Can You Make Money Day Trading?

During the dot-com boom, it seemed like everyone was a day trader. After the bust, it was almost a dirty word. During the housing bubble, day traders were back in force. Not too long ago it seemed like everyone is a day trader, then once again they all seemed to disappear. So we’re left to wonder, can you make money day trading?

The simple answer is yes. Of course you can. You could also go into a casino and make money betting on roulette, but the odds aren’t in your favor. While you theoretically can make money day trading, even experts debate whether you can consistently make money at it. Even worse, you typically need tools and larger sums of money than regular investment programs.

The reason you see so many day traders during booms is because when the market is going up, everyone is making money, even day traders. Since most issues are going up more often than not, day traders who follow the trend tend to make money. In heavily trending markets it’s easy to be a “successful” day trader. Unfortunately, when the market turns on them they tend to get crushed. They keep playing by the rules of a trending market and don’t know how to function in the new environment.

There is a saying among investors: Don’t confuse brains with a bull market. Day trading looks very appealing when everyone is making money. At the same time, flipping houses looked like a no-lose proposition during the housing boom. Now that the bust is here, most of those people have lost all the money they made in the boom and then some.

Ultimately day trading is gambling. You can win at gambling, but you have to be disciplined, skillful and wise, and even then you might get a run of bad luck that wipes you out. While it’s not impossible to make money day trading, there are other less risky ways to make money that are much more likely to work in your favor -- Particularly if you’re a novice.