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Day Trading is Folly

Advertisements for some day trading systems make investing look like a virtual bonanza where everyone’s a winner. Any company guaranteeing huge earnings is feeding you a load of bull. Some people win and some people lose. Those who believe the hype and have no strategy will lose. Zero-Sum.

Ad: If an ad promises…The potential to make a six or seven figure annual income from trading is at the ends of your fingertips.
Fact: It’s possible, but not probable, and these guys guarantee it. Trading is risky. You need a plan to win. The false hopes of the day trading is not a plan.

Ad: If an ad promises…The absolute best trading system with a profit-to-loss ratio of 12-to-1 and an average return better than 18 percent per trade…
Fact: Anyone who guarantees 18 percent a trade is not being truthful. You can’t predict the markets. There are ups and downs.

Ad: If an ad promises…Our recommendations returned an average annual return of 250 percent. If you just follow our recommendations, you will make money.
Fact: Just following a recommendation is a sure way to the poor house. To trade successfully you must understand the trading approach yourself in terms of why it works and what it is trying to do. Guaranteed returns are flat out lies. No one can guarantee a return.

Bottom Line: Day trading is the dirty underbelly of the marketplace. It is based on false hopes and false dreams.

Daily Top 10 Winners

One of the favorite devices used to keep day traders interested is the daily top 10 winners and losers in the equity markets. Take a look at the top 10 gainers during random days over the next week. Notice how many gainers are bulletin board stocks trading between 1 and 5 dollars? Why does the media often lead with news of penny stocks showing 20-30% daily moves when in all actuality those shares are being manipulated through internet chat rooms? Because those top ten lists keep day traders spending their money.

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