I was very happy. I was waiting for the morning to come as quick as possible. I was not feeling sleepy unlike other days when I used to be lost in dream world within minutes after falling on bed. Still, the scene of what my friend Shekhar had informed about 15 days before seemed alive in my mind.
15 days before, Shekhar and I met after 3 months though we stayed in the adjacent buildings. We both were desperately looking for a second source of income for last 6 months. He had started intraday trading recently and was making good profit. The stories of his profits became my new fantasy. Today my trading account got activated and I was ready to ride on the same journey my friend was enjoying.
In the morning, I excitedly bought 100 quantities of ……. At 9:30 AM and booked 27 points profit till 9:50 AM. My happiness increased by many folds, I had earned more than 2500/- rupees within 20 minutes. I am a networking engineer and I don’t make this much money working avg. 9 hours in my office. Next day I did 2 trades and I felt like patting my back, I was making more money than what Shekhar was making. Wow, this is the best way to generate second income.
I met few small losses in between but after I was offered leverage from my broker, I could make huge profits with small money. I was on cloud 9. I made plan to construct a new house for my parents in my village within 2 years.
After 4 months, my dream of making it my career was shattered as I met huge losses of 3 lac rupees. I had to pay 1.5 lac to broker. My second income source had become the biggest source of debt accumulation in my life.
Not going deep into troubles which I had to face due to my overconfidence and my overnight getting rich formula, I would like to tell you those very important points which no trader openly shares with you.
According to an academic study, 4 out of 5 people who do it lose money and 1 in 100 do it well enough to be described as “predictably profitable”.
The study showed that less than 2% of traders were profitable net of all fees.
40% of day traders quit within a month
87% of traders quit within 3 years
93% of traders quit within 5 years
Why then some professional traders (may be around 1%) are successful as intraday trader because:
- They are paid to trade: Professional traders are not trading their own money. They are paid to trade on others money. When it’s not your money involved, you are relieved of same level of psychological pressure.
- They have best tools: Smooth, Fast and well responding tools are made available to them. In fact they used the most advanced version of the best system available in the world. Precision pays a vital role in trading activities.
- It’s their main profession: They do it full-time. Thy unlike many of us do not have any other job or business. They invest their entire day studying and researching as that is what their job profile is all about.
If you think these points fall into your professional circumstances, you can continue intraday. For others, let me tell you what various losses you go through as day trader:
- Huge monetary losses – In intraday, you don’t get enough time to study and research a scenario because market gets affected by various events (may be more than 3k-5k events happening in the world daily). Due to lack of time, you in a way try to time the market. Since price movements is so volatile in short time that mostly you get compelled to convert your day trade into delivery and this is how you forcefully become a gambler in the market.
- It’s Impossible – Many good day traders I know has taken years to build their psychology. I interacted with few international day traders at Singapore, London and Silicon Valley and they all agreed that they are doing so because they are not risking their fund. One has to be so humble and learn the art of booking small losses and not taking them as dangerous stages.
- Eyes get tired – Staring one or two screens daily becomes the daily routing. Imagine doing it for thousands of hours every year. Since within seconds, scenario changes so you have to be alert to take maximum advantage or to stop huge losses. This system does not offer you any buffer time for you.
- Increased Blood pressure – When you have a trade going against your understanding, you can actually feel your heartbeat going up, your pulses beating fast, your anxiety superseding your current state of mind. Something like this happening daily can never be good for your health.
- Disturbed professional Life – Since most of you are already engaged in your job or business like me so managing active trading life along with profession becomes the most destructive challenge. My 4 months as day trader has been very disturbing for my professional commitment. Since my money used to be there in the market, while performing any task of mine, my focus used to be towards market.
I wish I could know these facts before I met Shekhar and I would have never got into it at all, I am an investor now, making more money than before have got constructed new house for my parents and now accumulating wealth for my daughter’s foreign studies after turning investor for last 8 years.
I still don’t say you can’t come in the 1% of those making success in intraday but if you wish to accomplish some beautiful dreams for your family, turn an investor because anyway good money is made in long run so why to chase a short-term focused strategy.
Author: Abishek Raaman