My Experience as a Day Trader
In mid December, I received a text from Josh Brown at Ritholtz Wealth Management. He sent a link to a stock game on Wealthbase. All players were going to get $100,000 in virtual cash. Then for the month of January whoever turned that into the most money would win. There would be prizes for the top three spots.
It sure sounded like fun. You could invest in stocks, ETFs, or cryptos as either long or short positions. You could only put a max of 20% of your money on any one position. In reality it allows you to experiment and play with things you would never do with your own money or portfolio.
Well fun was an understatement!
Initially I had figured there would be a few hundred people. It turned out there were 3,004 players. My thinking had gone from “I hope I can be near the top and maybe win,” too “I hope I can just finish in the top half.”
As I constructed my portfolio to start the game, I began with my favorite stocks at the time. I went with 10 stocks with $10,000 in each, all the stocks I actually owned at the moment.
Then during the first day of the game I asked myself, what the hell was I doing? I only had 30 days to make as much money as possible. These are more longer term larger stocks that do not move near enough to win a fantasy stock game. I had to think like a day trader.
So up went another computer screen in my office. My TV was turned to CNBC as it is every day. My office looked like a studio control room.
Out went stocks I liked, to stocks being traded on momentum. If news broke on something, your initial reaction was how can I trade this event to make money.
The adrenaline rush was real. Even though the game was for fun, I was immersed in the red and green arrows. I was buying stocks of companies I’d never heard of, or could even pronounce. No clue what the companies did. The start of the Gamestop and AMC reddit craze was beginning. I found myself running charts of the most shorted stocks in the market and buying those.
In the morning I would trade the news of the day. Then when I was up enough, I’d sell and lock in the gains, then move onto something else. I’d pay attention to the charts. Where were breakouts forming.
It was a ton of fun, but it became like a full time job. I was getting exhausted. All I could think about was what stocks to buy or short. It totally consumed my days. Most players in the game were full on day trading. Some were making hundreds of trades a day. It’s like a form of gambling.
To my surprise, I finished 99th out of 3,004 players. I turned $100,000 into $172,173.40 in 30 days. The highest I got was 56th.
What did I takeaway from this experience?
In no way could I ever be a day trader. I know some traders and have heard how mentally draining it is. I can clearly see that now. So day trading will not be in my future.
Day trading is really a form of gambling. It takes on that type of a high. It’s YOLO (You only live once) at its peak. Can tell why so many get immersed in it.
Something like this is a ton of fun. If you invest and like stocks it’s definently a game to play so you can experience it.
Buy for the long term. Invest in index funds consistently over time and unless you know what you are doing with stocks, stick with that approach. Hire a financial advisor to help you out if you can’t commit the time and energy to invest on your own.
I will stick to investing in stocks of companies that I know, like and use with a longer term view.