Robinhood Has Lured Young Traders, Sometimes with
Devastating Results
Day Traders Will Have Fun Until They Get Wiped Out
“One of the most important concepts in finance -- and
yet seemingly one of the hardest to understand -- is that there are two sides
to every trade. For a day trader to make money, someone else has to lose money.
In the most optimistic case, the loser could be a normal person who needs to
put money in or take money out of their retirement account, and who therefore
doesn’t worry much about the price at which they buy or sell. But most trades
are not this. Instead, day traders are usually buying and selling either from
each other, or from algorithms programmed by skilled, experienced financial
professionals. If it’s the former, their trading is a zero-sum game. If it’s
the latter, human day traders are very likely to lose because the people who
program trading algorithms are typically very smart, and their computers can
spot market-moving developments faster than people can. This is why professional
human traders have been increasingly driven out of the market”.