Podcast – Episode 131 – The Real Stats on Day Trading

Podcast Transcript

I don’t know if you’re doing day trading, but over 74% of day traders lose money.

Interesting stat actually thought would be a lot higher, probably is. Let me give the details. So the other day, I was talking on my phone to a friend and the word migraine came out. We were talking about her child that does he have migraines. It was just one or two times that the word migraine was used.

The next day on my phone, I start seeing ads for migraines, migraine relief, migraine therapy. I’m like, What the heck is going on? You know, I haven’t been to any migraine sites. I haven’t searched for mi– oh yeah, I mentioned migraines on the phone. So my phone is listening to me. And you’ve probably seen it. And it’s just happened too many times to be a coincidence. The phones are listening to you. Mine is listening to me right now, you know, Alexa, Siri, all these guys. They’re all listening. And then they’re showing us ads based on the stuff we’re talking about. Now, that is the future, that’s how things are gonna happen in the future, right, we’re gonna be thinking something, and there’s gonna be some software, some program that’s gonna be able to read our thoughts. And it’s gonna show us a billboard with a thing that we’re thinking about. So every car that goes by on the highway, will see a different sign on the Billboard, because of what they’re thinking about. I don’t know, it’s gonna be crazy. But so I bring this up, because now I don’t do day trading, I’m not interested in day trading, I lost money doing it, I don’t want to do it, I found my niche.

But as a trader, you know, we talk about trading all the time. And so I see ads for all different types of companies, option buyers, forex guys, day trading companies, all this stuff. And I keep seeing, I kept seeing this ad from a company called Warrior Trading, They’re day traders and the main guy, he looked like a really nice guy. Tall, skinny, long ponytail glasses, could be like, your average community college or university professor. Nice guy, you know, a little hippie looking guy. But he looked like, he was trustworthy. And he was talking about how he made millions of dollars doing day trading, and it doesn’t take a lot of time. And it’s super easy. And he’ll teach you everything on his webinar and stuff like that. Now, I never looked at it. But by the the numbers that he was throwing up, and the amount of ads that he was running, obviously, he’s got a pretty big company, and they’re got a lot of students and people are going to it.

So it turns out last month, in 2022, or earlier this year, the FTC went after this company for several issues. The company has since settled. And they have agreed to pay a $3 million fine to the government, to the FTC, because of a few different things.

Number one, they were teaching people how to avoid the $25,000 rule. So there’s a day trading rule that if you have less than 25,000 in your account, then you can only do two or three trades a day. And then once you get classified as a day trader and you have to have more money in your account, because it’s more risky, right day trading is actually riskier than regular investing. And so if you become a day trader, then you have to have a lot more money. Well, they were teaching people how to avoid that rule. So that was strike one.

Strike two is the claims that they were making, you know, basically, he had a claim that “Oh, how I turned $500 into a million dollars, I’ll teach you how to do this with very little time and you don’t need a good education. You don’t need this and that. And the claims, according to the government were very exaggerated, and they weren’t for average people. So it’s not true that you can learn to day trade if you’re an idiot. It’s not possible for you to day trade if you only have 15 minutes a day, it’s not possible to profitably day trade by following your rules if you haven’t been doing this for 50 years or some stuff like that, right?

Now our company we make claims as well. And then we make similar claims. Now, the FTC sometimes they go after certain companies, the bigger companies and they try to make an example out of them so other people like us get the hint and stop making exaggerated claims. So hopefully our claims are not exactly that, we try to make them not exaggerated. But like I said, you know you guys see the ads you guys see that you guys get the emails, most likely you get emails from lots of different option guys. And there are crazy crazy crazy claims that are being made. You know, oh how you can make 100% in your underwear in two minutes every day. You know in the morning when the open is crazy, crazy stuff.

Hopefully ours are not that crazy. Yes. You know, we tell you that we can make 10% in a month and we tried to. Every month every month, and that’s 120% a year, which is a lot, crazy a lot. So people won’t believe that. But if we can show that we can do it, then we can say that. And so you know, that’s why we have to do it. But all of our testimonials and whatnot, you know, we interview the people that are having success. So they reach out and they’re like, Hey, I’m having awesome success, I want to talk to you about it, I want to thank you for it. And I want to tell other people to do this. So they can also have success. Those are the people we interview. Right? We don’t interview the people that, you know, have been doing options for 10 years, and they’ve made money like 50 bucks. Nobody really wants to listen that right. So we don’t interview those people. Because anybody can lose money. That’s not a big deal. You want to learn from people that are making money. So that’s the ones you want to interview and list. But I digress.

So anyway, so this company agreed to a $3 million penalty. And they agreed to change their advertising and the practices and all that stuff.

The third thing, the third thing they found was that the majority of the students were not making money. And so how did they do that? Well, I guess this company has a simulator, which is a software program, kind of like a paper trading program that you would get from your broker. So they had their own and they were telling all their students, don’t risk your money, do the paper trading on the virtual simulator, and learn to trade there before you go into the real world. So these people didn’t lose money, technically, because they didn’t have any money invested. Right? They weren’t doing real money, they were on the simulator.

74% of the people on the simulator lost money, and they never made money, I expected it to be a lot higher. But think about it, not everybody uses the simulator. So if they have 1000 students, there’s gonna be a lot of the people that don’t do anything out of the 1000, there might be 20 30% that don’t do anything. They just buy the program. And they’re like, Okay, Oh, give me the money. No, you have to do something you have to work, right trading is work, you have to do something. So they probably never even used the simulator. Out of the ones that did use the simulator, those are the ones that are taking seriously, or trying to learn watching the videos or the courses going or whatever. And then they’re actually doing the trades.

Out of those people, the serious ones, 74% lost money. So I think it’s pretty clear to say the majority of people doing day trading, probably over 85-90% lose money, even with you know, Mr. Nice college professor guy teaching them how to turn $500 into a million dollars. So if he’s teaching, and I don’t know if he’s legit or not, he might be probably is I mean, FTC looked at everything. So he probably did that. Hopefully, even with him teaching, very small percent of the people actually make money.

So should you be a day trader? No. Then again, this is not just a warning about day trading, this is a warning about crazy claims.

So I try to a lot of different traders, people are trying to make a living trading options. And the ones that have the biggest issues. And who don’t have as much success as they should keep bouncing around from one shiny object to the next shiny object and a nice shiny object because they see the claims. They see that oh, here you can make, you know, a million dollars by next Tuesday. So they jump into that program, and they jump into another program and gentlemen, so there’s no focus, right? There’s no reliability is you know, it’s not stable.

Because they just jump around. And so, you know, there was another company recently, a couple years ago called Raging Bull. These guys were teaching people how to trade options and do day trading and buy options and do all the other stuff. They had a lot of stuff, they were selling millions and millions of dollars worth of their courses every single year. They were the ones I don’t know if you remember this, but a guy getting out of the helicopter, the guy in the Lamborghini, and it had a private airplane talking about oh, “I’m the world’s greatest options trader in the world”. Turns out, the guy wasn’t even a real trader, he didn’t trade at all. Right?

Their company got hit by the FTC for a lot of the same reasons that their claims are just too much. They’re too exaggerated. But in the research and in the investigation and found out that these guys– the head guys, you know, the guy on the airplane and, and his main teacher and the other main coach or whatever, they didn’t even have big trading accounts. And the trading accounts that they had were negative, they were losing money. So they were busy teaching stuff that they really couldn’t do. And so that company went away for a couple years. And now they’re back and they’re advertising like crazy. They’re selling courses again, they’re selling everything again, and the same people so you know, it’s a sad state of affairs I guess, in the financial marketing world that we live in, I live in at least, you know, you’re on the other side of it, you don’t see the inside. It’s more about marketing, than actually about getting results, unfortunately, for a lot of people, and so, you know, and that’s one of the reasons that our company is still small, we’re relatively very small compared to all these guys, because we’re not willing to go and make the crazy, crazy claims. And so people don’t buy our stuff as much. Okay, you know, but the people who see through the crap, you know, they look at it, and they see our stuff. And I Oh, this is actually legitimate, this is actually real. And that’s like, the biggest, the biggest thing that we get when people come into our program, they’re like, Oh, my God, this thing actually works. Oh, my God. It’s like, it’s like, shocking to them. And it still works. I mean, yeah, I trade it every day, we– I do it all the time. So I guess there’s a lot of people out there that are selling stuff that doesn’t work, or, you know, maybe you have to do it for a long period of time, or whatever. And people just jump around, and they don’t see it. But just be careful. You know, this is just an announcement, like a public service message that, hey, you know, day trading, number one probably doesn’t work. You know, I mean, yeah, some people do make money. I’ve seen them. I know some of them. I know some people that make money day trading, it’s serious. It’s a job, you got to be up before the markets, you have to be ready and sitting at your desk the whole day. And then when market closes, then you can actually do your work and research and homework and tracking and all that other stuff. So yeah, it’s not easy to make money day trading, no matter what the advertisement says.

In terms of option selling, it does take time to learn. But it doesn’t take a lot of hard work. And it doesn’t take a lot of time. Because once you put the trade on, our whole process is different. We’re not trying to get out of a trade in 10 seconds, we’re trying to stay in the trade for 30 days, right? We’re trying to stay in the trade for a long time. Our whole process is different. So while we are in trades for much longer, the time it takes for us to find trades, manage them is much less.

So I’ve looked at many, many different ways of trading, and tried them all, several of them lost money on most of them. And then I keep coming back to selling Options. Because it’s, for me, the simplest way to do it, easiest to understand, and you can make mistakes, and still have it turnout, right in your favor. Or at least you don’t lose a lot even if you’re screwing it up.

You know, the whole goal. And I’ve told this all my students like in the beginning, when you’re starting out, it’s not to make money. The goal is to be consistent. So if you can trade month after month and not lose money, that’s great. Because then you just do one or two tweaks, and then that’ll that will just skyrocket your returns. So if you’re on the roller coaster, right, that’s like Oh, win, win, win, lose, win, win, win, lose. That’s the biggest bane of option sellers, because they’re not doing it properly. Because there’s no consistency.

So that’s the first goal. It’s not about making money in option selling. It’s not about how much return you can get. It’s about how much they didn’t lose. I’m consistent. I can if I mean, if your goal is 2%, then make 2% two to two to two. And then if you want to go to three and four and five, then we just changed a little bit. And then you go 345. And then you compound it and you compound it and compound it and you played the long game. Right? We’re not looking to retire in a couple of years. Oh, yeah, I’m going to turn my $500 into a million dollars and then go buy an island and live forever on the beach. No, we’re this is a long game. We’re doing this for a while. Yes, you can turn a small amount into a large amount. If you compound it and you keep working the system. It’s not gonna happen overnight. Okay, it takes some time, but it’s doable. It’s doable, very doable.

So, you know, beware, there’s a lot of stuff out there, your phone is listening to you. That’s one thing. And if you find yourself on too many email lists, just hit that unsubscribe button, get off the email list. I told that to somebody a couple of weeks ago. That’s what she told me. She was like, Hey, I keep bouncing around from shiny object to shiny object. And I’m like, Okay, this is what you do. You find the strategy that makes the most sense to you one strategy, just one, that’s what you focus on. And you unsubscribe from every other service.

You cancel every other service, get off every other email list. She’s like, even yours, like yeah, even mine. If you don’t want to sell options to get off my list, you know, I don’t want you on my list if you’re not gonna sell options, right?

It’s costing me money to send you emails. So get off my list. If you’re not gonna sell options. That’s basically all it is. boil it down to simplicity. That’s what we’re talking about.

That’s how you get ahead. One concept, one strategy. Just get good at it, focus on it, get consistent, and then the rest is history. Alright folks, take it easy. Talk soon. Bye.



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