Question of the Day (REPEAT): A recent research study found that _________ of stock day traders made money over a 12 month period.
Given the events that have transpired over the past week with GameStop, this QoD provides great opportunity to discuss the perils of day trading.
- Why is day trading so popular despite the difficulty of making money consistently?
- Why do you think it's so difficult to make money day trading?
- Do you know anyone who has actively traded stocks? Were they successful for more than a few days?
- What's the difference between investing and speculating?
Behind the numbers (CNBC):
A study published in June of almost 1,600 Brazilian day traders that tracked their activity for one year concluded that only 3% made money. The authors avoided claims that day traders can make money over short periods of time (a day or a week), and concentrated on day trading activity over longer periods.
Their conclusion: “We show that it is virtually impossible for individuals to day trade for a living, contrary to what course providers claim.
Want to use GameStop as a "teaching moment?" Here are some resources and professional development opportunities:
- FinCap Friday: Until the Game Stops
- Podcast: Yanely and Tim talk GameStop (15 minutes)
- Op-ed: Gamestop’s costly financial lesson for retail investors (CNBC): NGPF weighs in on importance of financial education
- Virtual PD (Monday, February 8th at 3pm PT): GameStop: Teaching Moment About Investing Pitfalls
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
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