Should you day trade?

 Well, if you want to save a lot of time, I can give you a quick answer: No, probably not. 

But let's get into why. 

First, let's look at successful day traders. Which are people with large firms that research and seek mispriced assets.  These firms will look for arbitrage opportunities, which is a trade with no risk that produces instant return. Something sounds too good to be true. And in a sense, it is. Arbitrage is free money, which is said to not exist. However, if there was never an opportunity for firms to find pricing errors in the market, then no one would look for them. And if no one was looking for them, then they would surely happen, as no one would be looking to find them. So logically, we know there are errors in the ways stocks and other capital assets are priced. But these mispricings are few and far between. 

The people that find them are the ones with the most resources. Now, I’m not talking about paying for stock trading advice, as generally paying for stock picks is not a good idea. Arbitrages don’t last. everytime you buy or sell the stock, you put pressure on it to correct it. Eventually with enough volume, the price will be corrected. If you could have all those trades to yourself, you would. So there is no reason to sell you arbitrage opportunities, else someone else will just take them.

No, the resources I am talking about are market data and infrastructure. Some of the best trading organizations pay millions of dollars for their own custom internet connections so they can get just the slightest edge in the market. They have teams researching stocks, the market, etc, to find slightly mispriced assets and you advance trading techniques to earn money via the trade and then cover themselves from risk and exposure.  What I am saying is professional trading organizations are sophisticated, it's not just a guy making trading decisions. 

It is a bit of a cliché, but there is a saying: if you go to a poker table, and don’t know who the sucker is, it is you. Likewise, in the short term trading world, there will be winners and losers. Do you think you will beat out the gorillas in the market that pay millions in research, technology etc., with your Robinhood account? Probably not. 

If you want another opinion on the matter, you may want to check out this Coffeezilla video.


  1. Have you ever med a super rich day trader? I rest my case...


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