Day Trading is a Great way to get Rekt, Study Finds
Making money in the financial or cryptocurrency world isn’t as easy as one might think. The volatility of Bitcoin and altcoins is appealing, but it won’t net traders consistent profits. A study by the University of San Paulo Brazil confirms day trading isn’t something one should pursue as a full-time job just yet.
The Appeal of Day Trading
Even outside of the cryptocurrency industry, there are plenty of ways to make money with day trading. Financial markets tend to repeat their patterns every so often. When timed correctly, even the most novice of traders can learn how to spot such cycles and money from it accordingly. This is what makes the entire day trading concept so appealing One doesn’t even need big amounts of money to do so either.
Unfortunately, the appeal of day trading also has a different side to it. This type of trading behavior si far more prone to financial losses compared to other methods. Not entirely surprising, as one needs the markets to perform every single day, either in an upward or downward direction. As more and more traders try to follow the pre-existing patterns, the chance of a sudden market reversal becomes much greater. This is why day trading is often a good way to lose money, rather than make a profit.
The Study Confirms
Based on the findings by this particular study, it is evident that day trading is not a full-time job anyone should pursue. While there is always a chance one might luck out and never sustain serious deficits in the process, the chances of it happening are comparable to those of winning the lottery. Everything is possible, but achieving it can prove to be a lot more difficult than most would assume at first.
According to the study, nearly everyone who pursues day trading loses money sooner or later. As such, it is often best to do it for one day, as that time frame yields the best chance of pocketing a profit of some sorts. The longer one extends their trading streak, the slimmer the odds for profit become. This is primarily due to markets responding in unpredictable ways, as well as traders becoming overly confident as to how they will continue to make a profit with very little effort.
Markets Aren’t Designed to be Beaten
It is rather intriguing to learn how most traders see the financial markets. To most, it seems to be a matter of beating the odds and the markets alike. While that train of thought is only normal, it is also completely beside the point. There is no such thing as “beating” market trends as even the most advanced and sophisticated trading units suffer from setbacks now and then. As such, what hope can one individual have to prove them all wrong?
That doesn’t mean one should not pursue the option of day trading. Instead, it can be a viable additional revenue stream, albeit users are advised to not spend any money they can’t afford to lose. Doing some “demo trading” for a month or two is also an option to explore. It will provide viable insights and help users determine if they are cut out for this mentally challenging task every single day of the year.
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JP Buntinx, Khareem Sudlow