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Is Day Trading a Form of Gambling? (8)

  • May 5
  • AddictionTreatment
Is Day Trading a Form of Gambling? (9)

Day trading is not a form of gambling. Still, the habit can become problematic for anyone who has previously struggled with gambling addiction. Getting caught up in the emotional highs and lows of trading can cause significant stress and lead to an addictive cycle. The activity can also lead to financial losses, impacting a person’s entire livelihood.

  • What is Day Trading?
  • Gambling vs. Day Trading
  • Signs You’re Addicted to Day Trading
  • How to Get Help if You’re Addicted to Day Trading

If you or someone you know is struggling with day trading addiction, various treatment options can help. Learning more about the signs can also help you pinpoint problematic behavior before it turns destructive.

About Day Trading

Day trading is buying and selling stocks or other assets within a day or even within seconds. It’s not about investing but taking advantage of the up-and-down price movements during a trading session. Day traders must know the technical analysis of price movements and often use various strategies to exploit market changes.

Day trading is most common in the stock markets. Successful day traders are often well-educated and well-funded, typically adding risk by using leverage to increase the size of their stakes. They are also attuned to events that result in quick market moves. As a result, many will trade based on the news or scheduled announcements, like the release of economic statistics or corporate earnings.

Gambling vs. Day Trading

Is Day Trading a Form of Gambling? (10)

The main difference between day trading and gambling is that gamblers play available odds while traders strategize based on market trends, price movements, and past performances. Traders often use sophisticated analytical tools and real-time market updates to decide which stocks to buy or sell and how much to spend.

While day trading is not considered gambling, some people find it easy to get caught up in the ups and downs of the activity, whether winning or losing, as the thrill can bring a rush of adrenaline and lead to an addictive cycle. The behavior can also lead to significant financial losses, which may motivate the person to continue hoping to recover them.

Like traders, gamblers take a small amount of money and risk it for a higher return. They might also leverage these with other securities, like futures. Both activities involve quick decisions for a huge profit or a substantial loss, with the latter being more prevalent in gambling and day trading.

The success rate of day trading is low due to its risk and requiring considerable skill. Good timing and luck can also play a huge role. Some studies show that 80% of day traders fail within a year. So, day trading is not gambling, but both often come down to chance and can lead to significant financial losses and problematic behaviors.

Signs You’re Addicted to Day Trading

Though problematic day trading and gambling addiction are different, both can share similar signs and symptoms. Its fast-paced nature can also become stressful — traders must act quickly by looking at what the market tells them and responding immediately. When the incentive becomes getting a dopamine-induced rush from making a trade, day traders become gamblers in the stock market.

Here are some signs your day trading habit has become problematic:

  • Spending more and more time on the stock market or continuously checking your position
  • Replacing previous hobbies with trading as the main activity of your day
  • Feeling a compulsion to day trade and becoming restless or irritable when attempting to cut back
  • Try to recover losses and by trading more, sometimes by leveraging with other risks
  • Spending increasing amounts of time trading
  • Your day trading has impacted your sleep, hobbies, relationships, or career
  • Experiencing suicidal thoughts due to financial losses
  • Investing in risky stocks

Like gambling addiction, day trading addiction can develop when a person attempts to recover their losses by continuing the activity. Excessive day trading might also be linked to a history of depression and anxiety and pleasure seekers might be at higher risk of engaging in day trading or gambling.

Traders can, like gamblers, learn to associate their behavior with positive reinforcements — money. Both also involve negative reinforcement. Trading and gambling might help people avoid boredom and escape their worries. While day trading in itself is not addictive, gambling behavior is — stocks just provide the action.

How to Get Help if You’re Addicted to Day Trading

A day-trading addiction can impact your daily life, leading to financial loss or disruptions to your work, relationships, and emotional health. Fortunately, there are ways to find relief, such as seeking professional addiction treatment or attending therapy.

You might also try the following tips:

  1. Recognize the problem: You must recognize the ways day trading might be causing immense stress and other concerns in your life. Understanding the signs and symptoms can help you manage them much easier and take the correct action.
  2. Pinpoint triggers: You must also recognize the triggers that might lead to pathological day trading. For instance, maybe you trade more after a stressful day of work. In this case, you might try healthier coping mechanisms, such as yoga or mindfulness meditation, to manage your stress.
  3. Wait for the feelings to pass: When you experience an urge to day trade, envision these feelings as cravings that have no control over your actions. Give yourself time to pause, breathe and wait a few minutes. Focus on staying calm or distract yourself with a favorite hobby. After a while, the cravings may dissipate on their own.
  4. Avoid high-risk situations: Try to avoid situations where you’d be more urged to trade. For instance, you might stay away from a particular website, delete trading apps, or do something healthier when cravings arise.
  5. Think about the benefits of stopping: Instead of shaming yourself or feeling guilty about how day trading might impact your life, envision the benefits of cutting back. For instance, you might have more money to spend on your family or more time to devote to more productive activities.
  6. Find healthy alternatives: When you feel the urge to trade, turn to a healthy hobby. You might participate in an activity you love or try a new one. Exercise, going to the movies, spending time with your support system, or going for a walk can become healthy habits to break the cycle of addiction.

Discover Compassionate Treatment at Gateway Foundation

Is Day Trading a Form of Gambling? (11)

When you’re struggling with day trading, counselors and treatment centers certified in treating gambling addiction can be helpful. At Gateway Foundation, we can address all aspects of your addiction to get you started on a healthier, happier path. Cognitive-behavioral therapy (CBT) might help you discover any underlying stressors contributing to your pathological day trading. And for those struggling with other addictions or conditions like depression, professionals can provide a dual diagnosis and get you started on a treatment plan that addresses all facets of your situation.

To learn more about our treatment programs, contact us today.

Is Day Trading a Form of Gambling? (12)

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Gateway Foundation

Gateway Foundation is a recognized leader in evidence-based addiction treatment proven to get results. Our experts in Addiction Medicine—including highly educated clinical and medical professionals and expert psychiatrists and nurses—deliver care that never stops. For over 50 years, Gateway Foundation has been helping individuals and their families recover from addictions and behavioral health issues and is the only provider that covers the entire state of Illinois with 16 facilities from the Wisconsin Border to the Kentucky Border. Gateway has specific programs focusing on substance use disorders, trauma, depression, anxiety, and other co-occurring issues. We’re licensed by the state of Illinois and accredited by the Joint Commission. We are in-network with all the major commercial insurance plans. Gateway Foundation: Addiction medicine, saving lives.

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FAQs

Is Day Trading a Form of Gambling? ›

So, day trading is not gambling, but both often come down to chance and can lead to significant financial losses and problematic behaviors.

Is trading a form of gambling? ›

Making some trades to appease social forces is not gambling in and of itself if people actually know what they are doing. However, entering into a financial transaction without a solid investment understanding is gambling. Such people lack the knowledge to exert control over the profitability of their choices.

Why do people say day trading is gambling? ›

Cameron Buchanan, of ASIC accredited online training centre, the International Day Trading Academy, says, “people often treat trading like they are gambling. And the main reason is because most gamblers don't expect to lose. So emotionally, a lot of us are hardwired to not [want to] experience loss. We want certainty.

How much money do day traders with $10000 accounts make per day on average? ›

With a $10,000 account, a good day might bring in a five percent gain, which is $500. However, day traders also need to consider fixed costs such as commissions charged by brokers. These commissions can eat into profits, and day traders need to earn enough to overcome these fees [2].

Is trading options gambling? ›

While option trading involves an element of risk, it is generally regarded as a legitimate part of the financial markets rather than a form of gambling. Options contracts have two main components: the strike price and the expiration date.

Is day trading illegal? ›

Day trading is not illegal when it is done within normal trade hours and properly recorded. However, a similar practice known as late day trading is illegal and can be prosecuted under commodities fraud law.

Can day trading be addictive? ›

All of this can induce reward pathways in the brain. When a day trader makes a profit or even gets excited about a potential one, the brain releases so-called feel-good neurochemicals, such as dopamine and serotonin. This can cause you to become addicted, just like with casino gambling or using illicit drugs.

Is day trading a fools game? ›

Yes, trading is tough work. But why must it be a fool's game? Why, when so many Wall Street firms trade profitably year after year? NOW, THERE'S FRESH EVIDENCE that day trading successfully is not beyond individuals willing and able to commit the time, sweat, and brainpower to build superior skills.

Is day trading a skill or luck? ›

Estimates vary, but it's commonly accepted that only around 10% to 15% of day traders are successful over time.78 This low success rate is attributed to the high risks, the need for substantial skill and experience, and the intense competition in the financial markets.

Why is day trading not worth it? ›

It's Very Costly. Every time you buy or sell a stock, there are commissions (i.e. brokerage fees) and taxes involved. Because of the high-frequency of trades being placed, these numbers add up very quickly — to the point where it can eat into a significant portion of your profits (or even turn a profit into a loss).

Can I make $100 a day day trading? ›

You're really probably going to need closer to 4,000 or $5,000 in order to make that $100 a day consistently. And ultimately it's going to be a couple of trades a week where you total $500 a week, so it's going to take a little bit more work.

Can you make $200 a day day trading? ›

A common approach for new day traders is to start with a goal of $200 per day and work up to $800-$1000 over time. Small winners are better than home runs because it forces you to stay on your plan and use discipline. Sure, you'll hit a big winner every now and then, but consistency is the real key to day trading.

Can I make 1000 per day from trading? ›

Earning Rs. 1000 per day in the share market requires knowledge, discipline, and a well-defined strategy. Whether you choose day trading, swing trading, fundamental analysis, or any other approach, remember that success takes time and effort. The share market can be highly rewarding but carries inherent risks.

Does Warren Buffett use options trading? ›

While Buffett's primary focus remains on long-term value investing, he utilizes options when he identifies favorable opportunities or wants to enhance his overall investment strategy. Selling (Writing) Options: Buffett's preferred options strategy revolves around writing (selling) options rather than buying them.

How is trading different from gambling? ›

Greater control over the outcome in trading

As a gambler in a casino, you have limited control over the outcomes. You purely try to play by the odds and hope that the cycle of probability will work in your favour. As a trader, you have a lot more control. Discipline is your best defence against market uncertainty.

What are zero day options? ›

What is a zero-days-to-expiration (0DTE) option? A 0DTE option is an options contract set to expire at the end of the current trading day. Every options contract on an underlying optionable, index, stock, or ETF, whether it was issued a month ago or just last week, becomes a 0DTE on its expiration date.

Is gambling the same as stock trading? ›

But there is one key difference between the two. When you invest your money, there's an equal chance that you'll either lose your money or earn a return. When you gamble, though, the odds are almost always against you. Even if you win big, there's a good chance that you'll risk it all to double your money.

Why is trading different from gambling? ›

Slower profits versus quicker profits

That, in a way, describes gambling. Profits appear to come fast but more often than not they are a mirage. Trading, on the other game, is a game of skill and discipline. The focus is more on managing your risk and protecting your capital.

What falls under gambling? ›

gambling, the betting or staking of something of value, with consciousness of risk and hope of gain, on the outcome of a game, a contest, or an uncertain event whose result may be determined by chance or accident or have an unexpected result by reason of the bettor's miscalculation.

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