So You Think You Can Day Trade?

So You Think You Can Day Trade?
14 Sep 2016

Overconfidence, in my opinion can be just as bad as being overly fearful. Especially in investing. I see people who, in the midst of one of the best stock market runs, believe that their superior returns are mostly due to their incredible ability to pick investments. This sense of, “I can’t lose” leads to poor investment behavior and often poorer results. This is especially true in the short term, where unfortunately most investors live today. Day traders, those who buy and sell (popular in bull markets) securities in small time-frames, have nearly an 80% chance of losing “real money” over the course of 12 months. That’s the results from CuriousGnu, a popular blog post, which calculated a median 12-month loss on investments of 36.3%

A 2010 study from the University of California at Davis indicated a small 1.6% of traders were profitable. Fees, taxes and emotions are the driving factors why short term trading is very difficult. Oh, by the way don’t ask the day traders how they are doing….That’s like asking people how they did as they exit a casino…You won’t hear about the bad bets just the ones that they did well on or they will say “oh, we broke even but we had fun!”… Yeah, sure you did… For us mere mortals day trading should be left to the “experts” to make a living.


Good Luck! Jeff


*These are the opinions of Jeffrey Johnston and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.


Jeffrey Johnston

Jeffrey is originally from Solon, Iowa. He currently resides in Swisher, Iowa with his wife, Prudence, and his three children, Seth, Ian, and Roman. He graduated from the University of Northern Iowa in 1989, where he majored in Finance and Investments. He has 24 years of experience in the investment and estate planning business. He is currently the President of “Premier Investments of Iowa, Inc.” Jeffrey’s main focus is Estate and Investment Planning for Senior Citizens and Pre Retirees. Jeffrey became a Chartered Financial Consultant (ChFC) in 2001. He is the author of many articles on industry related topics and he is a frequent seminar presenter. He is a Board Member TRIAD Linn County Seniors Against Crime, and he is also a past Board Member of the Heritage Area Agency on Aging Task Force. He is a member of CEO Roundtable in Cedar Rapids, a Daybreak Rotary Member, and a member of the Cedar Rapids Estate Planning Council. In March of 2009, Jeffrey became the host of the Premier Investments of Iowa Financial Hour which airs every Tuesday Evening from 6PM -7PM, on WMT 600 AM Radio. In his free time he enjoys golf, fishing, scuba diving, traveling, and coaching son’s basketball teams.