I think a lot of people on their way to FIRE sooner or later come across day trading. The general consensous and the data around the topic is quite clear. It’s a money trap and basically a glorified casino (especially if you trade very short movements of stocks by using high leverage).
I had the opportunity to talk to both a Swiss and an US daytrader that have audited profits (we talked about taxes etc. and they showed me) in the low two digit millions. Both of them are regular people without any investment banking background and both of them do this and have success rates of over 60% on their trades. Also, no none of them wanted to sell me their “strategy” or a course, etc. I watched some YT videos on the topic as well, but most of that on the other hand seemed quite fishy.
Since there definetly are profitable traders (given my annecdotal example, which uphold profitability over years of trading), I just wonder and hope for an unideological assessment and discussion.
Is it possible to be a day trader AND be profitable doing so over long periods of time as a regular guy (not working next to the exchange and without insider information)
Because I am seriously considering this as a “side hustle” - in a sense that I’d start doing paper trading and see if I can be profitable over a year or so. Putting in real money would imho only make sense if you can be profitable in a simulator over long periods of time.
I am very aware of this, which is why I would never trade before being somewhat sure I can be profitable in a simulator. I am not sure about losing 90% of their money though, I just know that most in fact do lose money, but not how much .
Not the right post for this forum. The VT-and-chill cohort will soon step in and punish you as you deserve!
Jokes aside, I guess there may be strategies that can deliver results over sufficiently long periods if applied carefully (e.g. I’ve just decided to start experimenting with weekly put spreads on SPXW). But if you become too greedy, the damage from a single bet gone wrong can wipe out months, or even years, of gains…
I am doing VT (rather VWRD) and chill and it has given me great success (Gross Worth 1.4M, Net Worth 800K). Nevertheless I try keeping an open mind - I thought about basically doing what Ross Cameron does (YT channel which doesn’t seem shady) - I guess that’s momentum trading on smallcaps. But again, this would only be a thing if I was actually profitable in a simulator.
The good thing ig is that IBKR is a good broker for this as well.
Ok, assuming that one believes that certain people can predict the market (as a whole or certain company’s market valuations):
At what point would one be sufficiently convinced to be capable of predicting the market to the point that one would take the risks that are necessary to take, so that active trading would make a meaningful difference?
(I’m not convinced the theory is right in the first place, but if I were, that would be the question I would ask myself)
Active trading would not be a substitute for passive investing imho - at least not for me. And depending on the profitability of your trades, you don’t even need to be right 50% of the time. In essence, Trading is pure risk management and simple math. I don’t beleive in predicting the market - but maybe you can jump the band wagon with small capital and get out at a suboptimal, but profitable spot.
Moe like taking 2K Bucks and trying to make 25% a week or so.
Believing in predicting the market is a prerequisite for active trading though, nothing else makes sense.
That taking 2k is a bit vague of a strategy… Those 2k are going to fluctuate, what then? Just taking 2k today and trade with whatever comes out of it until the end of your life?
@PhilMongoose I enjoyed the post though you forgot they used the word “try”
Whay would a youtuber tell the success secrets??? They just sell something.
I tried daytrading (years/decades) ago on forex, commodities and stocks. For me it didn’t work out. All profits over months destroyed in a single bad trade.
But far more important: as I quit, I had time again. No more endless hours on charts, news, yt, twitter, forums… Never again.
Well, we are in Switzerland so chances are, they could just take 2k for daytrading once in a lifetime without it upsetting their finances and without starting a whole thread about it (though admittedly, people start threads about all sorts of minor financial decisions in finance forums - I’m sure I have -, sometimes because they obsess, sometimes just for the sake of it, sometimes for the mental stimulation, and sometimes for the fun of it…)
So the whole question that remains is… what will they do if they “do not” (make 25% per week)?
A simulator will never teach you real world trading. You have nothing to lose there and no real emotions. You’ll act completely different if it’s your real money at stake.
I can 100% assure that it is a lit more than that and anyone who told you that, you should stop following for advice.
I mean I am not stupuid enough to think that this is realistic for someone starting to do anything… I guess the real amount of work would be 1+y worth of drilling in a simulator +2-3h of studying a day to become somewhat profitable in 2-3y or so.
Sounds like a reasonable investment for being able to beat the market.
How high do you think your chances are to beat the market after this amount of studying?
Let’s agree that defining “being somewhat profitable” = “being as profitable as the market” does not justify any amount of studying.
I mean - there are very different approaches to trading various things. You can trade low volatility assets wiht high leverage, low leverage and high volatility, do fundamental analysis, just analyze charts and trade momentum, etc.
The base chance of a stock going up or down from when you trade is 50% - I think a non institutional investor in his home can not really compete on the fundamental side and if anything can only follow the capital and get in and out at the right time (preferably very short time).
I think if you do not make sizable returns with small capital, it isn’t worth it. And you are also able to make such returns, because your trades don’t really move the needle of a stock that much.
EDIT: Also, I know that trading in a sim is not the same as trading offline, but if you can’t be profitable in a simulator, how would you be profitable IRL, so it’s clearly better than just winging it.
The answer is that nobody really knows if you will be good at it until you try so you just have to go and try it and I guess you also have to enjoy doing it otherwise it will be a big sink of time and money into something that might not yield a return.
I know the passive investing philosophy and it works and worked wonders for me! This however is just a new stupid Idea I have, there are much less useful things that get discussed on here.
No, as I said, with a small account, you would want to have “green days” of 10% or so, while having red days that are lower (surprise). So you’d aim for a 25% weekly return.
If you trade stocks that do 150% a day or so, this isn’t that much and it’s what momentum traders usually do. You need to capture a very small amount of that to profit off of it. And you’d also not be trading a lot I guess - maybe 1-2 trades a day, sometimes no trades (if your criteria for a trade aren’t fulfilled). If you can’t make 10% a day on a 2K account, it’s probably not worth the time invested and I might as well just continue working .
I’m not a crypto or finance bro that finds pleasure in pressing buy/sell - I just talked to people and watched some videos of people doing things.
There are like 3 or so trading youtubers that keep the selling very low key, while keeping their informational content quite high + they share audited proof of their profitability that’s easily checkable and they encourage you to check it yourself.
From my understanding, this shouldn’t happen - This is the risk management part of trading, which is why the “serious” sources I found on this all don’t recommend excessive leverage and CFD (like x100 BTC or whatever).
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though you forgot they used the word “try”
(though admittedly, people start threads about all sorts of minor financial decisions in finance forums - I’m sure I have -, sometimes because they obsess, sometimes just for the sake of it, sometimes for the mental stimulation, and sometimes for the fun of it…)
