Day Trading Strategies: Can I Really Make Money Day Trading Stocks? / Day Trading Options Strategies welcome to looking at the markets with me David Moadel today i wanted to talk
about day trading I know that day trading is very popular if you go on
Twitter or stock twits you'll see that a lot of the postings a lot of the
messages are from day traders or are just about day trading people who buy
and sell a stock or ETF or commodity within the same trading day or they
don't always buy and then sell sometimes they might they might sell short and
then cover their short position within the same day but either way they close
out their trade within the same trading day
which would mean they if you're a day trader that works during regular market
hours that means that no matter what position you open what whatever position
you open during the day you're going to close it no matter what
by four o'clock p.m. eastern standard time and that's that's if you're trading
regular stocks or ETFs or anything like that
the options market might be open a little bit later but you're going to
close the same day and there are some advantages to this I realize especially
if you have good position size management you can avoid very large
drawdowns if you are a day trader rather than a swing trader or buy and hold
investor but overall i'm not a day trader and i don't recommend it for most
people and I want to give some reasons why and I want them to be based on the
data or the research more than just an emotional decision because I want data
and research to drive the decisions that I make with my own money
so let's take a look at some articles i found online and hopefully they're from
reputable sources i believe they are you've got MarketWatch which is related
to the wall street journal and here's an article that says the odds of day
trading yourself to a profit are lower than you expect
notice it just says a profit ok it doesn't even say being able to make a
living at it or making a large profit just any profit analysis of trading
platform data shows that eighty percent of day traders are unprofitable over the
course of a year so that's not very good odds and yet here it shows a study where
it says a people who day-trade have in nearly eighty percent chance of losing
real money over the course of a year and they also calculated a medium 12-month
loss on investment of 36.3 percent that's that's pretty huge
and that's hard to recover from and then you go down they actually mention
another study from 2010 and I know that's that's kind of old but it's from
the university of california at davis so I'd say that i would say that's that's
pretty you know reliable that's pretty credible research there and that
indicated a mirror one-point-six percent of traders were profitable net of fees
so yeah that's that's not great odds at least statistically speaking and that
doesn't mean that I'm telling you not to day trade but I want you to be aware of
what the research says about day trading before you do it
here's another website i found vantage point trading and if you like to look at
these yourself
the web address is right here at the top in the address bar here so you can you
can always pause the video and go there yourself if if you'd like to see it
and I always try to give credit whenever I use the source so this one is called
what's the day trading success rate the thorough answer and it's pretty thorough
and if you go down a little bit and this is just one person's experience you know
the the authors experience but you know that this person seems to know what
they're talking about it says you may have heard that 90 or 95 percent of
traders lose money and he wanted to find out whether whether that's really true
or not in real life experience and this person said that while he date rated r
he traded for a day trading from he says about 300 or maybe 400 people came in
today trade and only 14 including himself of those people moved on to
become regular traders producing consistent profit for at least several
years so that would be a three-and-a-half to four and a half
percent success rate and approximately another ten made money but not enough to
keep trading so if success is defined as being just negligible negligibly
profitable for at least a couple of months this the success rate would be
about six to eight percent
and that's just breaking even or being slightly profitable six to eight percent
success rate that would be a what 92 94 percent failure rate in this person's
experience so that's that's not too good
take a look at another one this the seduction of day trading and this is an
old article but what stuck out for me with this one and this one says that
there was it mentions a study that found that seventy percent of day traders
actually lose money and then there's another person here saying only twelve
percent of them have the potential to make money
and that's again not good odds and what really stuck out for me was that they
mention mark barton and if you don't know who that is that's a pretty well
i'll read from here
mark barton in 1999 shot and killed nine people at to Atlanta day trading firms
according to cbsnews.com here he had he had lost hundreds of thousands of
dollars so yeah and and another interesting
yeah that's pretty tragic and i'm not saying that day trading necessarily is
always going to lead to that but it can show you the tragic consequences of of
day trading gone wrong and here's another interesting quote the day
traders may not even know what the company is they're just buying a symbol
going across the computer screen
they're betting that the stock is going to go up in the next two minutes so you
know I don't believe in trading based on based on just looking at a chart or a
symbol i like to actually know what the company is what they do you know I I
don't get too heavily into fundamentals because fundamentals are not everything
there's technical analysis there's charts i get that but you know that you
should have some fundamental knowledge of what your trading whether it's a
commodity whether it's gold oil or a stock or an ETF if it's a company you
should know something about the company and and you should know what
you know what they do what they sell what they you know what the company is
all about
I'm not saying you have to know the name of every regional manager in the company
ok but you want to know you know what where's the company located how have
they
how have they been doing recently have they been profitable recently or are
they not doing well these are questions I want to answer just for my own sake
whenever I traded company alright and day traders you know i i'm not saying
day traders are not informed i'm i'm sure day traders are very informed i
hope so at least the successful ones but you know that there's some interesting
lessons here
and then one more and i found this to be the most revealing because it's based on
science it's from trade society
here's the web address if you want to go there and and this is a fairly recent
article here and its scientists discovered why most traders lose money
ok and you know there's some amazing facts here
eighty percent of all day traders quit within the first two years and you know
so when people ask me how many traders fail i usually say eight out of eight
out of 10 that's sounds about right at least with day trading among all day
traders nearly 40-percent trade day trade for only one month and within
three years only thirteen percent continue to day trade after five years
only seven percent remain traders sell winners
at a fifty percent higher rate than losers so yeah I think these are pretty
interesting
the average individual investor underperforms a market index by 1.5% per
year active traders underperformed x 6.5 percent annually so active traders seem
to do worse to statistically overall then people who leave their money in
there for a while and day traders with strong
past performance go on to earn strong returns in the future so the better you
do the better you tend to continue to do so only about 1% of all day traders are
able to predictably profit net of fees one percent that's that's pretty low
alright
so and and feel free to read this you know this is this article i think it's
pretty interesting and what's the takeaway from this article at least why
most traders lose money is not surprising to anyone after going over
these 24 statistics they say they claim it's obvious white traders fail most
more often than not traders trading decisions are not based on sound
research or tested trading methods but on emotions
alright so and the need for entertainment and hope to make a lot of
money you know in your underwear
it says but you know at home trading you know that they want to make a million
dollars in their underwear meeting just you know sit at home and rake in the
money very quickly and of course that's not necessarily realistic
for a reef for a retail individual investor
alright so I hope I was able to give you some perspective and some food for
thought
as far as day trading goes and trading overall alright if you're not ready to
accept those odds then perhaps day trading is not for you
I'm not really a day trader in particular I mean if it if a trade is so
obvious that i feel like i just have to take it then I will but that's that's
pretty rare i prefer swing trading i prefer to give my trades time to work
themselves out rather than having to be right
immediately the same day alright so if you need more help or if you'd like to
just put together a trading plan or if you just want somebody to talk to maybe
lost some money in the market and you're consistently losing money and you want
to learn how to do better
well i can help you my name is David Modell mo ADL my last name and my email
address is David Modell @ gmail.com feel free to email me anytime and if you like
this video by all means please give it a thumbs up on YouTube leave a comment
I'm always glad to hear from you and subscribe to my channel that way you can
get the all the videos that I put out i'm always trying to think of new
material that can help you and your financial pursuits
alright so thanks a lot and i'll talk to you real soon