Is Day Trading Gambling?
- Anthony Speciale
- May 16, 2024
- 3 min read
Hey Trader,
Is Day Trading Gambling?
With the surge of retail trading during the pandemic, you've probably seen countless articles and WallStreetBets posts showing outrageous profits from traders who lost their jobs and decided to put their stimulus checks into the market.
While these gains can be impressive, there's also a chorus of voices calling it gambling.
As a profitable day trader with over a decade experience, I've been called a gambler by people who’ve never placed a trade themselves. Yet here I am, still trading.
Let’s get real—there is a fine line between trading professionally and blindly gambling your money away. This article explores the key differences in detail.
The Beginnings of Every Trader
I’ll be the first to admit, when I started day trading many years ago, I was gambling.
Like many traders, I treated day trading as a shortcut to quick riches.
I believed I could turn $1,000 into a million in six months.
Let me tell you, the only thing that happened quickly was my account balance draining.
Traders Profit Slowly
The first key difference between traders and gamblers is the approach to profits.
Traders aim for slow and steady gains over hundreds or thousands of trades.
Gamblers, on the other hand, look for shortcuts, trying to hit it big in just a few trades.
Gamblers rely on chat room alerts, copy trades, and anything that seems like a quick path to profits without the work.
Even if they "get rich", many tend to lose it all because their approach isn’t repeatable.
When gamblers win, the gains are small; when they lose, the losses are devastating.
Time Horizons
This short-term mindset is a hallmark of gambling.
Real traders, however, have a longer time horizon for profits—thinking years ahead rather than days.
Professional traders focus on consistency and sustainability, not quick wins.
Trade Journaling
Another crucial difference is that real traders journal their trades.
They review both wins and losses, diving into the analytics to understand their performance. Traders want to know why a trade was profitable so they can repeat it and why they lost so they can avoid similar mistakes.
Gamblers, however, rarely reflect on their losses. Instead, they jump back into the market, looking for the next quick win, repeating the same risky behaviors.
Trading Back-Tested Strategies
Traders use back-tested strategies, while gamblers take random trades based on hype from YouTube, Twitter, TikTok, or Reddit.
The rise of retail investing and subreddits like WallStreetBets has popularized YOLO-style trading. While some people made it big, most did not.
Professional traders follow risk management and stop-loss strategies, even if it means being mocked as having "paper hands."
I’m fine with being cautious if it means staying profitable and trading another day.
Control of Emotions
The third key factor that differentiates traders from gamblers is emotional control.
Traders know when to quit on a red day after hitting a loss threshold.
Gamblers, addicted to the adrenaline rush, often keep trading, chasing their losses and compounding their mistakes.
In my first year, every loss pulled me back to my keyboard, driven by the need to recover my losses and repair my ego. Letting go of that ego was a turning point for me.
I accepted that the market is always right, and it’s okay to be wrong occasionally.
Letting Go of Ego
There's a famous saying: “The market can stay irrational longer than you can stay solvent.” This is especially true in day trading.
You need to be right not only about the market’s direction but also about the timing and execution of your trades.
Instead of fighting the news, the market makers, or the trend, I now cut my losses according to a predetermined risk area and move on.
This discipline allows me to trade well and buy diamonds later rather than holding on to losing trades.
Dealing with Emotions
Rather than suppressing emotions like fear, greed, and excitement, I learned to recognize them and respond appropriately.
If I’m frustrated after getting stopped out multiple times, I remove that stock from my screen. If I make a mistake in position sizing, I exit the trade entirely.
Revenge trading is a thing of the past for me.
Final Thoughts
To be a successful trader, you must focus on a long-term horizon, use proven strategies, and manage your emotions and ego.
If you treat trading like gambling, relying on luck and hype, you’ll end up with random, often negative, results.
By following these principles, I moved beyond my initial failures and became a consistently profitable trader.
If you want to succeed, you need to do the same. Stop gambling—start trading.
Happy Trading,
Anthony Speciale
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