How Hard Is It To Make Money Day Trading

The fact that so many people fail at day trading doesn't mean that it is a poor strategy.

By JAMES "REV SHARK" DEPORRE

Dec 08, 2020 | 01:54 PM EST

In the 25 years that I've been trading, I've seen hundreds of articles that warn about the dangers of day trading. These stories always appear as a bull cycle starts to slow and it becomes harder to blindly buy and make money.

There is a new crop of these articles appearing now as some of the recent Robinhood and WeBull traders are finding out that trading is much harder than what they keep hearing on social media.

This article from NPR is typical of the anti-day trading theme. The author cites statistics showing that most day traders lose money over time and then finds an individual who was "wiped out" of his account.

Yes, it is true that day trading is very hard and that the majority of people that try it will lose money. That is exactly why good traders can make so much money. The fact that it is hard and that you have to work at it is the reason that it is so lucrative for those that do it well.

There is a gambling aspect to all investing and if what drives you to trade or invest is an adrenaline rush then the great likelihood is that you will fail. Trading stocks is very different from sports betting and if you don't recognize the differences you will be handicapped.

The fact that so many people fail at day trading doesn't mean that it is a poor strategy. It illustrates how many people never bother to learn what they need to know and never really make a real effort. They just keep repeating the same behavior over and over until they are wiped out.

Trading is a zero-sum game to some degree. For every dollar in profits that one person is making, someone else is losing. It just happens to turn out that the 20% of people that do make money are taking it from the 80% or so that are losing.

Many business journalists like to characterize those that lose money at day trading as "victims." However, these traders may have unrealistic explanations or never bothered to really learn how to actually trade.

Next time you read one of these stories think about the fact that there is someone on the other side of all those bad trades. Someone who is working hard and making a very good living doing the opposite of what the other person has done. I should know, I've been doing it for 25 years.

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