I keep seeing divided opinions on whether retail investors should stick to long-term investing (index funds, blue chips, steady compounding) or try their hand at day trading for quicker gains.
Personally, I have done both.
During lockdown, when covid was at its peak, I used to do trading with my father. We did some basic trading (inter-day) using fundamentals(P/E ratio etc.) rather than technical indicators. We made some decent gains since we bought when stocks were like at an all time low and were slowly increasing.
We did it for like 6-8 months and in the meanwhile studied how to read candle sticks and technical indicators and then started intra-day trading. Initially we made tons of losses and almost quit doing it but one day we made around 6% profit in a single day (fluke most probably) and then got addicted to it. And guess what, We lost more than 3x that money the next day as we traded with emotion and not with logic and reasoning.
So i wondered whether intra-day trading is worth it for retail traders and they should stick to long-term or maybe we were just not experienced enough to study the market and it was our short-coming.
If you guys have tried both then i would love to hear your experience!
Day Trading vs Long-Term Investing. What actually works better for retail investors?
byu/ProSamGamer ininvesting
Posted by ProSamGamer
2 Comments
Trading individual stocks, especially doing it frequently, which is kind of the implication with daytrading is incredibly complicated and requires an extreme amount of research. Very few are willing and able to put in that kind of effort and get positive results over the long-term.
But if you just buy index funds and hold them long-term, you’re very likely to get somewhere between seven and 10% annualized return. Add in compounding and pretty much anyone can get rich slowly. That’s the route I’m taking.
It’s worth it for me but it sounds like it’s not worth it for you.