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Quote

“You don’t need a $65,000 truck just to pick up groceries and run to Hobby Lobby.” - Chad Money Matters

Buy High, Cry Low

Day trading is a fad that many fall in love with.

The dream of making hundreds, if not thousands of dollars in a matter of minutes simply from a few clicks on your computer. Who wouldn’t be attracted to this opportunity?

Let me tell you though, if there was a catfish for market activities, day trading would be one.

In today’s piece, I’m going to share my day trading journey (basically how much I lost) along with three takeaways on why this “hobby” ends in a drained brokerage account for most individuals.

Let’s get into it. 👇

My Trading Story

Funny enough, it all began on Twitter. A good buddy of mine and I came across a trading service that offered options education, live chat rooms, and trade support. I’ll leave the name out because this service disbanded after the “lead trader” essentially took an extended leave.

Long story short, we split the $700 enrollment cost, watched the videos, and began slinging options with our tiny $1,000 accounts (broke college kids).

For 6 months we paper traded, aka practiced trading with fake money. Then it was time to take the training wheels off. On my first real trade, I bought a call option expiring at the end of the following week, ready to begin my journey to millionaire status…oh wait…what..why are we going down.

-$50, -$100, -$200. I rushed to get a fill and finally closed my first trade solidifying a $300 loss in under a minute.

Did I take a step back and realize I just lost 30% of my account in a matter of seconds? Nope, the adrenaline and dopamine hit from watching every tick of the chart had me hooked. 

Every morning over the next year, we would reserve a study room and display our charts on the TVs with enough indicators to rival the space shuttle’s flight controls. Here is a picture of my setup that made it look l like I knew what I was doing.

We had a blast, but to say we got rich would be the opposite of what took place. Eventually, our engineering classes got in the way and we had to take a step back from trading stopping my losses at around $1,000.

Day trading was a waste of money and even a bigger waste of time, but it did provide that initial introduction to the market.

Three Takeaways

Lessons you don’t have to learn the hard way.

Getting Rich Not-So Quick

This is how day trading is marketed. “You only need a few minutes a day,” or “you can start small,” and my favorite, “it’s easy once you know our top secret strategy.”

The only way to access this dream will be through a trade group that likely costs hundreds of dollars a year. Folks, the ones who are really getting rich quickly are those collecting your subscription fee.

Predicting short terms moves is extremely challenging, especially nowadays when one tweet can move a stock multiple percent in minutes.

Time Burn

Most folks out there who have a 9-5, kids, school, etc, don’t have the ability to sit and stare at the market for hours every morning. Yes, there are technical ways to set up your trades that don’t require you to watch them, but it is definitely not passive.

Don’t get sucked into thinking you are going to print money with just a few minutes of watching the market.

Opportunity Cost

The time and money one spends on trading would likely produce a much higher ROI if spent on other positive activities.

For example, the cash I once used for trading is now allocated to my long-term investments, which have performed better anyways. In that extra free time, I was able to start a brand on Twitter, which has turned into another revenue source in itself.

That’s what we call a win-win.

Conclusion

I know a handful of people who trade for a living. They are extremely wise and have decades of experience. For each one of them though, there are hundreds like myself who have nuked their accounts and failed as a trader.

Those days spent hustling the options market, and hoping to be the next star of Wall Street Bets, taught me that trying to time short-term moves is a losing game.

Remember, the odds are in your favor when you focus on decades instead of days. Getting rich quick is cool, but getting rich for sure is a gangster.

Till next time dawg, Cade.

Cade's Finds

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Is Small Cap Investing For You - Solid write-up by Mr. Maggiulli breaking down the historical performance of small caps.

Best Meme

Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email don’t hesitate to send me a reply.