I have been trying this whole “day trading” for almost a year now and here is my take on it.
The concept is to buy low and sell high to make money. Sounds easy enough, right? If only it was that simple. It is extremely hard to time the market and to make any real money from it.
I use an app called Robinhood to do my trading because it is FREE and it won the prestigious Apple Design Award. Sounds good enough to me. I didn’t want to pay money for each trade.
How does the app work?
With the Robinhood app, I get 3 free trades per 5 business days. What this means is if I were to use a trade today (buy and sell on the same day), then that trade won’t be available for another 5 business days.
Now I will only have 2 day trades left until the 5th business day. So if I were to buy today and sell tomorrow, then I don’t have to use one of the free 3 trades.
Why is it called a break-even game?
For the first few months, I was losing money and then slowly I was making money and before I knew it, I was up $3800. It was almost an instant overnight kind of thing. My brain was probably lighting up with endorphin. I kept checking the app, the excitement, it was exhilarating, then…
…I got GREEDY.
I kept forgetting that I set a goal to make $200 a day, so why didn’t I sell when I was up $1000? GREED!
And just like that, it was all gone within a week and then some. Before I knew it, I was more than $7000 in the red. Whenever I was in the negative, I’d tell myself that once I break even, I’d get out. But when I start making money, I’d get excited and it would suck me back in.
The reason why it’s called break-even game because all you do is trying to break even!!! The logic is simple: buy low, sell high. But for some reason, it seemed I kept doing the opposite.
Why Is Day Trading a Bad Idea?
The truth is that a very small percentage of people actually make a living doing day-trading. The rest of us, we’d be lucky just to break even. However, I look at it as a way for me to learn and I am very careful with it. I somehow managed to make $10K for 2017. The year ended good as far as that is concerned, but then I started 2018 with me losing $3K of that $10K.
There are a number of reasons as to why day trading is a bad idea, but the biggest reason why people don’t make money is that it is heavily manipulated. Yup, the reason why day trading is not a smart way to “make money” is because it is being manipulated by people up top to make THEM money.
You’d be better off to invest your money in S&P500 and that is where most of my money is at. Stock is just a small amount that I do for fun.
How Do I Pick My Stocks?
I started out with some of the stocks that my brother and friend were playing. At one point, I was playing with 9 different stocks at the same time and it was not a good idea. However, I did find one stock that has been making me money. It’s all about trial and error, but most importantly, this is NOT a way to make a lot of money or to get rich.
And don’t forget that Uncle Sam takes half of what you make too. Bummer.
If you have money and want to start investing, I would avoid doing day trading. Most people don’t make money from it. You do hear stories of people making big people from penny stocks. For every person that makes it, there are countless that lost money – you just don’t hear about it.
Your best bet is to invest in S&P 500. It’s the top 500 companies that make up the US economy. It’s not a get rich quick scheme, but it takes the guessing out of the equation.