HERE'S WHAT WE KNOW:
Part 3 (of 6): Why Chasing Money Will Leave You Broke
- Success in trading isn't about being a genius; it's about having the discipline to focus intensely without distractions.
- You've got at least 3 hours a day to hone your trading skills, but if you can't put your phone down, don't expect to make serious money.
This is the big paradox of trading…
Everyone's trying to find the guru with the best tactics. But that's not going to help because you’re so distracted that it doesn't matter.
Because you can have the best tactic on the planet but you’ll suck at it and if you get any traction someone's going to spot it and take it from you.
So while everybody's out there chasing on the right tactic or the best trade alert… you're completely missing the picture. Because you can take an old idea that people like me have been doing for years (like trading penny stocks)…
And you can make it work to make $300-$500 (and even several thousand dollars) a day with not that much time invested.
If you can FOCUS, you'll likely be more successful than 95% of traders…
But maybe… Even NOW, you read up until NOW and are still saying:
“You know what, I'm just not going to do those things. I'm just not going to do it and I'm just going to be successful anyways.”
No - you won’t.
I'm telling you this because I tried it that way before - and it cost me. So that “I’ll just wing it” mindset is ridiculous to me.
Because...
Take a look at any champion in any field, sport, or business--none of them are just "winging it." They're all about precision, strategy, and relentless focus.
Look at the titans of industry who trade the very same stocks we trade…
Look at the athletes in the Super Bowl or World Cup...
They don't have any distractions…
You see the best of the best kicking ass, focusing their attention, and winning and you want to go play in the same arena they’re in… and you still think you're going to be able to survive?
Nope. Not without the ability to laser focus your attention.
You’re crazy (especially if you're just starting out)...
Really though...
It just comes down to being a little bit smarter and seeing a little bit further down the road than the other guy.
Because if you come at trading and try to solve the problem that 95% of people can't solve with only your capabilities and ZERO focus… no wonder why you fail.
NO. WONDER.
That’s all there is to it
Fix this though..?
And suddenly every tactic, pattern, and lesson suddenly becomes much easier to understand.
It did for me and every successful trader I know.
I'm telling you, crack this and you've basically solved 90% of the issue.
HERE'S WHAT WE KNOW:
- Chasing after the latest guru or trading tactic is a rookie move. Real success comes from hunkering down and mastering the basics.
- A sharp focus can turn even old-school strategies like trading penny stocks into serious money-makers, setting you apart from the 95% of traders who can’t see past the next hot tip.
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Available research data suggests that most day traders are NOT profitable.
In a research paper published in 2014 titled “Do Day Traders Rationally Learn About Their Ability?”, professors from the University of California studied 3.7 billion trades from the Taiwan Stock Exchange between 1992-2006 and found that only 9.81% of day trading volume was generated by predictably profitable traders and that these predictably profitable traders constitute less than 3% of all day traders on an average day.
In a 2005 article published in the Journal of Applied Finance titled “The Profitability of Active Stock Traders” professors at the University of Oxford and the University College Dublin found that out of 1,146 brokerage accounts day trading the U.S. markets between March 8, 2000 and June 13, 2000, only 50% were profitable with an average net profit of $16,619.
In a 2003 article published in the Financial Analysts Journal titled “The Profitability of Day Traders”, professors at the University of Texas found that out of 334 brokerage accounts day trading the U.S. markets between February 1998 and October 1999, only 35% were profitable and only 14% generated profits in excess of $10,000.
The range of results in these three studies exemplify the challenge of determining a definitive success rate for day traders. At a minimum, these studies indicate that at least 50% of aspiring day traders will not be profitable. This reiterates that consistently making money trading stocks is not easy. Day Trading is a high-risk activity and can result in the loss of your entire investment. Any trade or investment is at your own risk.
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Citations for Disclaimer
Barber, Brad & Lee, Yong-Ill & Liu, Yu-Jane & Odean, Terrance. (2014). Do Day Traders Rationally Learn About Their Ability?. SSRN Electronic Journal. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2535636
Garvey, Ryan and Murphy, Anthony, The Profitability of Active Stock Traders. Journal of Applied Finance , Vol. 15, No. 2, Fall/Winter 2005. Available at SSRN: https://ssrn.com/abstract=908615
Douglas J. Jordan & J. David Diltz (2003) The Profitability of Day Traders, Financial Analysts Journal, 59:6, 85-94, DOI: https://www.tandfonline.com/doi/abs/10.2469/faj.v59.n6.2578