Day Trader Don’ts

From Forbidden Advice, Reader's Digest CanadaUpdated: Mar. 20, 2019

It sounds like the ideal life. Rather than reporting to an office or waiting on tables every day, you’re going to sit at a computer at home in your pajamas, making quick buy-and-sell stock decisions and racking up bucket loads of cash. Well, hold on to your wallet, hotshot. Here’s a reality check.

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1. Don’t Bet the Farm

The harsh reality: Most day traders lose money big-time. So never day-trade with money you need for routine living, tuition money, or retirement funds.

(Photo courtesy of iStock/Miodrag Gajic)

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2. Understand the Expenses

Many day-traders have to pay the company they’re affiliated with enormous commissions in exchange for training and equipment. They work with borrowed money and can quickly ring up mountains of debt. Given the hefty expenses, have a clear idea of what it takes to turn a profit in this scenario.
(Photo courtesy of iStock/Bogdan Kosanovic)

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3. There is No Such Thing as Easy Money

Day trading requires you to be glued to a computer all day, monitoring prices and trends at every moment. Done right, this is hard and gut-wrenching work. Anyone who tells you otherwise is scamming you.
(Photo courtesy of iStock)

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4. Consider Your Source

Once you become known as a day trader, you will be barraged with hot “insider” advice, primarily from people who are trying to drive up their own investments. Don’t act on advice if you aren’t sure of the source.

(Photo courtesy of iStock)

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5. Check Out That Class

You may have been invited to find out about day trading at a special class or seminar. Find out whether the instructor will benefit if you decide to become a day trader. If so, the information provided in the class might be seriously skewed.