8 Reasons Not to Daytrade

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Everyone wants to be a daytrader. Let me tell you the best days. You get in at 9:25am. You make the trade your system tells you to make at 9:30. And by 9:45, the trade is done, profitable, and you’re done for the day: $1800 richer and happy about it. Even better are those stories of people who took $3000 off of their credit card and “18 months later I had $25,351,011.45 in the bank!!!”  The first day I decided I was going to be a fulltime daytrader, on May 18, 2001, I was so excited I couldn’t sleep at night. It was unbelievable to me how much money I was going to make.

But its all a lie to yourself. I still occasionally daytrade. And I’ve daytraded for other people. I’ve daytraded for hedge funds and for prop trading firms. Right before I started daytrading, an old-timer who had spent 40 years in the business told me, “Don’t do it. Why do you want to be involved with those people.” But I wanted to be “those people”. I was one of them. I was a TRADER.

Don’t do it: Here’s why:

–          Suicide. At some point you will feel suicidal. That doesn’t mean you lost all of your money. You might  just be having your worst week in 2 or 3 weeks. But for whatever reason you bought when you should’ve sold and that sent your head spinning and now you need to be talked off the ledge. I’ve talked many people off the ledge in the past 10 years and had to be talked off a few times myself. Its not a pleasant feeling. Why do that to yourself?

–          You’ll overeat. Why not? You just put on the trade and the second you did it went against you. So you put on more and it went against you some more. So now you are staring at it and you are feeling bad. Your body needs to feel good. Your body is very short-term in its thinking. Its saying, “you did something that made me feel bad so now I need a doughnut. I know that will balance the bad feeling so go do it. Hurry.” So you eat a doughnut. The trade goes against you more. Screw it, you eat 5 more doughnuts. Six. Seven. I’m getting sick even writing this. Eight. Nine. And so on.

–          Your eyes go bad. Imagine you have two screens in front of you and thousands of numbers and they are all blinking and changing from green to red to green. You’re staring at these numbers for thousands of hours over the course of years. I can’t read books close to me anymore. The letters all melt together and look like a kaleidoscope. I have to take my glasses off to read them. Although, is that so bad? Maybe I won’t need glasses anymore eventually.

–          Social life. Do you really think that losing $500,000 of your client’s money in a day is going to make you a happy, chipper person when you go out with your friends that night. One person told me, “play with your kids. Kids always make you happy.” What the hell? Do I really want to listen to a four year old jabber about something when I’ve got money on the line? Forget it.

–         Blood pressure. When I have a trade go against me, I can sit there and feel the blood pumping through my entire body. I can feel my heartbeat. That might seem  like a superpower but it isn’t. If you hear every single pulse going all through your body then something very bad is happening.

–          Nothing productive. My biggest regret in life is the hours I spent watching trades when I could’ve been making a website business or starting some other kind of business that could’ve actually been helpful to people. Like a doughnut store. Who am I helping by trying to snatch a few thousand dollars out of the market every day? If anything, its like I’m trying to pick someone’s pocket – the unfortunate, overeating, suicidal, bastard on the other side of my trade.

–         No career. When you sit there and trade every day you’re not networking with friends or other professionals. You’re not learning anything new about the world or business. Every second you sit there watching a trade you are removing yourself further and further from any notion of a career since daytrading is not a career. You are closer to being an inmate in a mental institution and not a functioning member of society that your kids can be proud of.

–          Its impossible. I know some very good daytraders. In the long run it is possible to make money daytrading. But it’s hard and it takes years to build the psychology. Every good daytrader I know suffers from all of the above. You have to be extremely humble, have no delusions of grandeur when it comes to your market opinions, take losses as quickly as possible, and not get discouraged. Alas, in the long run,  I have none of these qualities.  And neither do you.

(See also, Who Really Makes Money on Wall Street!)


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  • http://www.taylortree.com/ Mike Taylor

    Good post, spoken from someone that has been in the trenches. Even when you have a system to take away as much of the emotional rollcoaster as possible – it is still there. Systems can only take away the emotion from buying and selling. We still have to deal with the portfolio ups & downs. And man, it takes years to get smart enough to realize you’ll still always feel those.

    Oh, and loved the pick pocket quote…so true.

  • http://thepuppets.tv Mao_del_zedongo

    ROFL…this is a fantastic piece..i can sympathize with the added weight….been there!

  • Donna Dimke

    gotta say i don’t agree with anything in the post. i daytraded in the glory days of the last bull market in 2007 & the profits piled up. didn’t need options or going short, though i have since learned those are valuable tools in bear markets. daytrading is the ultimate challenge. it’s a game about winning & strategizing & taking what is there for the picking. it requires intense concentration, lots of research & desire. i guess- you either have the passion for the market, or you don’t. If you have the passion- you perfect your art. or maybe you just keep working, learning, trial by error. its great for people who like working for themselves, calling their own shots, accepting responsibility for gains/losses, & ultimate success or failure. gotta keep the negative self-talk to a minimum of course, & maybe keep healthier snacks than doughnuts at hand.

  • Pier Luigi

    It is not true that day trading – or whatever other style of trading – is unproductive! Traders are the lifeblood of capitalism: no traders, no financial markets, no trillions of dollars of money available in the society for building business and improve our civilization and allocate capital in the best directions!

  • Francois

    Hi, good post and I agree for some parts but not everything… I have spent 12 yeas in the corporate finance world and volontary quit 3 years to be a daytrader… I trade futures and small caps and I love it! It fits my personality ang I don’t have to loose my time in stupid meetings… but I must say that most people will loose money trading… 95% +. You have a nice website and you write smart articles .
    Francois, Canada

  • James Altucher

    @Mike Taylor, you have a great blog at taylortree.com. I enjoy reading it. And yes, you’re right. Systems mean nothing and the psychology takes years to develop.

  • James Altucher

    @Pier, you might be right about it being the lifeblood. But I’m not sure who is doing the bleeding.

  • James Altucher

    @Francois, I do agree that it beats doing a corporate job. Once you leave the corporate world and discover that most of the world doesn’t sit in conference rooms all day, you can never go back.

  • http://4as@4asinsurance.com David Kaarby

    I was there, but learned that I can’t do it full time, so now I have a business and just put on some trades here and there, I run a business first, my Insurance agency and trade secondary, but I love it and hope I can do it for the rest of my life.

  • James Altucher

    @David, thats the way I do it. When I see a trade where I feel there is an edge, I make it but now I focus more on other parts of my business.



  • Terry

    Francois said,

    “but I must say that most people will loose money trading… 95% +. You have a nice website and you write smart articles.”

    Never a more true word spoken.
    Losing $$ is secondary, to THE second guess IMHO, YOU have the GUT,you KNOW how it will move.You KNOW you will win it.

    And YOU do not make the trade.(for whatever reason).

    Sure enough,it HITS, you were dead on, and lost a lot of $$$$$$$$,because for WHATEVER reason, you did not pull a trigger that the GUT said DO IT!.

    To me,THOSE moments were worse than losing money.

    Luckily I had some sanity,I set aside X dollars, said,win,draw,lose…….I QUIT when it’s gone.

    It’s like Vegas,a beckoning siren.

    Now when the HFT’s are running the screens in nano secs, and the Fed are pushing the Mkt,you realize, the Mkt (as we knew it) is GONE.

  • Russe9

    RodgerDoger- it’s stories like yours that give daytrading a bad rap!

  • http://www.johnwelshtrades.com JohnWelshTrades

    Hey James…I found your article intriguing. You are a person I respect in the stock market. I just want to point this out regarding your daytrading article…..everything you say is basically true. However, it’s always been this way with daytrading. I never see an article against daytrading when the market is down…it’s only during the bull runs like we have had over the last 8 weeks that I see anti-daytrading articles.

    I think it’s important to point out that yes, likely 90% of daytraders or active traders fail. However, I would like to also point out that the same is true for buy and holders….most of them anyway. I don’t know many successfull investors either. Or at least those that are honest about it.

    If you are a trader either you gotta love it or you gotta leave it. I love my job….look forward to it everyday….& I trade whenever I feel like it. As a trader, I control my own destiny. I am my own boss. Not everyone can do it, because not many grasp the mental aspect or psychology that comes with loss.

    Anyways, if someone daytrades, invests, or swing trades….good luck out there, because the market is not easy……ever. Only the really humble survive…and not many are humble in this business.


  • James Altucher

    @JohnWelsh, I agree with you. If you look over the past 50 years there’s basically been only two approaches that have consistently made money (in the millions or billions).

    A) The Buffett/Gates approach of holding a concentrated portfolio (one company, for instance) forever.
    B) The complete opposite extreme. The Goldman Sachs approach of making thousands of trades at high frequency every second.

    The 99.9% of the guys in the middle pretty consistently lose money.


    Senor Rodger,why you no tell everybody you live in my basement after you lose your money with the daytrading? You no tell everybody the full story how I give you tacos
    from my store.

  • Rick R

    James, I’ve been reading and enjoying your writings for years. Good stuff and I hope you keep writing. With respect to this article, You raise some valid points but I don’t agree with you telling people not to try something they believe may bring them financial success. How different is trading from any other job that doesn’t guarantee a salary? Like a commissioned sales person or someone starting a new business. The majority of folks who go into Sales fail as well or burnout since they are only as good as their last sale or sales quarter. I’m also not talking only about low end no degree needed sales jobs but sales reps for global company’s as well. Many entrepreneur’s put years of effort into something to only fail miserably as well. These types of jobs are not for everyone but those that try and succeed reap huge satisfaction & rewards.

    I worked in corp fortune 100 sales for most of my life and I trade now for a living as well and I can tell you that a lot of the problems that you mention that arise from daytrading happens in other lines of work as well. I know Sales & (ex-sales) people from big nasdaq traded company’s that are on anti-depressants or are overweight from stress eating. Many have no social lives or are divorced already simply because they are working 15 hour days trying to hit their goal for the qtr so they won’t get fired. I also know many programmers, Engs and Cube droids who complain of bad eyesight & weight gain from sitting in front of a computer all day long so these effects are not limited to daytraders.

    Anyway, My point here is that if you want financial or working freedom (unless you were born into it) you will have to at some point take on risk. So I would never discourage people to at least try if they want. If you get your ass kicked picked
    yourself up shake off the dust and go do something else or go use what you learned & try again. It’s not tragic to have tried at something and failed but to have never tried certainly is.

  • Trader1970

    Treat trading as any other busines. Have a business plan, keep track of your records, have a pic or video of your trades. Have week meetings to review. Have discipline and perseverance and do it. The only difference with other business is that you are by yourself 100%. Psicology is important ,needs to be part of your plan. Please do not justify failure with other reasons to say that trading is impossible .trading is challenging maybe respectfully is just not for you

  • Devin

    Jesus. You act like day-trading and swing trading are completely different things. Get a grasp of scaling and sticking to your stops and anyone can become a trader. Day-trading, really, should only be a tool to your swing-trading. Day-trading brings pennies whereas swing-trading brings the big monies.

    If at this point you are still nail-biting over your trades, it’s time to get ahold of some trader’s psychology books. Get yourself together man. And that hair.

  • TraderTim

    Sorry, but the entire article reads like someone who has blown up their account, and wants to make sure no-one else even tries.

    All the reasons that you list read like the litany of someone trading without a defined edge, no real money management and using pure emotion to enter and exit trades.

    I don’t buy the ‘portfolio swings’ argument either. If your edge works, what do you care about a lousy loss? If you know your profit to loss ratio is covering it, who cares? (You did test your method, right?)

    So the eight reasons fully interpreted would be:

    1) Suicide – yep, if you are taking swings at the market with no discipline and doing things just to show it who’s boss, you’re going to be feeling like a downtrodden fool. The inverse is someone who knows the edge they are trading, and can take a loss as easily as they close out profitable trades.

    2) Overeating – Compensating for a lack of plan, you treat yourself. I guess people who don’t actually craft a plan do this, but not the traders I know.

    3) Eyes go bad – This makes no sense at all. Either you have a bad prescription or there is something going wrong with you internally. Every person I know that screen trades needs to take breaks from focusing on the screen, but so does every other cubicle monkey in the corporate world. Learn your limits, and work around them.

    4) Social Life – Markets close, trades exit and you can have a life outside of trading. Lots of people do, I don’t know why this hypothetical case of self-imposed hermit behavior would apply. Oh, of course if you took on a big position just to “Show the market who’s boss”, well – you reaped the reward of being a random fool, not a true trader.

    5) Blood pressure – Yeah, there’s this thing called “knowing your risk”. Even if you have a system that requires you to take 10 losses for every winner, but you know that winner will recoup your loss — that is an edge you can use. If you have your whole body raging at you, you’re losing your hair and you are developing ulcers, you don’t have a trading plan. Stop, exit your trades and get something that works. Once you have it, understand your risk and even automate you strategy if you feel you can’t handle it psychologically. Remove the potential failure modes from your trading plan.

    6) Nothing Productive – I don’t get the ‘guilt’ about trading. You are doing something. Just because you aren’t out in the field plowing furrows and planting corn, doesn’t mean the digital transactions you are executing don’t have trickle-down and immediate effects. Your winning day translates to money spent on other services, which in turn makes the wheels of the economy go around. If you have this much of a hang-up about making money, I suggest you go to volunteer organization and leave trading behind. It could be the root of your hatred and self-loathing of losses has way more to do with your relationship with cash, not daytrading.

    7) No Career – You’re self-employed as a trader. That is a career. Sure, it isn’t the usual yes-boss-right-away-sir kind of cubical job that 90% of the world has, but it is a career. Again, if it really is hard for you to think of it as something serious and productive, there are way deeper issues you need to address.

    8) Its Impossible – spoken like someone destined to fail. If you have no plan, you have no business trading. If you have no edge, you have no business trading. If you can’t execute your trading plan, you have no business trading. The issue isn’t with daytrading, it is with your approach and willingness to follow through. Winners aren’t magically made, they put in the effort and time to master the challenge.

    In your summary, I see you allude to all this – don’t have your ego invested in what you’re doing, take your losses fast and avoid psychological pitfalls. But seriously, even if you don’t have the daytrading mindset – it doesn’t mean the rest of us don’t.



    • Alphadude2009

      nail in the head. but thanks to Jimmy for starting this conversation; and for being honest about his feelings. i am a day trader; and I did have similar thoughts like Jimmy at some point in the past.

  • http://www.businessinsider.com/daytrading-has-been-dead-for-at-least-20-years-mutual-funds-even-longer-2010-10 Michael Martin

    Trading is 80% emotional and psychological, the rest is technique. I think those interested in trading will learn more about how to trade in a consistent, profitable manner by going to yoga or by meditating, than by reading all horse-sh*t “How To Trade Like _________” books.

  • S C

    Great post. Everything on your list is 100% correct. However, every single one of them can be eliminated or vastly improved upon, especially since the majority of them are emotional based problems. “No career, social life, and productivity” are nothing more than personal perception. Life is what you make of it. There are plenty of people who think they have all three, but in reality don’t understand the value of life.

    Deliberate practice is IMO the backbone of every successful person in the world who engages in something that requires “talent and skill”. If you were to interview the successful traders you know they would all share the same “x factor” -> the DRIVE to become great.

    The 10% of people who make it trading (any type) bust their butt to do so. They focus on their weaknesses and improve upon them. The 90% who fail simply lack the drive to become great. The million dollar question is: where does the drive come from? I personally think it’s an accumulation of experiences. For example an unknown experience when you were 6 may have unlocked your interest in entrepreneurship. Then in your teens something triggered an interest in computers. Finally in your 20’s something triggered the drive to do something great in the internet business. The drive that made you great at website building doesn’t exist within me.


    The best people in any field are those who devote the most hours to what the researchers call “deliberate practice.” It’s activity that’s explicitly intended to improve performance, that reaches for objectives just beyond one’s level of competence, provides feedback on results and involves high levels of repetition.

    For example: Simply hitting a bucket of balls is not deliberate practice, which is why most golfers don’t get better. Hitting an eight-iron 300 times with a goal of leaving the ball within 20 feet of the pin 80 percent of the time, continually observing results and making appropriate adjustments, and doing that for hours every day – that’s deliberate practice.

  • http://www.younggunstrading.com SpeeroTheKid

    Agree with everything @TraderTim said

    If everyone had this mindset, we wouldn’t have 99% of the innovations we have today. How many inventors were told, “It’s impossible.”

    No one would be doing anything remarkable in this world with that kind of attitude, and to ego up and say that since you don’t have those qualities, the reader here doesn’t either, really kind of makes me giggle.

    There is a lot of emotional pitfalls in trading – but like @TraderTim said, having a method and using techniques that you have honed over time (whether that be from paper trading initially, to trading small lots, to finally swinging big trades) you can avoid these pitfalls and have faith in your abilities.

    Obviously, if you fall victim to half of the things listed in this article, you might as well go sit at the craps table, because it’s like the writer here just typed in a few ticker symbols and bought/sold when he “felt” it was time.

  • j.w.w.

    Just curious why everyone subscribes to the meme that 95% lose money. That meme showed up during the SOES bubble and everyone repeats it rote as if it were the holy grail. Some scientific testing should be done with this hypothesis, and it shouldn’t be repeated until it’s either proven or disproven. Same thing with the statement that the 99.9% in the middle lose. That should be tested also.

    As far as daytrading, I agree with you somewhat with the bid/ask, the market friction, the vig, and mistakes willkill you. That being said, I spent many, many years in the pit and made a very tidy sum scalping. That being said, these days, my trades these days are primarily huge grain spreads that can be on for months and months.

  • Fred

    So where does the money come from Mr. Daytrader? A whole lot of other traders think their money is going to come from you. Somebody is seriously mistaken in their assessment of their prospects. It’s a zero sum where your sum goes to zero.

  • Michelle B

    Your post itself is glib and cartoonish, but most of the comments here are worth the read, making my stay at this thread productive despite the inanity of your writing. Never liked your stuff and apparently, I still don’t (was lured here by a twitter comment regarding the recent flood of anti-daytrading articles. What you said about eye trouble is just pathetic. Really. Get an editor, someone with a science background preferably.

  • Alex

    Linda Rachke would laugh all the way to the bank after reading the comment of this “looser”.

  • Alex

    Adding to the loosing trade and eating doughnuts is gross!!! So if you loose $500K in one day, how many doughnuts is that – one doughnut per 1K, or one doughnut per 10K. Let’s say that’s one doughnut per 10K of loss! Man, eating 50 doughnuts a day put’s you in a SUMO-wrestler category of trader. Sorry, but I can not take this article seriously.

  • Donna Dimke

    It’s been fun to read the updated comments all week-end. James: i think you achieved your objective with your original post, if you were trying to bring out people’s emotional response to your put-down of their passionate pursuit! By evoking outlandish, stereotypical caricatures, you enabled traders to bring their own strong opinions to the table. Bravo!
    Your portrait is of a “newbie”- dumb money coming into the fray at the top of a bull market.
    Traders will continue to pour their energy & effort into their craft, because at the bottom of it all, & at the end of the day, the primal chase for riches & for the thrill of “winning” is what drives traders. in my opinion, each successful trader spends a lifetime honing their skills: this is a pursuit where perfection is always elusive, change is the only constant, & nobody has all the right answers all the time!

  • Jerry

    NEVER invest money you can’t afford to lose! Never invest the whole amount at once, that is called greed…..thinking you will hit it big! It’s been tried before. Some will luck out, (as some do in slot machines) but the odds are against you. Your only hope (Roger), is to “try” to come up with enough money to try to recoup your losses with GOOD stocks. Get a 2nd job if you have to….hopefully, your young enough that you have a 2nd chance. The markets bottomed out a couple years ago, and that it when I decided to take the gamble, remembering Warren Buffetts words “Buy when everyone else is selling!” This time, I bought good stocks… F, EMC, FLEX, yes…I took a gamble and bought SIRI, but not after doing some serious DD.. also bought other stocks that have now been sold..all at a profit, I doubled my $$ with F, and kept trying to buy low priced, but good stocks…right now, I am close to 80% profit on SIRI…and going long.
    I hope you can recoup some of your losses, if not all. There is NOTHING more discouraging ( for lack of a better word), than to lose a large amount of money…I know, I’ve been there, but I have been fortunate enough to have re-invested with IRA’s and bank accounts, and borderline divorce papers!!
    A good lesson learn was next time, don’t be too hasty in buying stocks, especially penny stocks. Odds are you will be better off buying better stocks,at slightly higher prices…this time, my timing was good…got into F at just over a buck a share, dumped when it doubled, sold most of the others at a profit, and narrowed down my holdings to just a few (6) namely FLEX, SIRI,EMC, CVTI, COHU & ERES. I still have one long shot, DFTC.OB… that may sting me, or make a turnaround. Hopefully, the turnaround in the markets since Jan.2009 will continue. Hope all your “moves” are profitable ones!!

  • http://www.firthitconsultants.com IT Consultant

    Interesting article and comments.

  • tm

    I agree with most of what Trader Tim says, except the points James makes about the societal utility of the daytrader. I think it’s a hallow rationale to say that daytrading makes you a part of society because you pay taxes on your gains and then spend your money to stimulate the economy. That’s great, but that doesn’t really speak to the relevence of what you are actually doing to earn the money. Anyone with a profession that makes them part of real society could also claim the same things, that they pay taxes and spend money. Then there’s the classic “providing liquidity” rationale. Does anyone start daytrading with the goal that they are going to “provide liquidity?” That’s like saying that being a breathing human benefits the world’s plantlife, because you are exhaling carbon dioxide used for photosynthesis.

    In reality, at it’s best, daytrading for a living is no different than being a pro poker player (although some could argue they are in the entertainment business). You are just trying to get odds in your favor, and using sound money management. I have nothing against this, but please stop kidding yourselves with these weak defenses on why your relevent or necessary. Just admit that you are looking to make money, and that’s it.

    • Anonymous

      There are plenty of people who enter professions for money as well, including doctors and engineers.  Take away half the pay and 90% of them will disappear.

      I trade for the money.  I don’t have any illusions about it.  But I will not feel bad about it either, nor let anyone try to make me feel bad.

  • http://www.savingtoinvest.com Andy

    thank you for this article. The easy gains over the last month have stirred my day trading desires, but reading this reminded me that boring is better in the longer run. I have $10K to play with stocks, but no more than that. That gives me my fix without destroying my finances and consuming my 10-4.

  • James Altucher

    @Andy, start to think of better ways you can enjoy that money. Can you buy a camera and editing equipment and learn how to be a photographer? I’m not suggesting that specifically but thats one example of how you can take $10k and better your life (and even return a multiple on the $10k) rather than just wasting it staring at a computer screen while trading.

  • Black Sunshine

    Here’s just one more reason not to be a daytrader. This guy was my next door neighbor and schoolmate when I was a kid. Here’s a link to news about him now, check it out.

  • http://www.awesome-entertainment.net Mark Thomas

    I tend to agree that while you can make money as a day trader, my experience (so far) is that if I would have left my good picks alone (80% of my stocks), I would be up big time. For example, I had 400 shares of AAPL at 60.00. If I would not have traded as soon as it went down on some bad news, I would have rode it to over 200 points (assuming I would have kept my head). It is true that AAPL dropped back down to 60.00 during the downturn around 2009, it quickly recovered and is now at 318.We’re talking $100,000.00 without me having to have ever logged back on my computer! This applies to many other ‘winners’ that I traded in & out of including IMAX @ 7.00 (now 23.00), MVL @ 17.00 (now at 50.00), NS @ $52.00 (now at 64.00 with a 7% dividend!). Bottom line, buy companies you believe in that make money and leave them alone. Dividends can make a huge difference over time when you allow them to work for you and buyback more stock. I have a relative that bought 100 shares of BA years ago and they now own 900 shares and did absolutely nothing.

  • David Buckwitz

    James, Great writing on day trading. Loved it! David.

  • Tobeyspaniel


    I wish I’d read this article before leaving my career in late 2008 so that I could trade stocks and “make money on the downside”, and I also wish that if I’d read it back then, that I’d have been wise enough to recognize it as true, take it to heart and act accordingly.

  • http://www.losmezcaleros.com Englewoodranger7

    I started day trading over 1.5 years ago out of necessity because savings interest rates and my pay check suck. My first year out, I made a 20% return. This year up till May 6th Flash Crash, my portfolio was up 43% for which I lost all my profits. Since, I’ve managed to make back a 20% return. It’s been a tough struggle trying to hold onto profits in this manic depressant market. Did I make mistakes, spent a few nights worrying and could have done it better? Yes! The lessons learned are as follows: Do one hour of homework for every stock owned; eliminate greed and emotions (continual work in progress); buy stocks thinking about what you’re willing to lose; don’t go all-in (keep cash reserves); have a goal for your profit; and use good tools to make informed decisions, such as marketwatch.com, Yahoo Finance, Investor’s Business Daily, CNBC, ShareBuilder, etc. What a crazy ride it’s been!

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  • Marc Johnson

    Someone mentioned that day trading is no different from sales or starting your own business. You’re taking risk to make a profit.

    I think the difference is that most jobs provide a service (doctors, police) or create things (engineering, farming).

    Day trading is probably the only job (next to a small time gambler) that neither provides a service nor creates anything.

  • paddy5200

    have you tried drinking? it doesnt stop the voices but it makes them happier.

    • Julian

      Doesn’t work. I tried drowning my sorrows but the bastards learned to swim.

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  • http://MIchaelMartin MO

    @James Altucher

    Dont entirely agree that there are only 2 ways to consistently make big money in the market.
    Trend followers have also pulled billions out of the markets over the years and William J.O’Neil turned a few thousand into an estimated 2 billion trend following fundamental stocks (compunding over 40% p.a since the 60’s-about twice that of Buffett) without running a fund and even with significant funds in money market or bond accounts
    Wihtout any help from TARP or the FED!

  • Luca

    James has been there for many years and raises important questions. The vehement reaction from many traders here speaks for itself in terms of how passionate many can be about this PROFESSION. The last word is particularly important: it is just arrogant corporate-speak to argue that trading is “no career” or that there is “nothing productive” in it. Having been in a long corporate career in banks and hedge funds before, I have had the privilege of seeing both sides of the fence. So,by what standards are the notorious corporate meetings, procedural routines and set of “rituals” more productive for society than somebody who risks capital on an ongoing basis ??? Do we define “productive” as having legions of highly expensive “executive corporals” to execute all these routines and then hire outside consultants to figure out “mission and values” ??? Because if that is all there is to productivity, the army would also make an excellent candidate (and after all, the standard top-down Westpoint culture still seems to be by far the dominant reference model for organizations). As far as added value to society, don’t we have enough corporate horror stories in this decade to question the standard politically-correct “get a job in a large and solid firm” clichè ??? The problem that James – and many in society – seems to have with trading is rather that risk-taking is one of the basic forms of freedoms and as such is associated with responsibility. Many simply have a problem with the notion of thousands of individuals who cannot be easily controlled and who – by the way – can vote with their capital every day on what government does. Sure, it would be far simpler to have society organized with just “proper” corporate types in respectable and controllable jobs, we have already seen this movie in Eastern Europe for some 70+ years. But the basic issue remains: who takes risk ??? While it is possible that the current societal crusade against risk-taking in major Western countries might be “successful”, the flow of capital towards emerging markets that are not held hostage of academics, politicians and lawyers is a fact that speaks for itself. The consequences in terms of jobs and opportunity will not be far behind.

    All that said, professional traders know full well how extreme the application of Pareto’s law is in the business. It is said that there are many bold traders, some old traders and very few old bold traders. Just surviving in this industry will put to the test even the most passionate trader. Yes, probabilities are stacked against one, but this does not mean that it is impossible.

  • RG

    @ Luca

    So your argument is that one might as well just be a trader, since it’s not possible to add value to society anyway? Ah, ok. Maybe expand your range of thought slightly? How about being a teacher, doctor, or engineer? Build something or provide a useful service. And that people are just angry that they can’t have control over traders…because they are martars for going out and risking their own money every day? That’s hilarious. You seem to confuse taking risk with adding value. You’re taking risk, sure, but both the downside and upside of that only effect you. As opposed to say, a fireman, who takes risk to benefit someone else. Trading is a closed system. You are taking more from society than giving back to it by benefitting from the productivity of others while not bringing anything back to the table. I’m not saying that no one should ever trade. Go ahead and trade, you have a right to do what you want…just admit that you aren’t a part of real society, and on balance, subtract value from the system. Seeing the answers from some people above makes me think this even more, based on how weak the rationales are. I was hoping someone could really form a stronger argument.

    • Anonymous

      As I wrote above, traders help correctly price assets.  Why is this important?

      Take a look at AXPW – extremely promising battery technology on the cusp of major design wins.  It could help reduce energy needs and all that good stuff.  But they had to raise capital in 2009 and again in 2012 by selling stock at about HALF their current stock price?  Why, because the lack of traders meant that whoever invested big in this company was stuck.  Thus they demanded a steep discount.  Wouldn’t it be nice if the company could have raised money at a premium instead, and help this technology change the world?

  • Gregg S

    I agree with every point except the last. I’ve been day trading for 11+ years and have averaged close to one million in profits per year. The problem is I can’t find a career that I like and pays at least 1/4 as much. Until then I’ll have to stick to with my suicidal, unproductive, obese hermit lifestyle.

  • Luca


    Sorry, I have more important issues than picking arguments. Nowhere did I ever state that trading is the ONLY profession that adds value to society, that would be plainly absurd. The fact that you seem to have a real problem with trading, however, grants you no right to dispute others’chosen path, be it trading or anything else, let alone insult them. If insurers assume risks and get paid for it, does anybody argue that “on balance they subtract value from the system” ? So, if traders assume risks that others shed and bring liquidity and diversity of opinion (and, by the way, a mechanism to keep politicians’fantasies in check) to the table, why should it be any different ? Or does it add more value to society to have Fed- and taxpayer-bankrolled risks only ???

  • Marc

    James, I agree 100% with what you are saying. Looking at the previous 48 responses, there are not many that agree with you or I. However, this is a biased dataset – those that tried daytrading and lost have moved on, and are not reading/commenting on articles like this anymore. Those commenting are most likely 1)daytrading companies, 2)those who are losing money but have not yet given up, 3)a few that may actually be making money, but at an unacceptable level of risk.

    I know what I am talking about – I was in the trenches like you for 8 years, and have experienced every struggle you mention. The first investing book I read said that “out of 1000 option trading clients at my friends brokerage, not one ever made money consistently”. I went immediately into denial mode and tried for years to prove this statement wrong, with options, stocks, futures, you name it, but couldn’t do it.

    I am currently trying to at least use what I learned in all those years, and will soon be completing my Phd in Finance. Don’t get discouraged by the responses, if you keep just one person from wasting several years and many thousands of dollars day trading, it will be worth it. (NOTE: Not to say all investing is bad or that the subject of Finance is bad. Because of our productive society, in the long run investing is a positive sum game. But in the short run it is a zero sum game – actually, less than zero, because of commissions, etc).

    PS – I used to read your columns back in 2004, 2005, or so, and enjoyed your insight.

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  • Bond

    i think some of what you said is true. however, most of it exemplifies opportunity cost. any job, or bread making activity if you wish, has pluses and minuses.
    daytrading is a liberal occupation. like a dentist, let’s say. it is what you make of it.
    you can choose to meet people from the market, manage money for others as well, or just keep to yourself.
    the key word is freedom. some just don’t know what to do with it.
    the daytrading’s sole purpose is to make money for the individual. thus, the direct benefits for society are limited. i do believe that the overall effect of daytraders across the world is large, and probably positive. a single daytrader is not important, but think of us as a swarm of bees.
    let’s not forget the indirect effect of daytrading: money. that money will be spent in many creative ways by an overemotional and mentally overworked trader.

    marc, 95% of traders dont make money. its not easy, its a very competitive sport.
    in failure lies success. i agree that people need to be aware of the difficulty of making money by trading (medium and long term trading, just as difficult, if not more so than daytrading.) but i don’t agree that people should be prevented from trying to trade. each to his/her own.
    daytrading is zero sum game for whom?
    how can trading be negative sum game in the short term, then become positive after a certain time? isn’t the long term made of short terms?

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  • doug

    “Every second you sit there watching a trade you are removing yourself further and further from any notion of a career since daytrading is not a career. ”

    I would gladly give back all the money I made day trading for the hours wasted watching a ticker. Granted, since the money I lost on every fifth trade ate the profits of the 3 of the 4 prior, my net gain was not a huge sum of money, but it would be a huge amount of time wasted that I would recoup.

  • Chris

    Honestly this sounds like a post from some one who tried day trading and crashed and burned and is a little bit bitter about it. I know many people (most of them close family friends) who day trade and make a substantial living from it. Through perseverance and dedication they made it work for them, so much so that they were able to retire early than most and thus able to have more time for family and friends. You mentioned suicide, the only reason anyone would consider this is because they relied on day trading as a “last resort” so to speak. Anybody doing this is going to get bitten, but for those that have made it their career, have weighed the pros and cons, obviously have got a balance of them in place to the extent that they are confident to do it for the rest of their lives. Suicide is a strong word to throw around and if it ever gets like that for you then obviously you’re in the wrong proffesion.

    As for overeating, that is just complete rubbish, who is to say that every single day trader is obese, this is a major generalisation and one that I think is stated with absolutely no evidence (apart from your own maybe, but that’s you and maybe you should take up gym or a sport) to speak of.

    As for your eyes going bad, there is some sense in that, seeing as staring at computer screens has been scrutinised by scientists and the sort for a long time now but there are methods to prevent this and if you are serious about day trading and understand that staring at a computer screen for multiple hours is necessary, then you would take this into account and put forward remedies to help with the strain on your eyes.

    Social life is social life, business life is business life, and if you can’t separate the two then you aren’t cut out for this field! Trading must be seen as a business. If losing 500,000 or so of a clients money will deter you from having a normal social life then trading isn’t for you. In anycase, if you were hired to increase the net worth of other people then you should be able to handle if not prevent a 500,000 dollar loss, because let’s face it, people wouldn’t hire you otherwise.

    A hightened blood pressure is different for each person. If you can “feel blood pumping through your entire body” then obviously you have taken a trade that you do not know how to handle or control, it should be unemotional, like I’ve said before, it should be seen as a business and nothing personal, and all business decisions should be executed with confidence and substantial evidence and backing to do so. If you “feel your blood pumping through your entire body” with a losing trade, then you have the wrong mindset.

    With regards to the “unfortunate, overeating, suicidal, bastard on the other side of your trade” that comes with the teritory. Every action has a reaction and if you are smart enough to capitalise on those opportunities that you can make a few thousand dollars off those people then so be it, they got in this game for the same reason you did, to make money, and you trying to “help” them is only going to be counterproductive. I’m no sadist, but trading is a game of intellect and research, and if yours is superior than another person then you definitley should not feel bad about it seeing as you’ve put time and effort behind each of your trades. You aren’t gambling, each trade has been executed for a reason.

    With regrards to your statement of “no career” I couldn’t agree less. You say that one is removed from the world and I can not understand how you see this. Take currency trading for example, in order for you to make the “best” trade possible, you have to take into account a number of factors, including technical and fundamental. The canadian dollar is well renound for being a commodities currency seeing as it exports many commodities. In order for you to make the best trade you can, you need to understand how commodities work which involves a huge aspect of the social and business sector. Saying that there is no career in trading and it causes you to be a “social recluse” is completely short sighted.

    Impossible?? Really?? Tell that to the all the people I know that have succeded and lived happy and fulfilling lives from trading. You even said it yourself, “In the long run it is possible to make money daytrading”, I’m not quoting this to prove that in the long run you can make money, becuase I know that once a person has a set of rules and a solid strategy they can be successful. I’m quoting that because it goes against everything you mentioned in your post. Why mention all these negative aspects of trading only to, at the end of your post, conclude that it is possible to make money.

    In conclusion, and this pissed me off the most, you do not know who I am (or anybody else for that matter) so please don’t tell me what qualities I do and don’t possess!

    • jdbear

      This is so well written there is very little to add. As a day trader your overall results are dependent on your research, backtesting, discipline in adhering to your system, and emotional detachment. Of course there will be losses, but with a properly designed system you can take them in stride and look forward to the next trade.

      Of course there are valid systems that hold overnight but you are subject to a lot more uncontrolled variables including overnight gaps and overall market fluctuations. I like being *done* at the end of the day, win or lose.

      • Nate

        agree. especailly when he says things such as, i’ve talked 10 people of the ledge and have been talked off myself. (paraphrase too lazy to lookup the exact words of that dumbass). Well maybe ranting and raving about daytrading is his way of venting so he doesn’t go off the ledge lol

    • http://www.facebook.com/people/Jon-Berger/1400973714 Jon Berger

      I think the author was just trying to be funny not serious. You on the other hand are cumbersome boring and missed the point by say the entire Atlantic ocean. In a word aaaaaaannnhhhhhh FAiL

      • JMODE

        If the author is trying to be humorous, then why has he so *seriously* thrown around the word suicide?

    • fourfingersdown

      what a garbage comment to be so high on the board here for so long. you think this is a humor piece now. you obviously have zero experience.

  • doug

    “If losing 500,000 or so of a clients money will deter you from having a normal social life then trading isn’t for you.”

    Nor is investing my money either!

  • ed wood

    there is nothing glamorous about daytrading. it is hard work. it is humbling. it is lonely. I do it to become more financially independent and I am very cautious. I make small trades all day long and bank the coin. I don’t spend it. I want to be able to attain financial security – not needing to throw caution to the wind for the big score since I won’t risk capital. I just want to make the money a bit faster than buying dividend payers or the slow large cap growth stocks. I don’t short, play options, or play breakout or momo stocks.Like i said I am CONSERVATIVE.

  • ed wood

    check out http://www.wealthmiser.com

    my website – all explained

  • http://abetterwaytotradestocks.blogspot.com beanie

    For most investors, there really is only one way to make real life changing returns — the Warren Buffett way.

    Daytrading is useless and long term unprofitable endeavor. If you have to daytrade to “make a living”, you’re standing on very shaking grounds.

    I have only heard of a handful of strict daytraders that were long term successful, and that was before the carnage of 2008.

    If you’re successfully making less than 100k a year trading, it is better to take a job. At least you get health insurance and pension. Remember opportunity costs when you daytrade — you’re losing all the job benefits (i.e. government jobs nowadays have lots of benefits.) Your wife and family and kids will respect you more for it. Nobody likes a lazy bum that makes money from trying to take money from other people (assuming you can successfully daytrade).

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  • http://n/a darnoc

    Day trading is hard work. Not physical work but mental work. It takes nerves of steel and the ability to devote many hours to reading and analizing information. You have to have a plan and stick to it. Also you have to be very flexible in how you trade using options to not only protect but to make extra profits. If you trade even part time you still will need to spend at least 6 hours a day reading. This is not for those who scare easily or have emotional problems. And the most important thing is that this is not a get rich quick way of making money.

  • Ronnie G

    Ha ha what I have been saying all along ,day traders are pathetic losers & morons minus any education or a high school diploma.They really need help .They should become a waiter ,busboy cab driver etc.

  • Tom

    To that second comment in reply:
    I’ve seen a lot of day traders who’ll be glad to tell the story about how they made 113k in 4 days or whatever. Whoopee for them. They don’t brag about the time they lost 113k in 4 days though. And don’t forget Uncle Sam gets 1/3 of whatever profit you eke out.

    What I haven’t ever seen is any day trader who is willing to open his account to show me every transaction made over the last 10 years and let me calculate their after tax return on capital. Wonder why that is?

    • http://www.streetcoup.com Matt

      This is so true that I’m also very suspicious of whatever profits people tell me about. What counts is the net balance on your account.

    • http://www.streetcoup.com Matt

      This is so true that I’m also very suspicious of whatever profits people tell me about. What counts is the net balance on your account.

    • index1000

      because its none of your F****** business maybe

  • Lol


  • Globalmarketstrade

    please check my trading, which has been 98 % on the money, all trades posted timely
    in twitter http://www.globalmarketstrade.com

  • Mirk

    I know what you are talking about, I tried to daytrade as a profession for some month but had to discover that I am not able to make money with daytrading (sometimes you think it works and you win 100 000 but you have to give it back over the next periods). I assume there might be some guys who have success in daytrading.
    Anyhow I am a fulltime professional trader – but I changed to strategy trading ONLY. I stopped loosing money daytrading. This gives you more time to do something productive and increase your knowledge whille your strategy is trading for you. But it was a long way to develop successfull strategies.

  • gg

    wow i find it hard to believe that you traded for other people with such a lousy mindset. i think this is good advice for a lot of people, but you should be fair and tell people they have to figure out a good strat AND have a proper mindset to beat daytrading. if you gonna freak out about every loss, just dont do it

  • cunparis
  • cunparis
  • http://twitter.com/bullbear365 bullbear365

    Great post James and equally great comments by readers. Exactly what a blog should be. Now how can a good writer benefit financially from good blogging (not including ad revenue)?

    • SoftwareGuy

      I actually did that for a while. I am a programmer with a Master in Software Engineering and a concentration in artificial intelligence. I created evolutionary algorithms that fined tuned technical analysis signals to enter, exit and set limits on trades. I trained the algorithms on years of data and tested training on other sets of data. The algorithms worked great, but every time the algorithms lost money (which was 4 out 5 trades when you included commissions) I will loose faith in the algorithm that I developed and knew by heart and started just selling when I felt like it, which lead to staying in losing trades too long and selling wining trades to early. After 6 months of this I was unhappy and thankfully even money wise. I just went back to develop actual useful software.

  • Hookturn

    I tried it, what a pain. I have been holding some trades for a day or two, some for a weeks, some a bit more. some I will keep for years. I do well enough to pay the bills, take the wife to dinner and put some away. This way I can go on vacation when I want and don’t feel like I’m missing some million dollar deal

  • Admin

    What about automated day trading?  Let a computer program trade your strategy for you so you can go do something else.

  • Cliff Bennett

    People, people, people.

    Altucher is a smart, smartassed guy with a fairly well developed sense of his own weaknesses and strengths. And he’s (I think) a fairly entertaining writer.

    He specializes in making us think about stuff, in an area he obviously knows something about, by saying things that are a. Funny, b. Absurd, c. Outrageous , or d. All of the above.

    When he sticks his tongue firmly in his cheek and writes one of his “10 reasons not to ___” lists, he’s merely passing on the idea that none of us should take ourselves too seriously, and we should never forget that failure IS an option in life.

    But as long as we keep our heads, we’ll survive.

  • http://twitter.com/neoalvaro Alvaro Salazar

    Loved it!

  • Siddhartha Herdegen

    The best reason not to daytrade is the random nature of the stock market. You can’t reliably predict random outcomes.

    • Mike Periboob

      No, it is not really random, the best reason not to daytrade is that it is worthless. Traders have exactly the same value as professional poker players– zero. Even bankers are more useful to society. As an investor, I “loan” money to companies which make a good product, these companies then use that money to hire more people, build infrastructure, make more good product, and make profits, of which I get a share. So in some small way I contribute. Also, I have three stocks that I have held for gains over 1500%.  :-)

      Traders just gain/lose money from/to other traders, and breathe air that would more productively used by burger flippers at McD.

      • Anonymous

        Traders help the market find a close to correct price, so that bankers and investors can help companies raise money to do all that good stuff you say.  Otherwise, low liquidity, volatility, and lack of pricing metrics cause companies to get ripped off in capital raises.  Traders keep the market healthy and they are paid for their risk.  They might not be the most productive members of society but they are definitely not zero or negative – unless they are manipulators.

  • WillF

    keyword “self-destructive” part of our human nature. Irony is that once we train this tendency out from our trading, we still have it simply because we have the ego to think that being one of “them” means anything. 

  • Gs

    I day trade, swing trade, and have long positions, in my opinion, thats the only sane way to do it, trading around your core positions which you hold long term. Much of my day trading has been counter productive, the swing trades are better, and the long position the best, and thats after 9 years of slugging it out. Day trading alone is foolish, find an undervalued asset, buy a core, and then trade around it.

  • http://www.facebook.com/people/Julia-Stella/100003607382435 Julia Stella

    These tips are what really helped me in the beginning http://howtofixstuff.blogspot.com/2012/03/tips-on-how-to-day-trade.html

  • http://twitter.com/n88dleboy Andrew Charman-Shea

    From my perspective, you need skin in the game to stay on top of things. Trading every day is for poor people. Think, if you had 10 million dollars, would you sit in front of a computer monitor all day trading in and out of shares just to make a thousand bucks? To say there isn’t great opportunities that happen in just a day would be silly talk, but if you are seeing mirages, you will over trade yourself into the cemetery. Ride the coattails of the big money, you big dummy, and shit, sometimes it happens all in one day.

  • http://twitter.com/n88dleboy Andrew Charman-Shea

    If you had 10 mil though, the last thing you would want to be is flat at the market close each day. Moves last weeks, months, years. Why would you sabotage yourself?

  • paul

    A terrific article, thanks for the cautionary!

  • loopy

    Excellent… If I wanted a day job, I’d find something less stressful. If I wanted to work 24/7, I’d start an enterprise that listens to me.

  • voidist

    he is not talking sore grapes……..he is right

  • SweetDoug

    I’m generally pretty harsh with you, on your writings, but I like your commentary on this subject.

    I had given the thought of moving into a more active idea of day-trading some thought.

    You have some wisdom here.


  • Diana

    Yes yes and yes!!

    I’ve watched my decades-long, well established yoga, swimming, food practices slowly erode. Trading is godless.

    Indra’s having her way with us justnow in Ft L Fl – early summer storm. no electric/no Bartiromo…. yes Altucher!

    Your piece was hand delivered by the gods.

    Those were just the words I needed.

    Thank you.

  • littlewhite

    the only matter to you is you are one hell of a downer
    you are just making youself look bad and above all,
    you are crused by daytrading, you tried and you fail
    -end of story-

  • dick

    this author is SUCH a fuckin loser

    • Adios

      You have nothing better to do than post negative bs? That by definition makes you a loser. Go troll somewhere else. DICK!

  • Mama Mia

    Funny! Reminds me of the funny DirectTV Commercial “Dont attend your own funeral”

  • Michael

    James, I commend you for your honest and humble assessment above. I know, I have lived this walk, and in the end, life is much more enjoyable, productive and livable when spent not daytrading. God bless.

  • buymystock

    “What beat me was not having brains enough to stick to my own game – that is, to play the market only when I was satisfied that precedents favored my play. There is the plain fool, who does the wrong thing at all times everywhere, but there is also the Wall Street fool, who thinks he must trade all the time. No man can have adequate reasons for buying or selling stocks daily– or sufficient knowledge to make his play an intelligent play”.- Jesse Livermore

  • Alex

    “I know some very good daytraders. In the long run it is possible to make money daytrading.” “Alas, in the long run, I have none of these qualities. And neither do you.” I don’t think you know me or my qualities, but nice article.

  • tim zue

    best stock promoter pennystockcapital.com

  • Eldar

    Now rename “Daytrading” word in this article to “business” word or concrete business name. In daytrading only 5% of traders are profitable. The same statistics is anywhere. 95% of businesses goes to bankruptcy.

  • sunny

    This is the best article about day trading. I wish I had read it before starting day trading. I think I would have never wasted so much of time and money. There are no chances for common person to make money in day trading and even by investing in stock market. At the end he would be looser.It’s better to do something else rather predicting something that is manipulated.

  • http://thesensibleguidetoforex.com CLIFF WACHTEL

    usually the problem is that day traders don’t learn risk and money management and thus burn through capital and confidence before they’ve had the chance to learn, Takes time, like any lucrative, competitive profession, you need to approach it like a business and ask/answer all the questions you would if you were writing a business plan, discuss this issue at some length in my book, The Sensible Guide To Forex, because most newbie Forex traders attempt to daytrade currencies before they know enough or have been profitable on practice accounts – with predictably grisly results.

  • Bradley Bradley

    James you definitely missed your calling buddy. While I suspect you could make a living writing, you absolutely could be a comedian cause I’m LMAO right now and this so long after the original post. It’s 50/50 all day everyday. It’s either going up or going down from where you pulled the trigger and it sure feels like losing most of the time but you gotta get out of those losers faster than you got in and let those winners run. Good luck to all!

  • whtpwr

    100% truth…this is a word to the wise…don’t do it.