309: The Dangers of Day Trading

You remember that last episode? Last week, we were talking about trading versus investing and how...

Man, it could really seem enticing.

You get the rush.

You see the screen.

You see the reds and the greens of the stock market, and you're like, do I buy? Do I sell? Well, Tim, you mentioned this gamification of trading, and that has led people to day trading.

It's been around for a long time, but I see it now, especially people in my generation.

They'll use apps to day trade and kind of play the stock market during the day and during the week.

And today we want to talk about the dangers that are present when you get involved in day trading.

Promises those quick wins, right? Like that's what we want to see.

That's what people expect to see is a quick win.

Maybe a get rich quick mentality.

But...

We'll find statistically that a lot of time it ends differently than that.

So what do we

got today? Well, probably should start with a reminder on the difference between investing and trading.

We said that investing is seeking to put capital to work in companies over the long term for potentially great rewards.

Trading is different in that it's more like a get rich quick mentality.

Somewhat.

It can be, I think, in some instances where really what you're trying to do is just seek to capture quick wins based on the momentum of a company.

You'll buy in for a short period of time and then you'll sell out once you've achieved a particular price objective.

It's not putting money to work in a business for the long haul.

It's not actually functioning in and growing with the value as the company generates value.

So it tends to be more like a get rich quick.

Now, I'm hedging a little bit here.

I'm not saying that all traders have a get rich quick mentality.