Is day trading worth it? If this is the question you are asking then this article is for you. I am addressing this post to the students, learners, and new traders. I can’t think of a reason why experienced trader would ponder this question.
If you are here to be told yes or no, then my answer to you now is no. Walk a way, matter of fact, walk away from trading period. Anyone not capable of deriving their own sound judgement through research and logical analysis and be responsible for their decisions does not have the trader in them.
I intend to discuss is day trading worth it with you by presenting all the facts that I know through knowledge, research, and personal experience. By the end of this article I will present you with my conclusion. However, it is entirely up to you what you make of this knowledge. If you agree with me, I have some suggestions in the end that may help you becoming a day trader. It is entirely normal to disagree with me completely. I promise you there will be no hard feelings, quite frankly I don’t care about how you feel. I care about you as a trader and as a trader, your own intuition and judgement is forever your best friend.
At the same time, this is also not a technical post. There will be no tips, jargon, or tax break downs. I really don’t think you care about those things now. I will briefly touch upon the major differences between schools of trade and investors to widen the horizon and give investors the respect they deserve.
Is Day Trading Worth It: Get Rich Fast
To answer this question we must explore a few options. Firstly What do you mean by is day trading worth it.
Most people explores day trading because they think that there are vast wealth in the market just waiting for them to get rich quickly. That statement is absolutely half true. There are vast wealth in the market for sure, but can you benefit from it and can you do it quickly is another story entirely. Matter of fact, most day trader just do okay. Probably not much than the desk job that is paying your while reading this article. I feel that I don’t have to elaborate more on this, I think you can agree with me base on everything else you’ve read so far.
Is Day Trading Worth It: Stability and Freedom
So get rich quickly is not that easy through day trading, then what about financial stability? Is day trading worth it in that sense? If it is not vast riches that you are hoping for perhaps you can be your own boss and work on your own terms as a day trader. I’m a CEO of a modern trade company, digital asset such as stocks, Forex, commodities is something I trade. It sure is nice to wake up and do whatever you want. No boss to tell you what to do.
That is however not entirely true again. Putting all my other duties aside because it is irrelevant and I can’t think of any other successful entrepreneur that works less than 8 hours day. Hell I’m writing this article at 11 pm on a Friday night, but I do it because I like it. As cliché goes, don’t do anything you don’t enjoy.
Let’s assume all you do is day trading. Stock market typically opens at 9 am and closes at 4 pm. So for those 7 hours a typical day trader is in front of their screen(s) looking at charts and tickers. That optimal swing only comes once a while and you better be there to get in and get out. Yes, I know there are tools and computer programs, but you have to be there right? Autopilot does most of the flying but would you be on a plane without a pilot?
So that is 7 hours dedicated to your day trade. By the way there is no lunch break. It is true that unlike value investors day traders are mostly technical traders. If you don’t know the difference I will get to that later it is not that important at the moment. However, you still have to study the market! How are you going to know what is coming if you don’t prepare before and study the asset you intend to trade.
Lets say you now have to wake up at 6 am to catch the early news, do you exercise, eat a healthy breakfast and maybe meditate a little to get your mind ready. Day trading is extreme mental work. You need to make sure the market sentiment is as you predicted the night before. After the market closes at 4 pm it is a good idea to take a couple of hours to absorb what happened and plan for the next day too.
7 hours of mentally exhausting day trading and 5 hours prep work. That is 12 hours of solid good work that may not pay you more than your boss at the moment. I’m not going to take away your weekend for now, that is just mean.
Is Day Trading Worth It: LOL?
I’m not really making a case for day trading at the moment am I? Here is some good news, when you really start to get good at day trading. There is a few book worth of knowledge in that alone, so I’m not going to get into it, you could be making good income and have the luxury to not trade when you don’t feel like it.
Who am I to stop a millionaire from taking a vacation to the Maldives.
So yes, there is definitely stability and freedom when you become a good day trader. I can’t teach you how, trust me no one can, but a good book to start is the Reminiscences of a Stock Operator by Edwin Lefevre. It is a classic that will give you the trader’s mindset of one of the best technical trader of his time, Jesse Livermore.
Is Day Trading Worth It: Things to Avoid
I’m being blunt here, don’t bother with pink-sheet, OTC and penny stocks. Don’t know what they are? Good, you don’t have to. Have you seen Wolf of Wall Street? Watch it when you can. If you have, then the news is you are not Leonardo DiCaprio you are the sucker on the other end of the phone (computer) when you try to trade those.
If you are not part of the pump, you are the dump. I am over simplifying things here but because those market are poorly regulated there are tons of wolves just waiting to prey on the curious lambs (you).
Many new day traders end up throwing their money away on penny stocks because like name suggested those stocks are cheap. These same stocks also showcase amazing growth at one point or another. It is the perfect pump and dump trap for new traders that are capital strapped.
If you have couple thousand dollars and you want to day trade chances are your only option is penny stocks. BRK.A is $216,220 a share. GOOGL $800, AAPL $113. You get the point, with a small start-up fund there is nothing decent you can buy in volume to making money on the swing. So naturally many people end up buying 20,000 shares of XDE.Pink (totally made up don’t google). Say you picked up XDE.Pink for 10 cents a share, with $2,000 you end up with that many shares.
You are confident, because lots of people on a stock forum says its going to rally to a buck twenty by noon, and it sure look like it. WOW that is more than $20,000 dollar from your $2,000 in a jiffy! Chances are and I will put my money where my mouth is that will never happen. What most likely end up happening is you ending up with 20,000 shares of XDE.Pink worth of junk. Depends on where you go in on the pump and dump, you’d be lucky to come out with some money to cover your brokerage fees.
My verdict, stay the hell away from it. If you have limited capital there are better things than those markets. You can always use the money to buy some stock books too. Knowledge is sexy.
Is Day Trading Worth It: Capital
At this point I probably unveiled one of the biggest hurdle for new traders. If you don’t already have a lot of money it is difficult to start trading. If you have millions of dollars why would you day trade? Go read the Intelligent Investor and become a value investor, like Warren Buffet.
So here is a conundrum that I have presented you. If you already have a lot of money and want to become an investor I don’t recommend day trading. As Benjamin Graham wrote in the Intelligent Investor if you must day trade never put more than 10% into the swing. In the long run value investor always come out on top.
Here is a secret, if you want to try at day trading without risking too much money (or none at all) there is a type of market called the Binary market that lets you learn everything you need to learn as a day trader with as little as $20 to start.
I’m not going to explain too much about the Binary Market. You can read more in this post. What you do need to know about this market is that it is regulated and you do need all your day trader technical skills to be successful as well. Think of yourself a super day trader in this market. The difference is you are trading on the market not in the market. For example you can trade $1 on GooGL because you are not actually buying a share of google, instead you are simply participating on the prediction of the market movement. Exactly the type of skills you practice as a day trader.
In Binary Market you can trade stocks, currencies and commodities. There are more depending on the firm offering them but those are the norm.
Is Day Trading Worth It: Excitement
At this point I think it is fair for me to mention another key benefit of day trading. Excitement. Day trading is very exciting no question about it. Remember the cliché do what you like. Well, it is very easy to like day trading, nothing gets the adrenaline going when you caught the momentum in the perfect swing. Making money out of it in the end is almost a benefit to the ride.
In my opinion I think that is why day trading is worth it for so many people. If you happen to become good and make a great living out of day trading there is no job more exciting.
Nothing is more rewarding to a man than the affirmation that he is correct. And get paid for it.
Is Day Trading Worth It: Binary Options
At this point you’ve had enough of me. I said from beginning you may or may not agree with what I said. However if you are as I said learning the market, trying to explore more about day trading and finally decide whether is day trading worth it, then there is not enough articles you can read to make sense of it all.
The best way is to put yourself in the seat of a day trader, and my recommendation is to do it with the least risk and potentially highest return. Try it with Binary Options.
Hop over to these brokers, see what they are offering, sign up for a free demo account and start day trading!