Is Day Trading Really A Sucker’s Game?

Successful day traders commit to their business. Even then, most day traders fail in their first year. Brokerage firms, training services, and other traders have a vested interest in making trading seem like an easy activity that you can work into your life. But it’s a job — a job that some people love, but a job nonetheless.

Take a few minutes to read the following. 

How many ads have you seen that begin like the following? 

MAKE YOUR FORTUNE IN JUST MINUTES A DAY TRADING THE “XYZ” SYSTEM

-or-

96% WINNERS WITH LITTLE OR NO RISK TRADING THE “ABC” SYSTEM

 

The internet and Social Media is rampant with get rich quick schemes like these.  Trade long enough and you find these systems to be nothing more than scams to take advantage of the gullible and the desperate.  Unfortunately, these “get rich quick” systems, along with their indicators and chart patterns, accomplish little more than to line the pockets of those selling hopes and dreams.  Don’t be a sucker by falling prey to such deceptive practices. 

The truth is that stock market speculation is the most difficult “easy” money to make.  Difficult because it requires an uncommon discipline and tempered expectations which few possess; easy because all that is required to make money is to buy and then sell at a profit…no sweat from physical labor; no diplomas needed.  A phenomenal amount of money can be made quickly without any effort; therefore, there are those who would have us believe that it is easy to make money all the time.  It is not.  It is difficult because the unknown future is…well…unknown and it takes a few of us a little longer than others to figure out that the markets give…and the markets take, regardless of any technical indicator, chart pattern, or analyst’s forecast.   

But here is what I also see.  I see a lot of people who make money consistently by day trading.  The successful day traders I know have been doing it for years.

These are very highly skilled, disciplined traders, who use risk based methodologies and continually adapt their trading to changing market conditions.

Successful day traders are the most elite group in the markets.  They make money based on their own actions.  They are not beholden to analysts, CEO’s, the financial press, Fed/BOJ/RBI governors and heads of Central Banks, false accounting scams, or earnings announcements.  They don’t have to “wait” to make their money.  They make it today, and tomorrow, and the day after that.  And best of all, since they are always actively watching the markets and by definition are flat at the close, they are largely insulated from “acts of God” like earthquakes and hurricanes, as well as the more dangerous “acts of Man” like 9/11.COVID-19.

So is day trading easy?  No!

Do most people lose at it?  Of course they do!

But day trading is not an investment style or philosophy, it is a level of financial mastery that most will never achieve, but millions desire.  Trust me, dig into the deepest, darkest fantasies of even the most hardcore value investor and you will find someone who wishes they could be a successful day trader. And in that context I feel the same about a post entitled “Is Day Trading A Sucker’s Game?” as I do about one called “Is Trying To Become A Professional Actor A Sucker’s Game?”

Or “Is Trying To Play Pro Football A Sucker’s Game?”

Or “Is Trying To Be A Full-Time Musician A Sucker’s Game?”

Or astronaut?  Or Olympian?  Or neurosurgeon?  Or professional poker play.  Or hedge fund manager? Or Billionaire?

You get the point.

Anything that requires focus, drive, discipline, specific skill sets, and yes, even at times luck, is hard to do successfully, but because the vast majority can’t do it doesn’t mean it can’t be done.  Nor does it mean it shouldn’t be attempted, as long as you do it the right way.

That means starting off only risking small amounts that you can afford to lose.  This will get you familiar with the mechanics of the markets and give you time to develop both a solid methodology as well as learn how your emotions come into play, not only when you lose, but when you win as well.

If you find that you have the stomach for it and are becoming consistently profitable, then you can gradually increase your size and decide if day trading is something you really want to try to get serious at, remembering that it is not an “either/or” activity.  For example, even if you are a swing trader, day trading skills are what will get you optimal entries.

What you should NOT DO however is treat day trading as a hobby, something that you undertake lightly, with minimal preparation and in an ad hoc fashion.

At the end of the day, participating in the markets is only about one thing……making money. Becoming a successful day trader will bring you rewards that far surpass the majority of market participants, but it is not without risk.

If you try it and find, like most will, that day trading is not your cup of tea or that you can’t make any money at it, then you can position trade, value invest, intelligently invest, or invest with whatever passive method you are most comfortable with.