If You're a Day Trader, You Could Be Making a Big Mistake

For investors, "buy and hold" has always been considered the sensible way to invest in the market. The idea -- put your money into stocks, index funds or mutual funds and over the years, you will earn an average of about 8%.

But whacky market gyrations over the past few years have led many investors to either give up on investing altogether -- or become active traders, hoping to generate profits from the volatility. Generally speaking, these day traders are investors who trade frequently every day and believe that by timing the market just right, they will generate impressive returns.

But James Altucher, managing director of Formula Capital, says that day trading is a mistake. A former day trader himself, Altucher explains that today, day trading is just too difficult. In this short video, Altucher explains the pitfalls of day trading -- not just to your portfolio, but also to your health.

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shidelera5

Those who can, do. Those who can't, write about it. Stop wining and do a little home work, dont get gready, buy on the bad news, sell the good. Be patient, good buying opportunites only come once in a while, not every day....oops, didn't mean to write about it ! back to doing it !!

December 16 2010 at 10:00 PM Report abuse +1 rate up rate down Reply
Trudy Marie

Any stock tips? I'm listening...

December 16 2010 at 9:21 PM Report abuse +1 rate up rate down Reply
savemycountry911

A few years back day traders lost their shirts. I guess people have short memories.

December 16 2010 at 8:22 PM Report abuse +1 rate up rate down Reply
frankengreat

Don't listen to anybody. Just play the chart patterns and you will make money. An

December 16 2010 at 6:01 PM Report abuse +1 rate up rate down Reply
1 reply to frankengreat's comment
trmnatr2

Be extremely careful who you teach your system to,never brag to anyone.My reply is always"Im just barely making it".

December 16 2010 at 7:44 PM Report abuse rate up rate down Reply
Tom

My strategy is to buy low and sell high.

December 16 2010 at 2:10 PM Report abuse +6 rate up rate down Reply
1 reply to Tom's comment
bdyftns

wow...how insightful.

December 16 2010 at 8:33 PM Report abuse +2 rate up rate down Reply
ksmwtm

Nano sec. traders, day traders, portfolio mgrs. The name of the game is to get info. & understand it, before anyone else. Unless you want to buy Big Blue & the like & stay up to the min. on political world news. In your spare time read "The Carpetbaggers" about Howard Hughes on his way up.

December 16 2010 at 2:08 PM Report abuse rate up rate down Reply
cashmanh8surkel

Buy and hold makes no sense. You have to be nimble, but not too reactive. Find the balance. Best advice I ever had was to look at a stock and ask yourself whether, if you had the cash in hand, you would buy that stock today. If not, perhaps it's time to sell.

December 16 2010 at 1:47 PM Report abuse +1 rate up rate down Reply
1 reply to cashmanh8surkel's comment
bdyftns

That's the kind of advice you're neighbor gives out when the market was at 7,500 and on it's way up to 11,000 +.

December 16 2010 at 8:35 PM Report abuse +1 rate up rate down Reply
Sonny

On CNBC today I saw a headline "Where have all the retail traders gone?"........I can't believe that the author of this headline holds such low esteem for his readers. You do not have to be a rocket scientist to know that this stock market is highly manipulated and while all the "professionals" are telling you to buy and hold..............they do just the opposite. They never ride the stock all the way down and hold. They liquidate their positions and buy at the bottom. How did Goldman Sachs and others make so much as a result of the last "crash"? Sorry, but this retail invester will never invest in the stock market again. I'll buy anything of value and bury it first! One difference is that when Wallstreet when runs out of idiots to take money from, it still has the Fed Govt to give it all the money it needs for all the huge bonuses, etc.

December 16 2010 at 12:45 PM Report abuse +3 rate up rate down Reply
1 reply to Sonny's comment
cashmanh8surkel

Professionals are smart enough to know you never get to buy at the bottom and sell at the top. When they're making money the pull some off the table. Professionals never fall in love with a stock or get emotional about it. Fear (selling when a stock starts going down) and greed (buying more while a stock goes up) is what kills the amatures.

December 16 2010 at 3:30 PM Report abuse +1 rate up rate down Reply
Tom

I've invented an attachment for my electric drill that helps select stocks for daytrading. In forward it tells me what and when to to buy and in reverse it tells me what and when to sell. I started investing with funds I obtained by picking aluminum cans out of trash barrels. Next week I will be closing on my purchase of all of Bermuda. Right now I'm running a DeWalt 18 volt cordless with a keyless 1/2" inch chuck. I like it because I can take it with me anywhere I go and I'm told I look macho wearing it in its holster.

December 16 2010 at 12:18 PM Report abuse +3 rate up rate down Reply
contak2

I started day trading 3 years ago with $35,000. in cash. Today in cash assets I have am worth 2.5 mil. I am 27 and yes, it takes a lot of work and is time consuming, but the outcome is not a dangerous one, but can be a lucrative one if you make the right moves at the right time. As my dad told me, trading is a rich mans roulette table, it's a gamble and all investing is a gamble. I invest in the American, Asian and European markets. Being smart on when to sell off and when not to and where to put your money is where the success is. I would have to think theat the moves I have made were successful and my net worth speaks for itself.

December 16 2010 at 11:35 AM Report abuse -1 rate up rate down Reply