There was a short segment on CBS Sunday Morning that was titled, "The Psyche Of A Day Trader." As day trading is what I do for a living; I thought it would be interesting to tune in and see what they had to say.
The premise of the segment was that there was a correlation of the effects on the brain of what a day trader does and that of what a gambler does. Somehow, (I don't pretend to understand the methodology of the study), measurements of the brain activity of a day trader and a gambler were analyzed while both subjects were involved in their various pursuits. Apparently, there were certain similarities between the two. This begs the question: Are day traders' gamblers or are they entrepreneurs?
There is something to be said for the rush of being in a trade that is making you money. To a certain extent, day traders are addicted to the feeling that they were right, that all of their hard work to get to a level of profitability is paying off. On the other hand, the sheer frustration and bewilderment a trader feels when a trade goes against him/her is equally as devastating.
Most any successful person in life has experienced similar feelings. If you are a salesman, there are similar emotions associated with closing a big deal that go beyond the aspect of "just making a living." If you are a research scientist, solving a specific problem that you have been working on must carry the same feeling. If you are a detective and have just solved a particularly difficult crime, would in a certain sense, again create the same feeling of elation. So it stands to reason that just being a day trader and having feelings of excitement doesn't make you a gambler; it just makes you human.
So the next question for the day trader is how do you adequately deal with the ups and downs of your profession? For the active trader, learning how to deal with this predicament is as important as finding the right trading system to use. As any seasoned trader knows, taking a losing trade is as inevitable as death and taxes. The best way to deal with this situation is to have a very defined set of rules and the mind set and resolve to carry them through. It is also important to have enough confidence in your trading system to have a positive expectation about the result of the trade. That way, when you do take a losing trade, you know that the probability of the next trade being a winner is high.
On final thought. There is no way a gambler can stack the odds in his favor. The house is always going to win. Why do you think they have all of those big beautiful casinos in Las Vegas? At least with day trading, a trader can, with a lot of practice, turn the odds in their favor. Is it easy? Nope, nothing in life that is worthwhile is ever easy! Is it possible? Absolutely!! With enough practice, the right system, the right money management rules, the right mind set combine with the integrity to follow through on those rules, day trading can not only be profitable but very rewarding.