Is it true that day trading is no better than gambling?

[Paul Beck]

Is It True That Day Trading Is No Better Than Gambling?

[Rishabh Tyagi]

All depends on you entry and exit strategy. If it is based on no logic or tested or proven strategy then it falls under gambling. However, if your strategy yields a net positive result for your bottom line, then it cannot be considered as gambling.

[Steve Walters]

Gambling is when one places a bet on the outcome of an event. It’s a simple win-lose scenario based on the mathematical probability of the event occurring or not occurring, which we call the “odds”. These odds are the key to gambling. Day trading does not depend on odds but is a system of profiting from a more controllable environment. The environment itself impacts the results and has little to do with a dependence on mathematical probabilities or odds. If a gambler were to try day trading, they might find it similar to gambling at first. That is because they would be choosing trades blindly, without the benefit of research or experience. Any professional day trader would likely admit that when they first began day trading it felt like gambling. Any gambler in a casino has the same chance of winning or losing as any other gambler there. They all want to win, but the odds dictate who will win and lose. Risk is uncontrollable in gambling and each bet is always a 50-50 split based on pure, simple chance. Day traders spend most of their time doing research on the stocks they are considering. They ingest and analyze huge amounts of information before placing a trade. A professional day trader might have a win lose ratio as high as 75:25 or even greater. They base every trade they make on information, analysis and the events currently happening in the market environment, which changes constantly. Luck and odds have nothing to do with trading. If day trading was no more sophisticated, no different from gambling, then day traders would not need to conduct research, thereby saving time and effort. And with a 50:50 chance of each trade winning there would be no professional, career day traders. The fact is professional day traders are very disciplined and those who aren’t don’t last long. A day trader who approaches the markets like a gambler will soon find themselves no longer able to trade, but a day trader able to put in the proper effort will profit much more than by gambling.

[Simon Mugo]

Hi Jennifer,

Glad to see that we have a professional gambler among us. I think professional gamblers and traders share a lot of similarities in that they take a methodical approach to their activities, which is what makes them pros. I'm sure you cannot compare your approach with that of a regular punter who visits Vegas once a year and places some bets hoping to win. The same is true of professional traders who approach the markets with a balanced approach searching for opportunities that align with their defined edge. You can check out our sister website, www.askgamblers.com where we cater to both professional and amateur gamblers. 

[GavenYmah]

It's a topic that often sparks debates. Some argue that day trading is akin to gambling because both involve risk and uncertainty. Others believe that with the right strategy and knowledge, day trading can be a legitimate investment approach.