A brutal fact is that 75% of all day traders lose money. Unfortunately, new traders looking at the stock market as a “get rich quick” scheme are usually left penniless. And for every 100 bankrupt traders, there is one raging success story. This person probably turned $1,000 into $30k in under a year, and if you pay them to teach you, they’ll show you how.
Meanwhile investors who plan on holding stocks longer than 12 months have notoriously outperformed their peers: Warren Buffett, Peter Lynch, Cathie Wood, etc. The greatest investors of all time, some of whom actually founded the field of modern finance, are those who understand playing the long game.
The unadulterated truth is that the stock market is volatile, and a careful trader can make money by operating with precision within the microscopic margins that exist. A good day trader will have detailed investing plans and a list of trading rules they never deviate from. Day trading can yield excellent returns, but is inconsistent in the long run.
While day trading can yield great returns, its purpose is nearly the exact opposite of the stock market’s intended purpose. The stock market provides individuals with the ability to purchase part-ownership of large companies through shares of stock, with the idea being that an investor will buy stock and be paid a portion of the company’s profits as the company grows more valuable. And the people who have performed the greatest and most consistently since the stock market’s inception were people who used the markets for this purpose; long term investing.
Investing is about making individual, not mutually exclusive, investments that the investor believes will appreciate in value for a specific and particular reason. Each investment a person makes should include a unique thesis detailing why that particular stock will go up or down.
In general, investing is more about understanding how businesses operate than understanding particular equations or algorithms. Day traders usually lose money, and the number one rule for investing is Never Lose Money.