Day Trading – A Type of Gambling
By web definition, day trading refers to the practice of buying and selling financial instruments within the same trading day such that all positions are usually closed before the market close for the trading day. Traders that participate in day trading are called active traders or day traders. Stocks, currencies, stock options, and a host of futures contracts such as equity index futures, interest rate futures, and commodity futures are Some of the more commonly day-traded financial instruments. Initially, day trading was preserved for the financial firms, professional investors and speculators. Many people from investment firms or banks also work as day-trading specialists in equity investment and fund management. But the advent of electronic trading and margin trading has increased the popularity of day trading especially at home traders.
By definition of day trading, it can be said that it is sort of gambling. When a person is trading with a share or stock, he purchased that particular one or the bulk whatever the case may be in a price anticipating that the value of the said instruments will be hiked before the market closes for that day, and he will be able to sell it at an increased price to gain the premiums. However, it may not be true and the price of the instruments just fall back than the purchasing price at the beginning of the day. The latter case would leave the trader to sell the instruments at a lower price than with which he bought it, resulting in a loss. The nature of financial leverage and rapid return has made day trading a high risk activity associated with “extremely profitable” or “extremely unprofitable” situations. This implies that high-risk profile traders, i.e. people who like to accept risks can make either high percentage of returns or high percentage of losses. Because of the high profits (and losses) that day trading makes possible, these traders are sometimes portrayed as “bandits” or “gamblers” by other investors.