I’ve considered getting into daytrading many times – jumping into thet training and education aspects of it, preparing mentally for short-term trading which requires a different mindset and habits.
Daytrading works differently from passive or active investing. In fact, you can argue its not even remotely related. The decisions you make associated with your buys or sells are based on different reasons. So I would argue daytrading is closer to trading commodities like oranges or forex than investing in stocks.
This is the main reason I have not pursued this “job”. I just don’t want to “go back to school” and learn new skills which at the end of the day, have little value other than predicting intra-day movements of stock prices. I’d rather learn more about fundamental analysis, macro-economic growth trends in sectors like artificial intelligence or fin-tech. You have to remember, to be remotely competent at anything you have to put in the time. This is an immutable law that determines your success or failure as an equities investor. Jumping into daytrading because you believe you are a competent retail swing/momentum investor is a great way to lose money fast.
Additionally, daytrading, just like everything else related to making money without a job, is portrayed in an overly optimistic lense in social media (and mainstream media). There aren’t enough stories out there about the ten guys who all lost their initial bankroll as opposed to that one guy with the popular Youtube video on “How I learned to daytrade”. My philosophy is – before making a decision or committing to a course of action, be as familiar with the downside as the upside that appealed to you in the first place. If you look hard enough, (e.g. Reddit) you will find those horror stories.
Lastly, I feel like the nature of the activity is to maximize short-term cashflow. Just like a business or a job. This doesn’t align well with my current priorities. I already have a job where I am making similiar daily cashflow with a reasonably similar amount of time investment (for new daytraders anyway). If your prioritiy is making cash daily as a source of income, then you might find sticking with your job better in long run. Your job would be more stable, less risk required, and less initial investment of time and money. Would I be happier staring at candlestick charts vs. doing what I currently do? I doubt it. The entire concept of daytrading is making fast profits from short-term price movements. If profit was your only priority, this does not compare more favorably to long-term investing or swing trading. Feeling like you’re forced to close out your position before the day is over is not a constraint you want when getting into a stock.
Daytrading is not investing, so it doesn’t align well with what I like to do. I also think the risk-reward ratio is pretty poor for people starting out. Of course, I may change my opinion on this in the future. Maybe when I don’t have a full-time job anymore, daytrading could be something I start out of curiosity. In the meantime, I will believe in the power of growth through technology and innovation, and the investment opportunities that come with this.
Common sense disclaimer: This post is just a journal. It is not intended to be read by anyone other than for the purposes of entertainment. I am not in the financial services industry, so I am not qualified to give any advice related to investing. Assume I am just your neighbor standing on the curb with you holding a can of beer and shooting the shit.