows a trader to overcome the probability of losing money.
When you involve yourself in financial markets, there is a learning curve in which you will lose money. The reality is trading is exciting, it connects the trader and puts them on an emotional rollercoaster. If you are entering trades just for the thrill and not following the tested strategy, then it is seen as trading in a gambling style. A true trader is perfectly happy to gain wealth a little at a time. Where you look at gamblers looking to hit big immediately.
With steady trading gains, traders will have an exceptional chance of turning a long-term profit. Instead of getting warped in high-risk bets, investors will buy stocks in a coordinated, well-thought-out manner. Both gambling and trading include risk and can both be detrimental to your pockets if you do not have impulse control. With both gambling and trading, you must use an amount of money that will not affect you substantially if you were to experience a loss. Experts have said that dramatic and erratic fluctuations in stock prices create a similar “high” to that experienced by gamblers who see a big bet. This rollercoaster ride can excite your hormones, even creating trading withdrawal symptoms.
Summary: Day Trading vs Gambling
You have learned what gambling and day trading truly means. You have seen how they have some similarities, but also quite some differences. You have also learned the significant value that using a strategy has along with analyzing market data to have a winning trade. Gambling can creep into trading practices if you don’t use a strategy. But it is also clear that each one is quite different; day trading is done to make consistent income, unlike gambling. Warren Buffett said, “The most important quality for an investor is temperament, not intellect.”
My goal has always been to help as many day traders achieve their personal financial goals, whether they are novice traders or experienced traders. The MK VIP training has plenty of resources to help you get started on reaching your day trading goals. With my program, you can learn how to begin day trading and learn to avoid falling into gambling tendencies. Putting money into the market can be scary, but with the proper guidance and if you put in the work, you can win. The size of your success is measured by the strength of your desire.
Maurice Kenny has helped over 600 people become financially free through one-on-one coaching, mentorship, and options trading strategy. Many of these new traders are now full-time traders, and they all started by watching his 1-hr webinar.
Feel free to check out other FREE educational resources to help guide you as you begin your new journey to financial freedom.
Also, download a (FREE E-BOOK) by Maurice Kenny, “DAY TRADE LIKE A MILLIONAIRE.”