{"id":105367,"date":"2020-11-05T12:01:18","date_gmt":"2020-11-05T09:01:18","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/why-day-trading-is-such-an-incredibly-bad-idea-right-now-and-what-you-should-be-doing-instead\/"},"modified":"2020-11-05T12:01:18","modified_gmt":"2020-11-05T09:01:18","slug":"why-day-trading-is-such-an-incredibly-bad-idea-right-now-and-what-you-should-be-doing-instead","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/why-day-trading-is-such-an-incredibly-bad-idea-right-now-and-what-you-should-be-doing-instead\/","title":{"rendered":"#\n  Why day trading is such an incredibly bad idea right now, and what you should be doing instead"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3e2d7d2daa1\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3e2d7d2daa1\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/why-day-trading-is-such-an-incredibly-bad-idea-right-now-and-what-you-should-be-doing-instead\/#More_people_are_trying_to_play_the_market_and_its_not_going_to_end_well\" >More people are trying to play the market, and it\u2019s not going to end well<\/a><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/why-day-trading-is-such-an-incredibly-bad-idea-right-now-and-what-you-should-be-doing-instead\/#Stocks_dont_always_go_up\" >Stocks don\u2019t always go up<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/why-day-trading-is-such-an-incredibly-bad-idea-right-now-and-what-you-should-be-doing-instead\/#Theres_no_such_thing_as_a_free_trade\" >There\u2019s no such thing as a free trade<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/why-day-trading-is-such-an-incredibly-bad-idea-right-now-and-what-you-should-be-doing-instead\/#More_from_NerdWallet\" >More from NerdWallet:<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/why-day-trading-is-such-an-incredibly-bad-idea-right-now-and-what-you-should-be-doing-instead\/#Liz_Weston\" >Liz Weston<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#<br \/>\n  Why day trading is such an incredibly bad idea right now, and what you should be doing instead<br \/>\n<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"More_people_are_trying_to_play_the_market_and_its_not_going_to_end_well\"><\/span>\n  More people are trying to play the market, and it\u2019s not going to end well<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"2784D866-1A2C-11EB-B6F6-C89F7FF48B59\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p class=\"editorcomment\">This <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/article\/finance\/playing-the-market-is-a-bad-idea-especially-now?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=anne-stanleymarketwatch-com&amp;utm_content=870164\" class=\"icon none\">article<\/a> is reprinted by permission from <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"http:\/\/nerdwallet.com\/blog\/?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=anne-stanleymarketwatch-com\" class=\"icon none\">NerdWallet<\/a>.<\/p>\n<p> The current day trading boom will end as these frenzies always do: in tears. While we wait for the inevitable crash, let\u2019s review not only why day traders are doomed but also why most people shouldn\u2019t trade, or even invest in, individual stocks.<\/p>\n<div class=\"paywall\">\n       <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/article\/investing\/day-trading-risks?utm_campaign=ct_prod&amp;utm_content=870164&amp;utm_medium=wire&amp;utm_source=syndication&amp;utm_term=anne-stanleymarketwatch-com\" class=\"icon none\">Day trading<\/a>\u00a0basically means rapidly buying and selling investments, hoping to profit from small price fluctuations. Brokerages have reported a surge in trading and new accounts this year, starting with March\u2019s stock market crash when investors rushed in looking for bargains. As pandemic lockdowns kept people from their jobs and classrooms, trading continued to soar, especially among young adults.<\/p>\n<p> The poster child for this gold rush is Robinhood, a commission-free investing <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a> that uses behavioral nudges to encourage people to trade. Robinhood added over 3 million accounts this year and in June logged more trades than any of the established, publicly traded brokerages. More than half of its customers are opening their first investment account, the company says.<\/p>\n<p>People can start trading with small amounts of money because Robinhood offers fractional shares. In addition to stocks and mutual funds, the app allows trading in options, cryptocurrencies and gold. Customers start out with a margin account, which allows them to borrow money to trade and amplify both their gains and their losses.<\/p>\n<p>Alexander Kearns, 20, is one example of what can go wrong. The University of Nebraska student killed himself after seeing a $730,165 negative balance in his Robinhood account. The novice trader may have misunderstood a potential loss on part of an\u00a0<a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/blog\/investing\/options-trading-101\/?utm_campaign=ct_prod&amp;utm_content=870164&amp;utm_medium=wire&amp;utm_source=syndication&amp;utm_term=anne-stanleymarketwatch-com\" class=\"icon none\">options trade<\/a>\u00a0that he made using borrowed money as a loss on the whole transaction. In reality, he had $16,000 cash in his account when he died.<\/p>\n<p>Research has shown that the vast majority of day traders lose money, and only about 1% consistently get better returns than a low-cost index fund. A rising stock market, and a flood of inexperienced and excitable investors willing to bid up stock prices, has convinced more than a few day traders that they\u2019re part of that 1%. They\u2019re being egged on by the few people who actually will make money: the hucksters selling seminars, e-books and strategies that purport to teach you how to successfully trade.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Stocks_dont_always_go_up\"><\/span>Stocks don\u2019t always go up<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Stocks overall are an excellent way to gain wealth over the long term. If you can weather the downturns, stocks historically have offered good returns.<\/p>\n<p><strong>Learn more: <\/strong>What is the S&amp;P 500 and how do I invest in it?<\/p>\n<p>Those downturns can be doozies, however. Stocks lost half their value during the 2007-09 recession that started December 2007. The market lost nearly 90% of its value in the early years of the Great Depression.<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>Extended downturns have popped previous day trading bubbles, including the one that formed during the dot-com boom. The Nasdaq Composite<br \/>\n        COMP,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/210598365\/realtime\" class=\"positive\">+3.85%<\/bg-quote><br \/>\n      \u00a0 stock index rose 400% in five years, only to lose all of those gains from March 2000 to October 2002.<\/p>\n<p>Markets that go down eventually come back up. That\u2019s not true of individual stocks. Any single stock can lose value, sometimes all the way to zero, and never recover.<\/p>\n<p>The sensible way to hedge that risk is diversification. That means buying stocks in many, many companies, including companies of different sizes, in different industries and in different countries. That\u2019s prohibitively expensive for most individual investors, which is why mutual funds and\u00a0<a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/article\/investing\/what-is-an-etf?utm_campaign=ct_prod&amp;utm_content=870164&amp;utm_medium=wire&amp;utm_source=syndication&amp;utm_term=anne-stanleymarketwatch-com\" class=\"icon none\">exchange-traded funds<\/a>\u00a0are a better bet.<\/p>\n<p><strong>See: <\/strong>This 50-year-old Vanguard mutual fund is holding its own against younger rivals<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Theres_no_such_thing_as_a_free_trade\"><\/span>There\u2019s no such thing as a free trade<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Another way to grow wealth is to minimize investing costs. That means trading less, not more, because trading incurs costs even when there are no commissions involved.<\/p>\n<p>Investments held more than a year benefit from favorable capital-gains tax rates, for example. Those held less than a year are taxed as income if the trade wasn\u2019t made in a tax-deferred account such as an IRA.<\/p>\n<p>Another way cost is incurred is in what\u2019s known as the bid\/ask spread. The banks and financial institutions that facilitate trading in various stocks are called market makers. They offer to sell stocks at a certain price (the ask price) and will purchase at a slightly lower price (the bid price). People who trade stocks instantly lose a little money on each transaction because of this difference. That\u2019s not a big deal for infrequent traders, but the costs add up if you churn stocks in and out of your portfolio.<\/p>\n<p><strong>Read: <\/strong>These money and investing tips can help you prepare for the future even though you can\u2019t predict it<\/p>\n<p>The biggest potential cost, though, is that every trade exposes your portfolio to the many ways we humans have of screwing up our money. We\u2019re loss-averse and we want to avoid regret, so we hang on to losing stocks. We think that we can predict the future or that it will reflect the recent past, when this year should have taught us that we can\u2019t and it won\u2019t.<\/p>\n<p>We also think we know more than we do, a cognitive bias known as overconfidence. If you\u2019re determined to trade, or day trade, don\u2019t gamble more than you can afford to lose, because you almost certainly will.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"More_from_NerdWallet\"><\/span>More from NerdWallet:<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<ul class=\"articleList\">\n<li>\n      <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/article\/finance\/unexpected-retirement?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=anne-stanleymarketwatch-com&amp;utm_content=870164\" class=\"icon none\">Suddenly Retired? Here\u2019s What to Do Next<\/a><\/p>\n<\/li>\n<li>\n      <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/blog\/finance\/smart-money-podcast-sudden-retirements-and-finding-lost-money\/?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=anne-stanleymarketwatch-com&amp;utm_content=870164\" class=\"icon none\">Smart Money Podcast: Sudden Retirement and Finding Lost Money<\/a><\/p>\n<\/li>\n<li>\n      <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/article\/finance\/use-crisis-build-money-habits?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=anne-stanleymarketwatch-com&amp;utm_content=870164\" class=\"icon none\">You Can Use a Crisis to Build Helpful Money Habits<\/a><\/p>\n<\/li>\n<\/ul>\n<p class=\"editorcomment\">Liz Weston is a writer at NerdWallet. Email: lweston@nerdwallet.com. <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Twitter<\/a>: @lizweston.<\/p>\n<div data-layout=\"\n              inline\" data-layout-mobile=\"\" class=\"\n        media-object\n        type-InsetCommentingPromo\n            \n            inline\n  article__inset\n        article__inset--type-InsetCommentingPromo\n            article__inset--inline\n  \"><\/p><\/div>\n<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>      <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Liz Weston\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Liz_Weston\"><\/span>Liz Weston<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener noreferrer\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B2784D866-1A2C-11EB-B6F6-C89F7FF48B59%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener noreferrer\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Why day trading is such an incredibly bad idea right now, and what you should be doing instead &#8221; More people are trying to play the market, and it\u2019s not going to end well This article is reprinted by permission from NerdWallet. The current day trading boom will end as these frenzies always do:&#8230;<\/p>\n","protected":false},"author":1,"featured_media":105368,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-105367","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/105367","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=105367"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/105367\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/105368"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=105367"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=105367"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=105367"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}