Why do most day traders fail?

 I don’t know for certain that 99% is the right number, but I suppose it’s close enough. If what you want to know is why you specifically are failing at day trading, then the answer is the Dunning Kruger effect. You know so little about how markets work that you are incapable of assessing your own lack of competence.

In reading something like that you may say:

“This doesn’t apply to me, I know TONS about the markets.”

To that I’d respond - “Exactly!” You believe you know tons about the markets and how they work. But most of what you know is nonsense taught to you by people who didn’t know anything either, and like you, they lacked a clear view of their lack of competence.

It’s breathtaking really - the degree of Dunning Kruger in the retail markets. I can think of no other domain that comes close to it.

What’s even worse is that they hear things like Goldman Sachs making money on 299 of every 300 days (which is absolutely true) and their immediate response is “they must be cheating”. They aren’t. At least not in the way that anyone in the retail world might imagine. All they’re doing is using ‘positive cash flow hedging’ to make sure that they can turn a profit if the markets go up, if they go down, and if they stay the same. That’s it.

But rather than thinking to themselves “well now I know that’s possible, I’m going to try to learn the same thing” retail traders just say “It’s the big banks cheating”, or “they’re front running me”, or “they’re manipulating the market”, or “It’s the Rothchilds, the Getty’s, Colonel Sanders and the Queen who are screwing me!” or some other stupidity.

Making money in the markets isn’t really that hard. Making more money than everyone else, that’s hard. But just turning a profit? It’s quite simple really. You just have to be something other than a narcissistic, vain, shallow, self aggrandizing dolt. Just think seriously about it for even a little bit. Just be motivated by something other than proclaiming yourself the coolest kid on social media. Don’t be an idiot. Don’t do ‘stupid’ things.

That’s all there is too it. Really.