Many people look at the market and wonder if day trading is a scam, since there is such a huge amount of people who lose money in the market. But is day trading really a scam if you know what you are doing?
This is the third article in a new series on Day Trading For Beginners where I talk about and share my tips on getting into day trading.
AND why I think day trading is the best way to invest your money!
If you’ve contemplated getting into day trading, it’s important you take the time to go through this series and understand the concepts. By the time we are done with the series you’ll be better prepared for a successful day trading career.
Let’s get right into today’s topic.
Is Day Trading a Scam?
I get this question a lot.
- Every time I meet someone new and they get to know what I do for a living…
- Every time someone comes across my work…
- Every time I meet a new student…
Some ask out of curiosity and some out of genuine apprehension of day trading.
Many students want to get into day trading but are afraid because they keep hearing day trading is a scam. So, is day trading a scam? Well, it can be. Like many other lucrative careers, it is infested with scammers.
But Day trading itself cannot be a scam because it’s a much larger concept than one company or an individual. People can be scammers. Concepts can’t be.
The internet’s littered with websites promising that you can make money from home instantly by day trading. With gimmicky language, they make it seem like it’s all so easy.
If you’ve ever spent any time on the internet, you’ve definitely seen commercials offering advice on day trading. These over-the-top ads can be convincing. After all, who doesn’t want to become super wealthy super quickly?
These scammers with their false promises make people believe that buying their services will prove to be lucrative for them.
But you know how they say if it sounds too good to be true, it is? That applies to this situation too. Always remember that the internet is chockablock with false information and it is up to you how you make sense of it.
Day trading can be an immensely rewarding career that’s based on skill and knowledge.
The fact is that there is a risk involved in day trading. Not just the risk of scammers duping you but also the intrinsic risks of the market. It would be extremely dangerous to start trading without managing that risk or without adequate knowledge.
Why Most Day Traders Fail
Simple answer? Most day traders fail because they do not learn.
They do not spend enough time understanding the industry.
Anyone who isn’t willing to spend time building their knowledge of day trading should not enter this field. Period!!
Why do people enter day trading? Sometimes for the simple reason that they read somewhere on the internet that it’s a quick and easy way to make money from home.
Or they met someone who got lucky and they think they can get lucky too…
It gives people a lot of hope but none of the tools they need to succeed. Most people dabble in day trading for the false promises to ‘get rich quick’. They have no idea just how much work and perseverance it takes.
So then they end up losing all their money and wondering why.
This is why Day Trading often gets a negative perception.
Does that make day trading a scam? No!
The fault doesn’t lie with the career itself. It’s because of the lack of awareness surrounding it.
- If you know what you’re doing, day trading is not a scam.
- If you understand the risk involved, day trading is not a scam.
- If you have the right work ethic, day trading is not a scam.
Ever since I entered day trading, and then started mentoring people, I’ve noticed a lot of people are apprehensive about entering this profession. Because of the fears surrounding it, many people are against day trading.
When I started, I too came across many “experts” who promised me the moon; who told me I could make a ton of money if only I buy their services.
I only started to build success once I stopped blindly following every expert and instead took my studying into my own hands. All the courses I took and the books I read… I put them to the test.
I started marking down areas that are essential to look at for a stock, such as the market cap and the volume being traded per day, plus marking down the patterns that all stocks go through, then testing my strategies with paper trades and saw what worked for me and what didn’t.
My test runs lead me to success, making $1.3 million in my first year. My techniques became a game-changer for me. I listen to facts. I work off the numbers. I have confidence in the predictable patterns and formulas I find.
Once you do this it’s almost impossible to ask: is day trading a scam?
Day Trading Myths
1: Day trading leads to instant wealth
When it comes to day trading, the biggest myth I’ve encountered is that it’s a get rich quick scheme.
When it doesn’t generate instant wealth and in fact leads to a loss of money, people come to negative conclusions and ask is day trading a scam?
What you should expect instead is to spend at least 6 months to a year of hard work on paper trades and working in excel spreadsheets before starting to see any yields.
Day trading takes an astounding amount of patience and an insightful understanding of the market. If you can dedicate time, commitment and effort, only then day trading is for you.
The path in the first year is rough; there are lots of ups and downs.
As a beginner in day trading, you need to set realistic goals.
Think about the following before investing time or money in day trading.
- Do you have enough capital to actually invest? If not, wait until you do. For the time being carry on your knowledge building process.
- Steady profit will take six months to a year to reach your destination. Are you prepared to be patient?
- Can you commit to trading two to three hours a day, keeping in mind your current schedule and bandwidth?
“We all have dreams. But in order to make dreams come into reality, it takes an awful lot of determination, dedication, self-discipline, and effort.” – Jesse Owens
2: You don’t need to learn how to day trade
Becoming a day trader is a gradual process that involves learning, gaining knowledge, aptitude, persistence and patience.
As a beginner, it’s important to learn as much as possible and follow high-quality guidance.
Knowledge plays a huge role in your day trading success. Empower yourself with knowledge from the beginning. With that frame of mind, no matter what happens you have the expertise to rely on, always.
In the beginning of your day trading career, embrace the fact that it will take up a major part of your day. The investment of your time upfront is essential.
And trust me, the learning never stops. This isn’t a thing you can study once and then rely on it for the rest of your trading profession. You need to keep updated. Knowledge is the answer to becoming successful as a trader.
“We now accept the fact that learning is a lifelong process of keeping abreast of change. And the most pressing task is to teach people how to learn.” – Peter Drucker
3: You can day trade as a hobby
You cannot get into day trading assuming it’s a hobby and expect instant success. This is another reason most new traders fall short. They believe they can dabble in it as a pastime and when it doesn’t work out, they presume day trading is a scam.
Day trading has the likelihood to become your main source of income in the future so commit to it that way. It is not a venture that you should do as a hobby. Give it the respect and commitment of a career.
It does require hard work, but huge rewards await you in the end!
Fix the timings in your day when you will be trading. Give it that time slot and discipline and watch as your new career blossoms. You don’t have to make something your full-time job to be passionate about it.
It’s all about the mindset. Just because you’re giving it fewer hours than your full-time job, it does not mean you should take it casually as a hobby. If you take it casually, you will trade on a whim, won’t plan properly and will base your trades on your gut rather than strategy.
Things may feel slow while you wait for steady profits. You may get disheartened. Don’t stop. Keep going. The hard work and effort will add up.
When I first started, I used to spend 4-6 hours learning the markets and practicing strategies. When you first enter the turf of trading, you will spend a lot of time studying, practicing and observing.
“The quality of a person’s life is in direct proportion to their commitment to excellence, regardless of their chosen field of endeavor.” Vince Lombardi
4: You do not need advice in day trading
Partially true, because you do not need incorrect advice.
As beginners often notice, there is way too much confusing and contradictory advice on the internet. It’s important you’re mindful of the advice you follow and the resources you consume.
The finest resources of day trading for beginners keep the advice straightforward and present a step by step guide on how to select stock, implement strategy and handle your capital and risk.
(for the resources, I recommend for new day traders, bookmark and read part 2 of this series)
When I first began, I felt inundated with all the advice out there. I was frustrated at how perplexing it was. That’s what prompted me to create this series, this blog and my program. To pack everything under one roof and help you avoid going through 10 different courses that waste your time.
It has become my mission to assist people realize their dreams and accomplish what I have in a much more organized way.
“I always pass on good advice. It is the only thing to do with it. It is never of any use to oneself.” – Oscar Wilde
5: You can take one course and become a day trader
Building a new career happens by laying the groundwork. While it’s true that you do need good advice and guidance, just following a course is not going to cut it. You need to implement the great advice you’re given correctly.
You need to spend time studying, planning and experimenting with the information you’ve learned.
Learn about everything you can, from books, news, podcasts, Youtube and blogs. This will not only keep your knowledge contemporary, but it will keep you sharp.
6: Day trading does not need money
Anyone who tells you day trading doesn’t need investment is straight-up lying to you.
Capital for investing is a necessary element, and how much you have — and how you handle it — will establish your returns.
As you might expect, you will lose some of your investments. Like any form of investing, day trading comes with its risk.
I advise my students to start with at least $3,000 of capital. You can begin with a smaller amount, but $3,000 gives you the leverage you need to gain impetus. With this, you set yourself up for potential success from the very beginning.
If, at this point in time, you don’t have $3,000, begin saving. While you are, use your time wisely to study the markets and broaden your knowledge.
How To Get Over The Mindset of “Day Trading is a Scam”
When I started, I almost failed like 94% of new day traders do.
Like many, I began to question and ask… is day trading a scam?
I listened to incorrect advice, paid heed to too many people and relied on my emotions instead of the facts. I didn’t take on a mentor to steer me through those difficult beginnings that everyone finds harsh.
I almost ran out of money. But I turned things around by going back to core principles:
- Do not rely on your emotions when you trade
- Trust the data and patterns
- Find a few trusted people to follow and get rid of the noise
- Work directly with a teacher who can help you become part of the 6% that succeed.
It’s important to take some time to summarize what you want to achieve from day trading and to create a map of what your future looks like.
When you know day trading is a journey, getting over apprehensions happens much faster.
It’s important you look beyond the hype and recognize what this entails (including the potential risks and gains).
Is Day Trading For You?
If you seek financial freedom, it’s time to make the change from working for money to having your money work for you.
You can spend your life going from paycheck to paycheck, doing work you don’t benefit from financially or emotionally and going through the daily grind.
Feeling dull, disconnected, and undervalued…
This is how I felt. What I was making just wasn’t sufficient. I got dismayed and anxious. When I look back at that time now, I realize it was all an opportunity.
Don’t assume day trading is a scam and give up before you begin. Look at it as an opportunity.
Accept the fact that success in day trading doesn’t happen overnight. It takes time and patience.
It takes knowledge and skill. The accumulation of that knowledge is a time-consuming exercise that bears fruit at least a year down the line.
I took a deep dive into day trading because I realized that the numbers don’t lie. Anything based on logic and patterns cannot be a scam. Patterns are universal and understandable.
I’m so glad I got over my apprehensions because this industry completely changed my life.
Just like it’s changed mine, I know it can change yours, too!
Maybe you’re looking for a change right now. You are ready for it and prepared to reignite your zeal for life. Day trading, if done with the right guidance and awareness, can help you earn not just money… but freedom.
This is my passion these days: to help new traders make fewer mistakes than I did and fast-track their success. I sincerely believe anyone can make good money day trading, so long as they have a great work ethic…
AND are eager to commit and follow the right advice from people with proven track records.
Right now, I invite you to take a few steps with me:
- Subscribe To My Youtube Channel: I’ve dedicated many videos towards day trading for beginners. I also share weekly analysis, introduce new strategies, and more tips and tricks.
- Join My Newsletter: I write these emails for people who want to learn the basics of Day Trading and the practical steps they should take to get started.
- Join The Freedom Challenge: My personal experience and years of research have helped me create The Freedom Challenge. I help my students based on my knowledge of what to do and what not to do. If you’re new to all this and feeling overwhelmed, you may find it’s the program you need to get to where you desire.
I hope this article has helped debunk some of the myths in your mind about day trading. Is Day Trading a Scam? No… I hope you see that now, and I hope you’re ready for the next steps.