Introduction to a Day Trader’s Tale
Day trading is a popular form of investing that involves buying and selling stocks, commodities, or other financial instruments within the same day. It is a risky endeavor that requires a great deal of skill and knowledge. Day traders must be able to quickly analyze the markets and make decisions based on their analysis. For those who are successful, day trading can be a lucrative career. However, for those who are not, it can be a costly mistake.
I am not sure the exact numbers but if I had to guess only 10% of day traders stay successful long enough for it to be life long career.
The Journey to Becoming a Day Trader
Day trading is not for the faint of heart. It requires a great deal of dedication and hard work. To become a successful day trader, one must have a thorough understanding of the markets, the ability to read and interpret financial data, and the discipline to stick to a trading plan. Additionally, day traders must be able to manage their emotions and remain calm in the face of market volatility.
Though being disciplined and sticking to a trading plan may sound simple its not. When you get the alert of a $10 stock with 7m float getting some phenomenal news and that $10 stock you managed to get in at $12 sell for $17 3 minutes later only to buy back again at $15 to sell for $24 20 minutes later. You have a tendency to keep on scalping. Or start throwing more money in each time only to get burned. Eventually you buy in it dips you don’t worry at first and it keeps on dipping. And before you know your down 80%. You had made 4k in 30 minutes and now 2 hours later your down 5k.
That is day trading. What happens is you hit home runs occasionally and it creates a mindset on only jumping on the ones that you think have the homerun potential. I did really good day trading until I started losing not adapting to the changing market and lacking the willingness to go to the darkside and start buying puts.
The Highs and Lows of Trading $1.75 Million in 2020
2020 was a tumultuous year for the markets. The coronavirus pandemic caused unprecedented volatility, and day traders had to adjust their strategies accordingly. Despite the challenges, some day traders were able to make a profit. I traded $1.75 million in 2020 and experienced both highs and lows during the year, but ultimately ended up losing $6,000.
I did good with Pandemic investing in mostly good stocks. Made money multiple times on OCGN and then ended up losing money on it. Trying to hit that home run again and go bigger and bigger each time. APT was another play I remember profiting off of and not to mention Pfizer, Moderna, and 3M stocks,
To put it into perspective 2020 had 253 trading days that year so on average I traded $6,934 per day with about 4.24 trades per day. I started work at 6am and would wake up at 330am every weekday to take advantage of webull’s early premarket trading. I usually was done trading for the day by time I pulled into the work parking lot every morning. Occasionally I’d jump on something during my 30 minute lunch.
1.75 million traded in a year sounds like really big money but I never had more than 60k in my trading account at any given time. Which brings up another thing. If your successful day trading or swing trading don’t forget to pay yourself a lil something every week.
Reflections on Losing $6,000 Trading
I learned that no matter how much research and preparation you do, there is always a chance that you will lose money. I also learned that it is important to stay disciplined and stick to your trading plan. But did I really lose? Actually no, I took 6k in losses to reduce my tax liability that year because I made some good picks at buying the bottom of some stocks that took a big hit on Robinhood.
One of those was MRO aka Marathon oil. All the oil stocks went way down when the lock downs started and I got a great price made profit but looking back boy did I sell way too early. What was I thinking buying at $13 selling for $19 only to watch it go back up to $40+.
This story was meant to be a cautionary tale for aspiring day traders. It is important to remember that day trading is a risky endeavor and that losses are a part of the game. Note that most of the time I was playing with about 30-50k cash in my trading account. I was so caught up in the thrill of day trading I completely ignored what was great long term buying opportunities the Covid 19 stock caused.
Literally look at any blue chip stock chart like Apple, Tesla, Verizon, Amazon and Exxon just to name a few. Some serious money could have been made if I would’ve be patient. That’s the big reason here I focus on getting people thinking long term and dollar cost averaging over time.
It is also important to remember that success in day trading requires dedication, hard work, and discipline. With the right approach, day traders can be successful, but it is important to remember that losses are inevitable. To some extent day trading makes you a gambler but gradual and consistent dollar cost averaging over long periods of time should be a rewarding investment.