Day Trading: What Is It, And Should I Do It?

By: Yael Evgi  |  August 31, 2020

By Yael Evgi 

It’s risky, exhilarating, and sometimes, ends in a drink or two. No, I’m not talking about a night in Vegas, I’m talking about the latest market trend; day trading. To understand what Day trading is, let us begin by defining it. The act of making a “Day Trade” involves the speculative buying and selling of a financial instrument such as stocks, options, Forex currency, and futures contracts within the same day. Day Trading is largely known as risky and irresponsible for its uncertain outcomes. Moreover, famous investors such as Warren Buffet look down upon the contested strategy as a contrast to the safer bets of value investing. However, 2020 has seen a year-to-date dramatic increase of individuals who trade speculatively. This trend was last seen during the Dot-Com internet stock boom at the end of the 20th century. So — why are there so many day-traders now, and should you try it?

As our population became confined to our homes, computer, and phone screens, many began looking for alternative ways of making money. The attractive method of buying and selling a stock on the same day with hopes for that security to increase in price value has become one of the most popular. Google trends indicate that in the last 12 months, searches for “Day Trading” have been at their most popular in March at the onset of the pandemic, and recently in June. Searches on Youtube have additionally been at their peak. One can easily find thousands of videos explaining the art of day trading and some of the current hottest stocks to buy. Nowadays, It has become easier than ever to trade or invest in the market with almost all brokerages offering commission-free trading. One relatively new brokerage, in particular, Robinhood (Robinhood Markets Inc.), has become one of the most attractive trading platforms and communities during the Pandemic. Their game-like interface and simple functionalities make the interface attractive to millennials and even young Gen-Z traders in hopes to create riches. According to The Wall Street Journal, Robinhood reported a record-shattering number of 3 million new accounts opened during the first quarter of 2020. 

I opened one of those 3 million new accounts. Personally, I’ve always been fascinated by the stock market, but as a political science and psychology major, I’ve never had a chance to truly learn about it. After the rest of our Spring 2020 semester was announced to remain online, I decided that now was my opportunity to learn about investing. While finishing my spring semester, I began reading the “Journal” every morning, I signed up for courses on the stock market, read “The Intelligent Investor” by Benjamin Graham, and joined a twitter community with like-minded traders (shoutout to my YU trading squad). After months of learning, losing, and gaining on paper trading programs, I tested my skills this summer. Since beginning, the exhilarating process has taught me a lot about perseverance, risk management, and the psychology of the stock market as a whole. I’ve created and joined a community of friends and peers who impel each other towards profit. I hope with all I’ve gained to create a platform of educational tools for those who were new to trading and investing like I was. The process of day trading is rewarding, but nonetheless not for everyone. Statistics show that profitable day traders make up a small proportion of all traders, roughly 10%. However, I believe that with passion comes perseverance, and anyone can become that 10%.