Risk of Day Trading: Why Trading is a Calculated Risk and Not Gambling
.
LISTEN IN YOUR CAR or ON YOUR HEADPHONES
PREFER TO READ IT?
Full Transcript
Risk of Day Trading
When it comes to the subject of day trading many people think of it as very high stakes, win big – lose big with a lot of financial risk. And this is probably due to stories of people making life changing money in trading and also the horror stories of those who lose big in the world of day trading.
But what is the major risk of trading and can you really reduce this risk and trade safely? The truth is there is always the risk of trading in terms of financial losses. But with the correct approach including risk management and position sizing among other risk reduction measures the most successful traders use, day trading can be very profitable while also being relatively less risky than other financial investments or business ventures.
And that’s what I want to get into in this post – the risk of trading and how I manage risk and how the pros do it while still making pretty decent profits in an activity that comes across as much too risky for most people.
I won’t get too much into specific risk management practices that all traders need to implement in this post. But understand that risk management is part of the fundamental knowledge in day trading and financial markets that all traders must have in order to find success and become profitable.
So in this post instead of talking about specific strategies to manage and reduce the risk of trading that all successful traders implement daily, I want to talk about the risk of trading in comparison with the risk of certain jobs where you are not even guaranteed real job security and how trading is really a calculated risk.
So let me tell you about a conversation I had with a friend about the risk of trading and why it really isn’t gambling at all and in fact it’s a very calculated type of risk that can even be less risk than a 9 to 5 job.
How Most People Perceive the Risk of Trading and How I think Approach it
So I had an interesting conversation the other day with one of my girlfriends. We were just talking about work and you know, what I was doing. And she was, you know, questioning about the risk management of trading. Right. And that oh, that it’s so risky.
And I would say, yeah. Obviously, there’s some risk involved because, you know, you’re putting your own money on the line. It’s kind of like investing in your own business and wondering what’s going on. But more on a daily basis.
And she had like a little aha moment for a minute when I was explaining to her that she remembers she recalled one job that she had. She said that every day her and the colleagues and her other colleagues would arrive to work and look outside to see if their belongings were not on the street.
There was absolutely no job security at this place. Right. I don’t remember what it was. It was some corporation. And every day they would see if somebody’s stuff was outside, because if it was outside, that means they were fired without any notice. And this is how they worked. Every single day they would arrive to work and look outside.
Can you imagine living with that kind of fear every day and just go into work is risk in itself. Right? So I was thinking, what day tweeting has the same kind of risk involved, but you are 100 percent responsible for that risk.
You wouldn’t go into a trade without knowing what you are doing, right? I mean, then you’re just a gambler. And day traders are not gamblers.
Yes, there’s risk involved in day trading, but it’s very calculated risk. You know exactly what you’re doing. You know exactly how much you’re putting on the table.
So when people are going to bring up, oh, is day trading risky? It’s not any riskier than just a regular job that could get rid of you without a moment’s notice.
But this way, at least you are in control. You know what you’re doing. So it’s not that risky. So if you have any questions about risk management and learning how to deal trade, I’d be happy to help you because day trading is not complicated. It can be quite simple and it does not have to be risky.
The Risk of Trading: Why People think of it as High Risk
No matter how many people who have ‘real jobs’ that I speak to, they all regard day trading as super high risk. And I think this is for a few key reasons that I highlight below.
#1 Lack of Understanding of How Day Trading Works
Many people don’t fully understand how trading works. They see it as a quick way to make money without realizing that successful trading requires strategy, analysis, and very good risk management.
#2 Media Portrayal of Day Trading
Media often sensationalizes trading stories, focusing on extreme successes or failures. This can create the impression that trading is akin to gambling, where luck plays a predominant role. But as I discussed above day trading is a more calculated risk and not like gambling at all.
#3 Emotional Decisions Lead to Big Losses
Most of the big losses that are highlighted in stories people here about trading and by the media are due to emotional decisions. And the truth is the best traders (and the most profitable traders) are those who have a high level of emotional control.
Traders who make impulsive or emotional decisions can resemble gamblers chasing wins or trying to recover losses. These behaviors contribute to the perception that trading is based on luck rather than analysis.
#4 Most People only Hear about Trading High Volatility Assets
Trading in highly volatile assets, such as cryptocurrencies or penny stocks, can amplify the perception of risk and speculation. While these assets can offer significant returns, they also come with higher risks.
And there are definitely a lot more opportunities for trading outside of penny stocks and crypto such as futures and blue chip stocks where the volatility is still relatively high but much less than what people think they are.
#5 The Vast Majority of Traders Fail
Trading is hard and making a profitable career in trading is even harder. I think that most people hear a lot about trading from people who have given up and lost out because they don’t have the right trading education and training, especially when it comes to risk management in trading. And this ultimately leads to losses and even reckless practices that look like gambling to people who don’t really understand day trading.
While trading involves risk, it differs from gambling in that it can be approached with a calculated strategy, thorough research, risk management techniques, and a long-term perspective. Traders who understand these principles are more likely to succeed and avoid the pitfalls associated with gambling-like behavior.
Learn Day Trading
Let`s get to know each other. You can learn more about my journey and how I started here.
If you want to learn more about how to learn day trading and start day trading on your own with ease and confidence – Sign up for the FREE How to Day Trade
After that, if you have any questions you can always ask me at Thetraderchick.com. Come to my Facebook group and introduce yourself, let me know your experience with trading.
Are you ready to go beyond basics, learn day trading and start your dream life – check out Day Trading Courses.
Last Updated on July 28, 2026
