According to studies, 97% - 99.8% of retail day traders lose money - and those that don't earn less than minimum wage (or front run their followers via pump and dump schemes).
This article will tell you everything you need to know about why day trading is a scam (and what you should do instead).
The fact that day traders lose money isn't my opinion, rather it's based upon numerous research studies.
If you want to read the research studies about day trading, you can find them here.
Day traders are led to believe that they can use technical analysis, support and resistance and patterns - unfortunately this is false.
There are zero day trading research studies that show it's possible for retail day traders to be consistently profitable.
Humans look for patterns that are oftentimes not there. According to my former Cornell University professor, Tom Gilovich (one of the world's experts on patterns and cognitive biases):
In fact, the ONLY way I know to be profitable day trading is to front run and pump and dump your followers.
You can learn more about this below (unfortunately pumping and dumping your followers is not illegal):
Most of the Successful Retail Day Traders May Be Using Pump & Dump Schemes
There are many profitable retail day traders on YouTube.
They're almost always trading low-float stocks that they can manipulate.
Front-running is defined as purchasing a security and then selling it as buyers rush in.
Many of the most successful retail day traders are engaged in front-running and pump and dump schemes.
A Strategy That's Better than Day Trading
Day trading strategies oftentimes rely upon continuation of trends and trading breakouts.
But, to consistently make money in the stock market, I’ve found that being contrarian yields the highest profit potential - "Be fearful when others are greedy and greedy when others are fearful" - Warren Buffett.
For example, if the market falls ~5% in 2 - 3 days, and large companies like META / FB or Amazon fall 7% - 8% during that time, then your highest probability trade would be to sell puts and bet that META / FB and AMZN will not continue to fall.
Add in the fact that volatility would substantially increase while the market falls, and therefore the premium received for selling those puts would increase, and it’s no surprise that selling puts during periods of high volatility is one of our core principles at BestStockStrategy.com.
You can learn more about the Top 3 Stock Market Trading Strategies here
Become a Successful & Profitable Trader with our Trade Alerts Special Offer
Summary - Day Trading Scams and Avoiding Pump and Dump Schemes
I’ve never met a successful retail day trader or retail penny stock trader who didn't defraud their followers.
Ross Cameron and Warrior Trading were sued by the FTC and paid a $3 million fine. Raging Bull was sued by the FTC too.
Be careful of traders who trade low float penny stocks with an audience.
To be successful selling options, you don’t have to be special. You can be average; and as long as you don’t get greedy or trade too many contracts, you can consistently make money (you also need to hedge and aggressively close out your losing trades).
What To Do Instead Of Day Trading
Retail day traders of stocks and equities do not have the odds in their favor.
Day trading is like paying money to bet on the outcome of a coin flip.
Selling option premium is the absolute best way to consistently make money.
Why My Strategy Is The Best
I make it very easy. I don’t overwhelm you with unnecessary information. You'll learn everything in 2 - 3 weeks.
Frequently Asked Questions (FAQs) - Day Trading Scams
Is day trading worth it?
No, virtually 100% of retail day traders of stocks lose money. This is scientific fact.
Is day trading legit?
It's legit for the day trading fake gurus who front-run their followers - their biggest problem is avoiding Government lawsuits.
Day trading ruined my life?
Yes, that is common since I've never met a profitable retail day trader of equities who is consistently profitable.
Who is the richest day trader?
Virtually all retail day traders lose money.
Do investment banks day trade?
Investment banks make money as market makers, or transactional traders, they profit from the bid - ask spread differential and by making markets. These are riskless trades.
Retail traders are not market makers and therefore assume substantial risk when day trading.
Can you really make money by day trading?
Can you make money by day trading? Yes.
Will you? No.
Just like, can you make money by playing the lottery? Yes.
Will you? No.
Why do most day traders fail?
Day trading is at best, a 50 / 50 statistical probability (it's actually less when commissions and slippage are factored in).
When losing, you need to win MORE than you lose in order to get back to even.
As a result, from a statistical probability standpoint, day traders have a negative expected edge.