"How I turned 100$ into 5000$ in a day with this ground breaking strategy" or "Do this to get rich in 20 days trading X with my super sniper, triple zone analysis, hamster diving strategy - works every single time!"
And I could go on and on with similar sh*t that will flood your news feed / social platforms once you begin to educate yourself in terms of investments and finance.
The reason why there are so many scams, that get advertised with messages similar to the ones I showed above, is because people find the idea of getting rich fast almost irresistable.
Well, say hello to DAY TRAIDING! Think about it ... if you could get a daily a 2% on your money, hell ... that would be at least 60% per month.
There's a reason why on almost all broker websites there's a message that goes something like this "CFDs are complex instruments and have a high risk of losing money quickly due to leverage. X% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money."
At this point you might be wondering what the hell are CFDs. Well, CFD stands for Contract For Difference. Simply put, in enables you to buy or sell stocks with leverage. Also, you can sell a stock that you do not own. This is what's called to "short" the stock. Let's look at an example. Say you want to short stock X that currently trades at 100$. You don't buy the stock, instead you bet on the fact that it will go down. You sell it at 100$ and, when you close the position, say at 80$, you bank the resulting 20$. It's kind of like the broker buys the stock for you at 100$. So, you "owe" the broker one stock. When you "buy it" at 80$, you give the broker back that one stock that you owed him and you keep the difference.
This type of trading has been banned in the USA and a couple of other places; however, in Europe it's still legal. The "equivalent" for CFDs in USA are Options/Futures. They don't work exactly the same, but the main idea is pretty much the same. For more details about the differences between these, I suggest you check out this link
This is what most day traders use for their day to day traiding. And there's a reason why brokers have been forced to show the percentage of retail traders that LOSE MONEY with these instruments.
Some of you might say ... "Dude, you don't know what the f*ck you're talking about ... I'm sure I can trade better than those X% which are loosers. After all, I studied day trading concepts like ICT or I have this great strategy based on these technical indicators!"
Day trading is a VERY COMPLEX BEAST! It's a mixture of psycology, correct management of risk and ... LUCK!
I tried day trading for about 2 months ... and I managed the performance of breaking even. I did not lose money. I did not make money. I studied all of the free technical indicators that most trading platforms provide. Leading vs lagging indicators, fine tuning for different timeframes (5 minutes, 15 minutes, 30 minutes, 1 hour, 4 hours), incorporating support/resistence levels, adjusting for stop-loss hunting, carefully looking for divergences on multiple indicators, etc. You name it, I probably looked over it. I watched a lot of videos from real day traders, people like Tom Hougaard and Dr. David Paul, whom, by the way, trade without any technical indicators - just the "naked" charts - or an EMA (Exponential Moving Average) at most.
Also, consider that, depending on your broker, whenever you place a trade, you're at a loss because of the rates that the broker has; these rates can be fixed or floating/variable. As an example of a fixed rate, if stock X trades at 100$, if you want to buy, you'll have to "pay" 102$ and if you want to short, the price will be 98$. So, immediately after you "pull the trigger" on your trade, you'll be in red regardless of what you went long or short. These margins are the broker's way of making a win regardless if your trade is successful or not.
Let's look at day trading objectively. What can happen to a stock's price? It can go up, it can go down, or it can remain at the same price (kind of rare, but it happens). So, just by flipping a coin, so to speak, you might say that you have a 50-50 chance of correctly guessing the way the price is going to move. These odds are not enough for making a living out of day trading.
There's also the psycological factor that people tend to risk more in order to make up for previous loses, thus exposing themselves to losing more and more and more, in the hope that the next trade will get them to at least break even. Also, when you are in profit, you immediately tend to "protect" said profits thus not letting them run. You make 1$ in profits and you want to close the trade to secure the win. This is pretty much a recipe for disaster in day trading.
"Courses/Education - I need to get myself into "legit" day trading courses that can teach me the right way of executing day trades."
Before you go on an online courses shopping spree, ask yourself this questions - If you have an edge and you are constantly making money out of it, would you want to reveal this method, thus reducing its effectiveness? Or, would you keep it to yourself and continue making more and more money out of it?
Don't be deluded - day traiding is a probabilities game. No matter what strategy you opt for, you will have losing trades. That's 100% guaranteed. And, there's the famous saying that the "markets can remain irrational longer than you can remain solvent." If you have a really bad risk management strategy, and you use, for example, 25% of your capital on each trade, it takes 4 bad trades to get wipped out. If you use high leverage, the risk of going bust increases dramatically.
Also, with each bad trade, your capital falls and, in order to be profitable, your successful trades need to have higher and higher returns.
Here's another thing to consider - if you use CFDs and want to keep a trade "on the table" after the markets close, in general, you will have to pay the broker a fee.
All in all, day trading, in my opinion, is a very dangerous game. You need to be icecold when it comes to losing money, so that you avoid trading based on negative emotions (fear, anger etc.); you also need to be able to maximize your winning trades so that when you get to the bottom line, you are in profit.
Finally, consider the capital it takes to be able to make a living out of day trading. Some of you might say that you can start small an maximize gains with leverage. Sure, you can use leverage for increasing wins, but keep in mind that the leverage applies to losing trades as well. Say you use a 5X leverage on a trade on which you bet 10$. Sure, if you are correct, and the trade goes your way, you'll have 5 times the gains (for example, instead of 2$ in profit, you'll get 10$). But if you are wrong, and the trade goes against you, you will lose 5 times the amount (instead of minus 2$, you'll lose 10$).
So, after "all is said and done", is day trading a "scam"? NO. It is perfectly legal and SOME people actually make a nice living out of this. However, don't be fooled by "magic" strategies or influencers showing you Lambos and great mansions. I can rent a Lambo for a day and shoot 30 videos with it and brag about what a great trader I am and how buying my course will make you a millionaire in X months - oh wait, that's what a crypto influencer did, a while back 😂😂
If you got to this point and you are considering day trading, my advice to you is to start with a demo account (paper money) and experiment until you are confident in your strategy. Watch online videos of actual traders who trade online. Educate yourself with all of the free content there is online about day trading - believe me, there's A LOT! If you do "pull the trigger" on a live account start with a small amount BECAUSE the emotions when trading paper money ARE NOT THE SAME as the emotions you get when trading your own hard-worked money. Good luck and may the odds be ever in your favor!
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