Common misconceptions about day trading

[Spaceman_Spiff_Original]

I have outperformed bitcoin by 10,000% by daytrading and these increases have been steady since 2013. Daytrading is not gambling. It is a simple system where you learn to buy high volume dips and crashes, and breakouts. I guess 'Daytrading is gambling' is like this nice catchy excuse for bad traders for them to blow off steam.

Holy fucking crap dude, congrats on your trading success, that is beyond impressive. Unless most other guys, I believe you.
I am assuming you use quite a bit of leverage?

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[ktabb]

I assume everyone saying Bitcoin daytrading is profitable means in comparison to just "hodling" or, as you say, beating the market. Why are you assuming that's not what they mean?

I disagree with you here, I do not think that is what they mean. That is not what the word "profitable" means. I don't know why you think they do mean that.

Daytrading doesn't really mean doing trades each and every day, unless you are arbitring or scalping (which can also be more profitable in comparison to market). It means watching the market all day long and taking advantage of any clear signals you might see (and maybe doing some routine "scalping" to profit on the volatility in the meantime).

No, this is demonstrably false. Look at the link I sent. Day trading has a definition, and it requires making two trades within one day. Day trading means entering and exiting a position within one day. If you are not doing this, you are not day trading. It's simple.

You may stick to that definition of course but I find it rather restrictive, especially the part about entering and exiting a position within the same day. From my perspective, this is an unwarranted and unjustified requirement from purely technical point of view. If you see that the price rises, why would you want to exit a profitable position? Just to make sure it fits some clumsy definition? You may make a dozen trades one day and no trades the next day because you are just waiting for the right time to hit. Does it mean that it is not day trading? Or one day it is day trading, while the other not? Anyway, if you don't like me or anyone else, for that matter, using the term day trading, replace it with active trading in your mind. Basically, you are being overly pesky about insignificant details which are debatable even on their own. I don't think quarreling over definitions adds anything of substance to the discussion. Most of us understand what day trading essentially means.

Okay so what you are telling me is that you are not talking about day trading when you posted a thread saying that day trading is not gambling. Just FYI, the majority of people here are aware of the one valid and real definition of day trading, which means entering and exiting a position within one day. I think most people here honestly thought that you were talking about day trading and that you understood what the term means. I certainly did.

This definition is not a negotiable one, it is the indisputable dictionary definition. There is no room for discussion here about what the term day trading means to you or me... if you use it to refer to some other strategy (as it seems you are trying to do here) then you are wrong. Furthermore, it was not at all clear to anyone that you are talking about your own unclear and inaccurate definition of the term.

This is like if you called a cat a horse, and then said "Whatever, they both have four legs... everyone knew what I meant".

[Fredomago]

I have outperformed bitcoin by 10,000% by daytrading and these increases have been steady since 2013. Daytrading is not gambling. It is a simple system where you learn to buy high volume dips and crashes, and breakouts. I guess 'Daytrading is gambling' is like this nice catchy excuse for bad traders for them to blow off steam.

Holy fucking crap dude, congrats on your trading success, that is beyond impressive. Unless most other guys, I believe you.
I am assuming you use quite a bit of leverage?

As mention, those who understand and have a good assessment anticipating the movements, day trading is for those who have a big nerved and a big balls to risk with certain dips expecting that the coin will bounce back in your favor, for sure those who thinks that its like a gambling doesn't have a good
look inside of this strategy, people who keep losing their money and don't know what to do when situation did not go to their way.

[rickadone]

Just to start off, I believe that all trading... Even the mpst basic concept of trade and commerce, are exposed to some element of luck. Bitcoin's extreme volatility has made day trading an incredibly viable method of profit taking but also increases this exposure to luck.

That said, I think the most successful traders with the most consistent performances understand this element of luck and use their experience and skill to minimise reliance on luck, otherwise known as external factors beyond their control.

Technical analysis hasn't convinced me as a reliable trading tool for Bitcoin, it certainly has much less reliability in day trading, but the moderate success of bot and algorithm models used by day tradera suggests that there is enough data and short patterns in the volatility, though likely specific to platform and location.

Arbitrage is one example that thrives in day trading. If not only exclusive to it.

I would say exposure to luck and exposure to a lot of risk. I have tried day trading before and even with stoch or RSI to play with the 80-20 rule with overbought and oversold in a specific time frame of choice, it just does not work sometimes, and most times you just have to be able to learn to play your cards right with a lot of stop loss in the process. I know a lot of people have been doing this and working out for them, but it is just a lot of stress to take in and I would rather stick to the short term or long.

Some people totally are just fund of gambling anyway and they see everything they do as gambling, so I would not expect them to say otherwise, since all they do is to only sell high and buy low without considering some other things in the process or making use of some oscillatory indicators to make their decisions. Day trading may be stressful and need a lot of concentration, but if done well, it is far more than just gambling.

[gabmen]

I have outperformed bitcoin by 10,000% by daytrading and these increases have been steady since 2013. Daytrading is not gambling. It is a simple system where you learn to buy high volume dips and crashes, and breakouts. I guess 'Daytrading is gambling' is like this nice catchy excuse for bad traders for them to blow off steam.

Holy fucking crap dude, congrats on your trading success, that is beyond impressive. Unless most other guys, I believe you.
I am assuming you use quite a bit of leverage?

As mention, those who understand and have a good assessment anticipating the movements, day trading is for those who have a big nerved and a big balls to risk with certain dips expecting that the coin will bounce back in your favor, for sure those who thinks that its like a gambling doesn't have a good
look inside of this strategy, people who keep losing their money and don't know what to do when situation did not go to their way.

The thing is that day trading isn't really for everyone. I agree that when people say day trading is gambling, they just haven't developed the skill needed to make successful trades. Its not just about luck. Its observation and good analyzation of coins.

[Canis Majoris]

There seems to be a lot of confusion, misconception and misunderstanding about day trading and its advantages as well as disadvantages. Some people even say that it is a form of gambling. In this topic I want to explain why it is not and also address the most common issues which day traders encounter and how they handle them. Thank you for your attention.

First of all, day trading is no more gambling than any other trading. If the price rises you ride the wave, if it doesn't you wait until it does. That's pretty much all. In this sense, if day trading is gambling, then all trading is essentially gambling. Besides, arbitrage is also day trading which involves quite a few trades (actually, twice as many) albeit it is anything but gambling.

Further, there is a question of limited profitability. This question has some substance but it seems that people who raise it don't fully understand what day trading comes down to. Many erroneously think that it is mostly about missing good profit opportunities. In fact, nothing can be farther from truth than that. Day trading if done right is actually about maximizing your profits, not losing them.

Statistically, your best trading strategy would be capitalizing on both short-term volatility and long-term growth. Since most price moves happen in a rather narrow range followed by relatively rare but big price changes, an optimal strategy would be dividing your trading capital into parts, smaller parts for catching short-term volatility, while bigger parts for capitalizing on longer-term growth.

You are correct in what you write, but the reasons those misconceptions exist at all has to do with the irresponsibility of many of those that day trade, day trading can be extremely profitable but there are those that engage in the activity despite their limited knowledge and as you may expect their results are very poor this leads them to conclude that day trading is like gambling even if that is not the case.

True, but the same can be said with regard to long-term holding as well. Ironically, people who first thoughtlessly engage in day trading quickly turn into holders and investors, sort of, when the price goes strongly against them and they don't quickly close their position. They are hunting for small profits completely oblivious to the risk they expose themselves to. They may earn here and there, and then short but powerful price move eats all their "hard-earned" profits leaving them eternally in red. This is why most people should likely stay away from day trading altogether.

[surfinonmyownwavebaby]

I have outperformed bitcoin by 10,000% by daytrading and these increases have been steady since 2013. Daytrading is not gambling. It is a simple system where you learn to buy high volume dips and crashes, and breakouts. I guess 'Daytrading is gambling' is like this nice catchy excuse for bad traders for them to blow off steam.

Holy fucking crap dude, congrats on your trading success, that is beyond impressive. Unless most other guys, I believe you.
I am assuming you use quite a bit of leverage?

As mention, those who understand and have a good assessment anticipating the movements, day trading is for those who have a big nerved and a big balls to risk with certain dips expecting that the coin will bounce back in your favor, for sure those who thinks that its like a gambling doesn't have a good
look inside of this strategy, people who keep losing their money and don't know what to do when situation did not go to their way.

The thing is that day trading isn't really for everyone. I agree that when people say day trading is gambling, they just haven't developed the skill needed to make successful trades. Its not just about luck. Its observation and good analyzation of coins.

Day trading for sure is the harder one of the two and that is why I believe many people stick to long term hodl. Yes they prefer hodling but it isn't necessarily because that is their favorite thing to do, it is because in the absence of being able to day trade, this is the only type of trading most can afford to undertake.

[Canis Majoris]

Any income generation is associated with excitement. I disagree that trading on the stock exchange is like gambling. When you play casino you depend on luck 100%. When you trade on the stock exchange depends on luck by only 50%. The remaining 50% is your knowledge and ability to analyze the situation.

Some people, if not to say most people, rely on luck alone in their trading patterns, so it is not very different from gambling for them. They just place an order or two here and there, and blindly hope, often in vain, that the price will rise. On the other hand, if you simply follow the trend, you are not gambling already. Because statistically, the trend, once it establishes itself, has more chances to continue than to reverse. This doesn't mean that it will continue indefinitely, of course. This is about chances. Further, if you use arbitrage, your chances of earning are pretty close to 100%. The point is there is no point in such sweeping and hasty generalizations.

This definition is not a negotiable one, it is the indisputable dictionary definition.

Dictionaries do not provide definitions (textbooks do), they give explanations.

[Proton2233]

I often trade on the stock exchange. I always work to earn. Maybe it's luck, but I don't think it is. I never expect peak points in the chart. It helps me close deals. There are no such opportunities in gambling. You're totally dependent on luck. My opinion is that the market is more likely to get income. Excitement always prevents to make the right decision.

[TERA2]

I have outperformed bitcoin by 10,000% by daytrading and these increases have been steady since 2013. Daytrading is not gambling. It is a simple system where you learn to buy high volume dips and crashes, and breakouts. I guess 'Daytrading is gambling' is like this nice catchy excuse for bad traders for them to blow off steam.

Holy fucking crap dude, congrats on your trading success, that is beyond impressive. Unless most other guys, I believe you.
I am assuming you use quite a bit of leverage?

I dont always use leverage and when i do its usually only 2x. 3x at the max. I actually havent had access to leveraged bitcoin trading recently -
 only altcoins. Its a combination of leverage, altcoins, and selling forks at the right time, and getting in on crazy unusual movements. For instance I sold my bch at the peak of 0.5btc then rebought that crash to 0.2btc and sold at 0.38btc all within minutes. I probably overrepresent my "bitcoin" success because half of my net worth is from the last dogecoin rally.

[Canis Majoris]

Just to start off, I believe that all trading... Even the mpst basic concept of trade and commerce, are exposed to some element of luck. Bitcoin's extreme volatility has made day trading an incredibly viable method of profit taking but also increases this exposure to luck.

That said, I think the most successful traders with the most consistent performances understand this element of luck and use their experience and skill to minimise reliance on luck, otherwise known as external factors beyond their control.

Technical analysis hasn't convinced me as a reliable trading tool for Bitcoin, it certainly has much less reliability in day trading, but the moderate success of bot and algorithm models used by day tradera suggests that there is enough data and short patterns in the volatility, though likely specific to platform and location.

Arbitrage is one example that thrives in day trading. If not only exclusive to it.

I would say exposure to luck and exposure to a lot of risk. I have tried day trading before and even with stoch or RSI to play with the 80-20 rule with overbought and oversold in a specific time frame of choice, it just does not work sometimes, and most times you just have to be able to learn to play your cards right with a lot of stop loss in the process. I know a lot of people have been doing this and working out for them, but it is just a lot of stress to take in and I would rather stick to the short term or long.

Before using an indicator, you are advised to back test it on historical trading data. I know that past growth doesn't in the least guarantee future performance, but there is even less chance that some indicator would ever work in the future if it didn't in the past. I certainly give the benefit of doubt to TA enthusiasts here but when I tested a few TA strategies on historical data myself, none was close enough to being truly successful apart from pure coincidence like the broken clock being right twice a day.

[atjiat]

I often trade on the stock exchange. I always work to earn. Maybe it's luck, but I don't think it is. I never expect peak points in the chart. It helps me close deals. There are no such opportunities in gambling. You're totally dependent on luck. My opinion is that the market is more likely to get income. Excitement always prevents to make the right decision.

But without excitement it can not work. except for interest and expectation, a person must thirst for results and only in this case the results will be positive.

[romneymoney]

I think of gambling is based on random chance and the house always has an edge.  I think it poorly describes trading crypto in any timeframe since pricing is not random and there isn't a house that always wins in the longer term.  The high volatility means it's risky and people associate high risk with gambling, but that does not make them the same thing. 

[Omega Weapon]

There seems to be a lot of confusion, misconception and misunderstanding about day trading and its advantages as well as disadvantages. Some people even say that it is a form of gambling. In this topic I want to explain why it is not and also address the most common issues which day traders encounter and how they handle them. Thank you for your attention.

First of all, day trading is no more gambling than any other trading. If the price rises you ride the wave, if it doesn't you wait until it does. That's pretty much all. In this sense, if day trading is gambling, then all trading is essentially gambling. Besides, arbitrage is also day trading which involves quite a few trades (actually, twice as many) albeit it is anything but gambling.

Further, there is a question of limited profitability. This question has some substance but it seems that people who raise it don't fully understand what day trading comes down to. Many erroneously think that it is mostly about missing good profit opportunities. In fact, nothing can be farther from truth than that. Day trading if done right is actually about maximizing your profits, not losing them.

Statistically, your best trading strategy would be capitalizing on both short-term volatility and long-term growth. Since most price moves happen in a rather narrow range followed by relatively rare but big price changes, an optimal strategy would be dividing your trading capital into parts, smaller parts for catching short-term volatility, while bigger parts for capitalizing on longer-term growth.

You are correct in what you write, but the reasons those misconceptions exist at all has to do with the irresponsibility of many of those that day trade, day trading can be extremely profitable but there are those that engage in the activity despite their limited knowledge and as you may expect their results are very poor this leads them to conclude that day trading is like gambling even if that is not the case.

True, but the same can be said with regard to long-term holding as well. Ironically, people who first thoughtlessly engage in day trading quickly turn into holders and investors, sort of, when the price goes strongly against them and they don't quickly close their position. They are hunting for small profits completely oblivious to the risk they expose themselves to. They may earn here and there, and then short but powerful price move eats all their "hard-earned" profits leaving them eternally in red. This is why most people should likely stay away from day trading altogether.

But the problem is while that would be the logical thing to do many do not think like that, after losing money in the market they cannot let it go, they wan to recover the money they lost, but since their abilities are limited then they never do and they enter in a vicious cycle from which they never recover without understanding that if they just held not only they would not have lost that money but in fact got greater profits.

[phantuanvu007]

With my trading day there is always the risk and your emotional ability associated with emotions leads to many risks and pitfalls.

[Canis Majoris]

I think of gambling is based on random chance and the house always has an edge.  I think it poorly describes trading crypto in any timeframe since pricing is not random and there isn't a house that always wins in the longer term.  The high volatility means it's risky and people associate high risk with gambling, but that does not make them the same thing. 

The harsh truth is that there is a "house" in trading too, which has a sort of house edge over the majority of traders. If we think of crypto as a zero-sum game, which is a pretty close approximation anyway, then those who can't lose make the rest of the pack lose. There is simply no third option, and the effect on your chances of success in trading is essentially the same as the one produced by the house edge in gambling.

[wuvdoll]

I have outperformed bitcoin by 10,000% by daytrading and these increases have been steady since 2013. Daytrading is not gambling. It is a simple system where you learn to buy high volume dips and crashes, and breakouts. I guess 'Daytrading is gambling' is like this nice catchy excuse for bad traders for them to blow off steam.

The only reason why I stopped day-trading and concentrate on short term was just because of the stress of having to strain my eye on the chart all day, but for those who understand how to do their thing and make use of the quick swings in the market to their advantage, they are not gambling, and they are getting the best from it. Obviously, most people do not, and day trading, short trading or whatever, they are still gambling anyway since they have no strategy.

[Canis Majoris]

But the problem is while that would be the logical thing to do many do not think like that, after losing money in the market they cannot let it go, they wan to recover the money they lost, but since their abilities are limited then they never do and they enter in a vicious cycle from which they never recover without understanding that if they just held not only they would not have lost that money but in fact got greater profits.

As I have already written somewhere over here, Bitcoin and other major alts too were quite forgiving till recently. You could literally sit on your coins doing nothing and being completely indifferent to price moves, corrections, pullbacks, or whatever, and still book hefty profits at the end of the day simply because the whole market had been consistently rising. But now these days may be over, so your only chance to make up for the losses due to buying at the top can be via buying at local dips and selling at local peaks.

[carodupuis]

My personal take is that day trading just like all forms of trading has a large amount of skill involved but also a big luck element. Just based on my own personal definitions of gambling I would say it's still gambling.

The distinction is that the experienced traders can make good decisions so that there gambles are sensible and in the long term would return a profit.

Once you have the skills, you should be fine in any form of treading you are doing. However, day trading exposes one to a whole lot of risk and I am sure not everyone would absolutely want to be busy taking such risk. The reason why I said a lot of risk is that, in the normal short term, sometimes the chart just does not respond to the indicators let alone for very short term frames, which makes it look more like you are just counting on both the indicators and luck to make a good gain.

[Samarkand]

...
The only reason why I stopped day-trading and concentrate on short term was just because of the stress of having to strain my eye on the chart all day, but for those who understand how to do their thing and make use of the quick swings in the market to their advantage, they are not gambling, and they are getting the best from it. ...

If eyestrain is the only thing that is preventing you from making a ton of money
by day trading I have the perfect solution for you:

https://justgetflux.com/

f.lux fixes this: it makes the color of your computer's display adapt to the time of day, warm at night and like sunlight during the day.

This is by far the best software that I have ever used in terms of life quality improvements.
It is completely free and will ensure that you will still have great eyesight in the future even if you stare
at a computer screen for more than 10 hours every day. Besides, it really improves the quality
of sleep if you are one of the people, who can´t stop using the computer right before going to bed.