Day Trading: Why It Probably Isn't For You

Quick Definition: Day trading is buying and selling financial securities within the same trading day, attempting to profit from short-term price movements.

Who hasn't been tempted by the allure of day trading? The promise of financial freedom, working from home in pajamas, and watching an account balance grow with each clever trade. Millions of people have been drawn to this seductive vision.

But before anyone quits their job and dives into the markets, there's a conversation that should take place. What is day trading really? Who succeeds at it? And why are the odds stacked so heavily against the average person?

My Wake-Up Call: Is This Just Gambling?

When I began day trading back in 1995 with full-sized futures contracts, I would hear from friends and relatives that it sounded like gambling. At the time, this completely offended me.

My thought was, "Well no, this is about short-term financial positions based on data and patterns." I had charts, indicators, and a strategy I'd coded myself. I was analyzing price movements and volume. How could anyone compare what I was doing to throwing dice or spinning a roulette wheel?

Then one day it dawned on me: "Wait a minute—'short-term financial positions based on data and patterns'... that's also what people who bet on horse races do!" Horse racing handicappers study past performance data, track conditions, jockey statistics, and breeding patterns. They have elaborate systems and can explain in detail why they're betting on a particular horse.

Sound familiar?

That realization began my journey toward "leaving this to the experts"—the fund managers who spend every waking hour studying markets and companies. These professionals have teams of analysts, access to sophisticated research, and often advanced degrees in finance or economics.

If I'm being honest with myself, what competitive advantage did I really have sitting at my home computer? Even with my custom software that consumed market data and signaled trades automatically—something that was cutting-edge back in 1995—I was still competing against institutional players with resources I couldn't match.

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The Brutal Statistics: A Reality Check

The reality is, statistically, an investor has about the same chance of becoming a successful day trader as becoming a professional athlete, movie star, or music star. I've been in both worlds—I had a record deal with a division of Sony Music and played hundreds of shows across the country—and I can tell you that success in either field is vanishingly rare, even if you make it past the first small steps.

Let's look at the actual numbers. They paint a sobering picture.

Profitability: The Numbers Don't Lie

The vast majority of retail day traders do not achieve consistent, long-term profitability, particularly after factoring in trading costs and commissions. Here's what the research shows.

Let that sink in. Even among those dedicated enough to stick with it for nearly a year, almost all lost money.

The Financial Industry Regulatory Authority (FINRA) reported that 72% of day traders experienced financial losses in a single year.

How Long Do New Traders Last?

The data on trader longevity is equally revealing. Most new day traders quit relatively quickly due to losses and the inherent difficulty of the profession.

Here's the breakdown:

This rapid turnover highlights the significant challenges, market complexities, and emotional toll that most new traders face. Day trading requires an immense commitment of time, capital, and discipline.

Most people are simply not prepared for this reality.

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The Hidden Costs of Day Trading

Beyond the obvious financial losses, there are numerous hidden costs that don't show up in a brokerage account statement. As someone who spent years in the trenches of active trading, I learned these lessons the hard way.

Time Investment

Successful day trading—if an investor is among the elite 1%—requires constant market monitoring, hours of research and preparation, and the mental energy to make rapid decisions under pressure. Many day traders report working 50-80 hours per week.

That time could be used to advance in a career with far more predictable returns. Or building a business. Or developing skills that have lasting value.

Psychological Stress

The emotional rollercoaster of watching capital swing up and down throughout the day takes a genuine toll on mental health. I remember the constant pressure—it's like being on stage for hours every day, except instead of applause, you're getting immediate financial feedback on every decision.

Studies have documented higher rates of anxiety, depression, and relationship problems among active day traders. The constant pressure to perform, coupled with the fear of losses, creates a toxic stress environment.

Opportunity Cost

Every dollar an investor loses day trading—or keeps tied up in a trading account earning minimal returns—is a dollar that could have been invested in proven long-term strategies. It could have been used to pay down debt or invested in education or a business.

Think of it like this: if someone has $10,000 sitting in a trading account and they're breaking even after a year of intense effort, that's $10,000 that could have been earning dividends and distributions in quality assets. That's real money left on the table.

Tax Complications

Frequent traders often face a maze of tax reporting requirements and may lose favorable long-term capital gains treatment. Instead, they're paying short-term rates that are taxed as ordinary income.

This can significantly eat into any profits an investor might make.

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Beware the Trading Guru Industrial Complex

Author Note: I don't know why the SEC doesn't wipe these people off the internet (or even better, throw their asses in prison). They cause real damage to people's current and future financial situations and are nothing more than modern day snake oil salesmen.

There are countless so-called "trading gurus" with a "system" or trading signals they're willing to sell, or some course on how to day trade successfully. If anyone stops and thinks about it for just a moment, the logic falls apart.

If someone truly had a reliably profitable trading system, why would they spend their time creating courses and selling signals? If they could consistently make money trading, wouldn't they simply... trade?

The uncomfortable truth is that these "gurus" are more than likely making their actual money from selling garbage get-rich-quick advice, not from trading itself. I despise these schemes because I've seen how they prey on people's hopes and dreams.

This entire industry exists because there's an endless stream of hopeful newcomers willing to pay for the dream of financial independence. These marketers are expert salespeople who understand human psychology—our desire for shortcuts, our susceptibility to survivorship bias (we only hear about the winners), and our tendency to believe we'll be the exception to the rule.

Before anyone spends a dime on any trading course, they should ask themselves: if this person is so successful at trading, why do they need $997 for their course?

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Why the Odds Are Against Most Investors

Even if an investor is intelligent, disciplined, and willing to work hard, they're facing an uphill battle. Let me break down why.

Competing Against Professionals

The people on the other side of trades often work for sophisticated trading firms with cutting-edge technology, direct market access, advanced algorithms, and teams of quantitative analysts. They have advantages a retail trader simply cannot match.

As someone who built computers from basic components starting in the early 1990s and has been coding since I was a kid, I understand technology. Even with my automated trading system back in '95—which was kinda advanced at the time—I was still at a disadvantage compared to institutional players.

Information Asymmetry

By the time news reaches a retail trader, institutional traders have already acted on it. High-frequency trading algorithms can execute thousands of trades in the time it takes to click a mouse.

Think of it like this: it's like trying to win a race when the other runners get to start 100 yards ahead of you. Sure, you might win occasionally, but the system isn't designed in your favor.

Costs Add Up

Even with commission-free trading, there are hidden costs like the bid-ask spread, slippage on execution, and the opportunity cost of the capital devoted to active trading rather than passive investing. These costs compound over time and can turn a marginally profitable strategy into a losing one.

Emotional Trading

Humans are notoriously bad at making rational decisions under pressure, especially when money is involved. We're prone to loss aversion, recency bias, overconfidence, and a host of other cognitive biases that sabotage trading performance.

I've experienced this firsthand—watching a position move against you can trigger panic selling, even when your system says to hold. The emotional component of trading is something most new traders underestimate.

Market Efficiency

Modern markets are highly efficient, meaning that asset prices quickly reflect all available information. Finding consistent mispricings that an investor can exploit is extraordinarily difficult.

It's like trying to find bugs in code that thousands of expert programmers have already reviewed. Possible? Yes. Probable? Not really.

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A Better Path Forward

If an investor is attracted to day trading, it's worth examining what specifically appeals to them. The good news is that there's a far more reliable way to make money work—and it doesn't require quitting a day job, staring at charts all day, or competing against Wall Street algorithms.

Put Money to Work—Not the Other Way Around

Whether someone works at a gas station or at SpaceX, the fundamental principle of building wealth is the same: make money generate passive income while focusing on living life. This is where the real power of investing lies—not in trying to outsmart the market on a daily basis, but in harnessing the proven wealth-building potential of dividend and distribution-paying assets.

The beauty of passive income investing is its completely accessible nature. It doesn't matter what someone's job title is, how many degrees they have, or whether they understand complex trading algorithms.

What matters is that capital is being put into assets that work around the clock, generating dividends and distributions that compound over time.

The Power of High-Yield Assets

Carefully selected high-yield ETFs, stocks, and bonds with strong track records offer something day trading rarely can: predictable, passive income streams. These aren't get-rich-quick schemes—they're time-tested vehicles that allow everyday investors to participate in income-generating assets that were once only available to the wealthy or institutional investors.

REITs, for example, are required by law to distribute at least 90% of their taxable income to shareholders. This means an investor is receiving regular distributions simply for holding the investment.

Quality dividend-paying ETFs provide diversification across dozens or hundreds of companies, all of which are sharing their profits with shareholders. Think of it like owning a piece of hundreds of businesses simultaneously—each one potentially sending checks.

I began to focus on dividends and high-yield investing (MLPs, REITs, BDCs, etc.) in 2012. I was drawn to their cash-flow power and passive-income potential after years of active trading taught me that there had to be a better way.

Please keep in mind that I'm not a professional or licensed financial advisor and this is not financial advice. I create all of my articles based on my personal experience and research. Check out our full disclaimer.

What Everdend.com Is All About

This is what Everdend.com is fundamentally about: helping people make better decisions with their investments by focusing on passive high-yield income strategies that actually work. Instead of gambling on daily price movements, investors can build a portfolio of assets that pay them to own them.

I know that based on my own past—when I had the misconception and thought that dividends and distributions were slow, boring, and only for the very rich—that there are a lot of people out there who don't understand how powerful they can be for both passive income and growing wealth. This is why I started Everdend.com.

Making Informed Decisions Without the Stress

The difference between day trading and passive income investing is like the difference between trying to time every wave at the beach versus owning beachfront property. One requires constant attention, perfect timing, and incredible luck.

The other simply requires making sound decisions and letting time do the heavy lifting.

With platforms and resources focused on passive income investing, an investor can:

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Real-World Investor Scenarios

Let me show how different investors might approach passive income investing instead of day trading:

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If Frequent Trading Is Still Tempting

If an investor simply can't resist the urge to trade, here's my advice: Set aside a small amount of money they can afford to lose completely—treat it as entertainment budget, not investment capital. Never risk money needed for living expenses, retirement, or other financial goals.

But be honest: is this investing or just seeking the thrill of gambling?

As someone who's been on both sides—the active trading world and the passive income world—I can tell you which one lets me sleep better at night.

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Just Think About It

Day trading is a profession, and like most professions, the barrier to entry is low but the barrier to success is incredibly high. An investor wouldn't expect to become a successful surgeon, lawyer, or engineer without years of education and training.

Yet somehow the day trading industry has convinced people they can master financial markets with a weekend course and some determination.

The evidence is overwhelming: the vast majority of day traders lose money, quit within a short time, and would have been better off pursuing almost any other financial strategy. The few who succeed are either exceptionally talented, incredibly lucky, or some combination of both—and even they are constantly at risk of the markets changing in ways that render their strategies obsolete.

An investor's financial future is too important to gamble on odds this poor. The path to wealth for most people isn't found in daily market timing and rapid-fire trades.

It's found in consistent saving, smart long-term investing, continuous learning and skill development, and yes—letting the experts (like low-cost index fund managers) handle the complexities of the market. Or better yet, building a portfolio of assets that generate dividends and distributions that compound over time.

Be skeptical of anyone who tells you otherwise. And if someone is determined to try day trading anyway, at least go in with eyes open about what they're really up against.

I wish I had focused on passive income from dividends and distributions from the very beginning instead of spending years actively trading. But, back then, there were so many barriers of entry just for simple investing including ridiculous balances and insanely sky-high fees. It was still in the high-earners ranges.

However not anymore, anyone can do this now.

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Common FAQs About Day Trading

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Final Thoughts

Day trading isn't the path to financial freedom for 99% of people who try it. The statistics, the hidden costs, and the sheer difficulty of competing against institutional players make it a losing proposition for most investors.

But here's the good news: there's a proven alternative that actually works. Building wealth through dividend and distribution-paying assets is accessible to everyone, whether someone is just starting out or preparing for retirement.

I started Everdend.com because I learned this lesson the hard way. After years of active trading, automated systems, and constant market watching, I discovered that passive income from quality assets is the real way to preserve capital and generate income.

Remember, there's no perfect passive income scheme—despite what countless online gurus claim. But dividend and distribution-paying assets, combined with consistent investing and patience, can build meaningful passive income over time.

The key is starting with what an investor can afford, learning along the way, and staying consistent. Whether someone is just beginning their investment journey or looking to shift away from active trading, passive income strategies deserve serious consideration as part of a long-term wealth-building plan.

It's never too late to start.