There is a classic book called,"A Random Walk Down Wall Street" by Burton Malkiel. Although this was originally written well before the rise of the internet and the popularity of day trading, he explored the idea that short term trading is basically speculative (ie, gambling).

His thesis was that the next price movement of any given stock is not correlated to the previous price or price movement. He amassed a great deal of data and performed a lot of statistical analysis to demonstrate that most of the time his thesis holds true, despite an overall upward bias in stock price movements in the long term (think decades).

Of course, external shocks will create an environment in which price movements are highly correlated for a while (like during the 1929 stock market crash), so the markets are not perfect in this regard. Ovverll, however, day trading is a form of gambling. The day traders are not worried about if the stock price fairly reflects the stock's value - they are solely trying to predict short term price movements - which Malkiel's work has shown is usually unpredictable.

Learn more about this author, Jonathan Buckley.
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