The new middle-class gambling addicts: how day trading is ruining lives
- Thread starter lwlee
- Start date
But the problem is they still trade with fear and emotions because 1) they don't have a trading system/plan and 2) they don't backtest the trading system/plan to confirm that it's consistently profitable. Until you have a proven trading system/plan to be profitable, you are ALWAYS going to trade with fear and emotions. Even when you have a proven trading system/plan, you will still trade with some fear and emotions because the trading system is only backtested and never forward tested enough and since the market is dynamic that it constantly changes, you never how well your trading system will fare in the future.
The issue is not just the gambling mindset of the daytraders but also the very instrument that they trade. CFD's are not regulated nor are they traded on central exchanges. They are traded OTC basically with the broker on the other side so it is also very prone to market manipulations and unfair dealings as the traders are trading directly against the brokers on the other side and can only win at the expense of the brokers. In essence, the traders were almost set up to lose. This is actually the bigger reason if not the biggest reason for the losses of the traders that the article should have focused on exposing instead of blaming on the gaming mindset of the traders, imo.
Trading itself is hard but if one is working with regulated financial products that are traded on central exchanges, at least one would have some possibility to win but with those CFD's, the chance is virtually zero. This is not trading or investing; this is almost fraud.
Most new traders trade intra-day. Most of them lose money. We're told that most lose heavily within months and leave trading carrying a net loss. Most come in lacking some or all of - knowledge, trading experience, market awareness, discipline, risk management, even a profitable strategy.
At the very least, surely it must be prudent to not do what most new traders do?
Excuses.
I think most traders who make active decisions to buy/sell lose with day trading clearly being the most difficult of all approaches since you're executing/making decisions in real time with live prices flashing in front of you. Without a plan/edge you are likely to very quickly deplete your account as your very human nature is not made to be a successful day trader.
That said, everyone's a genious in a bull market. There's quite a few swing traders / HODLERS who made quite a lot over these last 10 years with little to no skill involved by simply being in the market.
I personally could never get intraday trading to work.
Re: being long in a bull market. This isn’t a game of who completes the hardest obsticle course. It’s a game where, who has the most money at the end wins.
Care to elaborate?
It's no surprise as directional day trading is probably the most difficult skill to master. You really need to be on top of your game at all times. In addition to knowing when to play and when not to play.
For sure. Long have been the right play for most of the last 10 years as a swing trader.
What I was getting at was that it's not necessarily that swing trading is so much easier than day trading, but simply that we've been in a bull market where just by being in the market people have made a lot of money without any skill involved.
If the last 10 years were range bound or even a bear, I don't think you'll see as many success stories from swing traders in comparison as it requires much more skill to navigate such a market.
I think swing trading is easier because if you can whether the gyrations you can be compensated for that.
you are more likely to be able to realize price discovery on some real metric rather than trading the waves of others as they jockey for that price discovery along with other motivations.
Day trading failed for me because I applied my strategy for price discovery and it didn’t give me any insight to ride those waves.
Yes. I think many day traders (myself included) trade with too high leverage such that they can't 'weather the gyrations' as you call it. That's a big reason why the failure rate is so high. If day traders leveraged down it's quite possible they'd be more successful simply on that adjustment alone.
Swing trading will usually give you better R/Rs as you can capture multi-day/week/month trades where the potential and realized reward is 10-20 times initial risk. Even with a win rate way below 50 % you can make good money as long as your R/R is in order. That's more difficult to achieve as a day trader as a too small risk means you're usually stopped out and the larger your stop the smaller your relative reward. Which means you need a quite high win rate to get ahead.
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