How do people get thousands of dollars in a day? Is there actually a skill involved or is it just gambling?
In: Economics
Most don’t; the average “day trader” loses money
Definitely more gambling; though they’ll argue systems, signs and skill
Today stock xyz opened at $10.33 and closed at $10.35.
During the day it reached a high of $10.42 and a low of $10.28.
Your day trader, through skill and analysis and luck, was able to purchase shares at $10.30 and sell them at $10.39, netting him a $0.09 profit, or about 0.009 percent, 9/10ths of one percent.
If they had $100 to invest, they would have made $0.90. If they had a million dollars to invest, they would have made $9,000.
Now imagine they bought and sold during a 10 minute period. They repeated the same thing multiple times each day.
Note that sometimes they lose money also.
Basically, you just take all of your money and give it to people you don’t know. You’ll never see them and they won’t even say thanks.
I think it’s like professional poker players. They may lose a lot, but the skilled ones will win more than they lose and come out ahead.
Skill is definitely involved. They can use charts etc. to gauge the movement. 5 min charts, previous day high/previous day low/previous day close etc. And definitely there are technical analysis tools available as well if you know how they work.
But lot of others also gamble.
In both cases, the day traders generally lose more.
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