Diary of a Day Trader: Is Day Trading Gambling?

In my view, Wall St. is nothing more then a legalized casino that draws you in with the false illusion that it is easy to make money day trading and purchasing stocks. Let me give you a reality check: There are trap doors everywhere you turn. Don’t believe me? Simply look at your mutual fund performance over the last decade. Do you remember the day traders and investors trading dot.coms, semiconductors and tech stocks and how they mostly went bust in 2000?

So you ask, is day trading gambling?

Well, yes, for nearly 100% of day traders and so called "newbies", it is. However, you can defeat Wall St. at their own game if you know what you are doing. We post the trading results of our senior trader, Brian Paragamian at our website every single day. This is your proof that you can defeat Wall St. and be a profitable professional day trader.

The big question is how do you beat Wall St. as a day trader?

Over the last 26 years as a professional day trader and stock broker I have learned that these are the CRUCIAL ingredients that turn day trading into a consistent money making business rather than a fruitless gambling exercise.

  1. Business: Treat day trading like it is a business. Approaching your day trading like a business is mandatory in every single trade, day or year that you trade.
  2. Education: Like any successful business, one needs to become educated. In this case, it is about learning the technical aspects of day trading. You don’t get fully educated by reading a book, watching videos or trading your own account. Trying to trade your own account as a newbie in a “trial and error setting” can only do one thing, defeat you. Regardless of your path to learning, I would highly recommend you paper trade for months before trading with real money; when you begin to trade with money, keep your position sizes small.
    ‘Hands-on’ education is what is needed to even begin to understand the complexity of day trading. You can rapidly get educated from watching a Professional Trader on a daily basis in a real-time setting and learning the correct way to trade. Education during a real time setting allows you to keep your learning curve small and make money through the long and treacherous process.
  3. Psychology: To be a consistently profitable day trader you must have the proper mind set; without it, you might as well go to Las Vegas because you will have better odds there! Simply put, you must be immune to losing money and must forget your last trade regardless of whether you made or lost money. Losing money is a reality in this business.
  4. Methodology: You must learn the proper way to trade the technicals of a stock and never deviate from it. Once you do this, the second guessing yourself and the 20/20 hindsight will be removed from the experience of day trading. You will never second guess yourself because every single trade will only be placed when certain conditions are met, the same way, all of the time, regardless of the market environment. Over 26 years we have our own proprietary winning strategies. When you have this, how can you doubt yourself? You can’t!
  5. Focus/Commitment: At all times, you must keep your eye on the prize, making money. You must believe there is no option for failure or taking second place. In this case, second place is losing money to Wall St.!
  6. Patience: Never force a trade. Wait for the proper technical setup. Let the trades come to you the same as business lets the customers come to them.
  7. Discipline: Develop your own rules and stick to them ALL the time. You should never sway from them otherwise you will start falling into the psychological mind traps. You must be willing to accept losses. You must not over trade or over leverage yourself. Try leveraging by taking 50% of a winning trade off the table and allowing the other 50% to run while using effective stop loss management.
  8. Stops: Use them effectively, they are an ABSOLUTE MUST; they allow you to manage the trade the right way and maximize gains. If you do not use stops, stop trading right now! Seriously, get on a plane and go to Las Vegas, your odds will be much better than day trading without using stops. Never assume a trade has to come back to your entry price to get you out at breakeven. You don’t believe me? Try it and see what it does to your psychology (mental state). When you play for breakeven without a stop it is game over and you are well on your way to taking huge losses, perhaps even losing your entire capital and more! The minute you do not use stops, this immediately throws you into the category of the nearly 100% of traders who are doing nothing more than gambling. Please, do not let a few winning trades lead you into false sense of security. If you don’t believe that Wall St. can be beat, come visit us and see our daily results using the approach we share. Our real time trading setting allows our members to make money through the learning process. Regardless of how you play the market, we always preach to our members to use patience, discipline and stops.">Always use stops, they are there to protect you!
  9. Risk/reward ratio: Not many “newbie” day traders use this to their advantage. You should never trade unless you have a minimum of a 2:1 risk/reward ratio. By doing this, believe it or not, you can be a very successful trader if you are only correct 33% of the time on your trades. You are probably asking how is this possible? It is all about trading the right way and managing the trade effectively. Using proper entry and exit prices along with using stops effectively allows one to make money on a consistent basis.

As far as I am concerned, day traders fall into 2 categories; 1. Those who are professional day traders who make it their livelihood and 2. “Wanna be” day traders who do not take the time to become educated, fail to trade the right away and in turn find themselves in a world of hurt having lost ALL their hard earned capital to Wall Street.

If you don’t believe that Wall St. can be beat, come visit us and see our daily results using the approach we share with our members. Our real time trading setting allows our members to make money through the learning process. Regardless of how you play the market, we always preach to our members to use patience, discipline and stops.

Since December of 2008 we have been teaching our members in our nightly video updates and daily live webcasts how day trade the correct way and be vigilant in this continued complex market environment. We teach our members how to protect their portfolios and actually capitalize and make money in both rising and declining markets. Take advantage of our 1 week “FREE” trial and learn how we make money on our day trades, swing trades and investments, on a consistent basis.

Also, we have launched an Auto Swing Trade program that allows investors to mirror our swing trades. Membership is limited.

About the Author

Senior Trader
BrianP [at] ProfessionalStockTraderLive [dot] com ()