Distinguishing Between Professional and Amateur Day Trading
There’s some buzz around this Friday’s New York Times (NYT) article about day traders. Some pros I’ve talked with think the article was poorly researched. I think the pros simply broke the first cardinal rule in trading: never get emotional.
The NYT article is about home gamers. These are people who day trade from home. Do not confuse them with proprietary trading firms, big Wall Street banks, or former pros who now work independently. These home gamers are more like the millions of people who purchase screenwriting books or workshops in hopes of getting their big break. Unfortunately, most of them never will.
On the other hand, the pros work for highly capitalized firms which offer many more resources than most home gamers will ever understand. For example, pros who trade for firms are trading other people’s money. Moreover, many are pulling a base salary. These are two very big differences from amateurs trading their own capital and eating only what they kill.
So, was the NYTs article poorly researched? No. It was simply about one niche of day traders. I guess the writer could have made that clearer in the introduction, but the article seems to make that very clear when reading it without emotion.