Day Trading Is Dangerous. Here's Why

You've probably fallen in the trap of listening to people online who are selling you the dream of making a passive income without having to do any work. You know, there's people that sit in their bedrooms, yet they had the four screens and all the charts. And you're sitting in your 9 to 5 job and you're looking at them making thousands of dollars. Easy money, they tell you. And you get into trading and you're starting to lose fear and greed can start to take over and can get even worse. And I've seen this firsthand. I'm going to delve into what actually day trading is and how you can do it successfully or avoid all the pitfalls that comes along with it. So what actually is day trading? Well, day trading is when you're trading smaller timeframe markets across maybe commodities, shares, cryptocurrencies and cryptocurrency. Day trading has become even more popular recently due to its 247 nature. In other markets, they're only open during the open market hours, which are usually about 9 to 5. And the most attractive thing about cryptocurrency is the volatility. In the share market or commodities market, seeing 1, 2, 3% moves is huge. But in Bitcoin and crypto, 10 or 20% moves are kind of normal. So the gains and opportunities that you can see in the cryptocurrency trading market are massive. And this is where usually people get sucked into people selling the dream about how easy it is to make money in day trading crypto, when the opposite is actually true. Listen, but first of all, what even is day trading? Well, day trading is a form of technical analysis trading when you're sitting in front of your computer and you're looking at a small time frame across different markets. The most common style of day trading on markets is through commodities or the FX market, or now, more recently, cryptocurrency. And the most appealing bit about cryptocurrencies is through leverage trading. So you can actually multiply the amount of money you have in your account through leverage trading, which does sound attractive, but it's equally as risky unless you know the risks. I've been in cryptocurrency for 7 years and know a lot of successful traders, big whales, lots of money. I can tell you right now, none of these people are selling courses, nor do they want you to know their tactics and strategies of how they're making money. Because they're making so much money themselves. Why on earth would they want to share you their secrets and tactics? So the people that are usually selling you the courses and the dreams of this lifestyle of trading crypto are the people that haven't been able to do it themselves. Now, the alternative to actually making money in crypto is not trading, but actually getting an advantage through understanding fundamentals and buying in cryptocurrency assets before other people have. In any markets, there's winners and there's losers. When you're trading cryptocurrency, you're trading against other bigger whales and big, bigger traders on the other end of the screen and there's a winner and there's a loser, and you're looking at smaller time frames. In investing, there's also winners and losers, but you're playing over a longer lifespan. In markets, you need an edge to win. And if your edge is that you've only been doing cryptocurrency trading for 12 months, 18 months, and you've done a guy's course online when your edge is quite small. But if you can get up to date research and insights and fundamental analysis on new projects that have just launched that you can invest in before for the rest of the market, then that can be a better edge against actually trading cryptocurrency. Most people lose trading cryptocurrencies because they don't understand the risks. You can get yourself in such bad, problematic situations when you're trading crypto, especially on leverage. If you are longing the market and the market is going down, you need to add more capital to your position so you don't get liquidated and the versa. If you're shorting the market, there is an unlimited downside because as you're betting for the market to go down, there is unlimited upside. And we saw this with a community member of ours a number of years ago who was consistently on the wrong side of the market and he had lost so much money that unfortunately actually took his life. And this is the problems and risks associated with crypto. It is not for everyone. That's why I have such a distaste for so many people that are selling cryptocurrency courses to the wrong people. There's absolutely nothing wrong with trading and making money through markets. But you've got to understand the risks associated and understand if you are the right person to trade markets. I personally am not. I focus on fundamentals. That's where my advantage is. I'm much better at funding fundamental analysis and on chain analysis. That's where I've made all my money. Getting in early in projects, before others, versus trading. It takes a special type of person to trade cryptocurrencies, especially someone that's trading cryptocurrencies, which is 24 7, you've got to be at that desk, you've got to be monitoring the situation. And I heard so many stories about people that have lost relationships, that have got in bad health, that stopped going to the gym, they're so fixated with that dopamine of that trading that they can lose a substantial amount of money if they leave and it damages all parts of their life. So you really do need to be careful. So when we talk about edge in markets, we what is your edge? What is the thing that's going to get you ahead of other people? So as I spoke about me, we've got a team of four analysts that are consistently looking at new projects, looking at the fundamentals, looking at their tokenomics, looking at the narratives, looking at where we think the future is going to be in cryptocurrency or investing heavily in that before the retail and the next wave of capital rolls in. In trading, what is your edge? Is it your experience? Is it the capital that you have? Is it the mentors that you have around you? These are things that you need to understand to know about your edge. And I think for so many people that get stuck into trading early on, you might have a few wins, you might boost your confidence, you might think you're actually winning, but then the reality sets in. Now, as we head into this bull market right now, when you're looking at trading versus long term investing, I really would separate this out. Because if you start to invest and trade with your long term investing capital, this is where you can really get yourself stuck in bad positions. Because if you're going against the market, if you got a few bad trades, you may start to dip into that long term investing capital and you end up losing more than what you could have done if you just bought and held in a bull market. And I say this all the time to our members, if you are not confident in trading and you don't have time, there is no need to trade by dollar cost averaging into good projects, setting your portfolio up and holding for a long period of time, 95% of the time, you can outperform trading. Now, there's some great traders out there not saying trading is a bad thing. I want to mention that. Right. But I want you to understand that it takes time to get that edge in trading. You are coming up against whales, institutions, new AI algorithms. That's who you're coming up against when you're trading. And As I mentioned, I've met these people before, I've been to quant funds. These trading institutions have hundreds of people with massive amounts of capital coming up against you. The retail, retail investors, you as traders, you are the exit liquidity, you are the 90% for most of you and that's what I want you to be wary of because that's not what the influencers online will be telling you. They'll be telling you all the great outcomes, the dreams that you could be living when the reality is it is extremely difficult to make money trading crypto. The the other thing you need to be wary about when trading cryptocurrencies are how the markets are manipulated, especially with bigger whales. As you're looking at different assets within the cryptocurrency market, whales will look to push around the smaller markets. We see these in bull markets when we have huge 10, 20%, 30% drops when a lot of positions are liquidated. We've seen this recently where you can see tens of millions, hundreds of millions of dollars liquidated in the markets. When large amount of people are either long or short and whales can come in and flip, split that, liquidate it all and then rebuy those assets. The reason they can do this is because the market caps of cryptocurrency assets are way smaller and with bigger whale accounts they can have a lot more control of the market. We saw this, you know, most recently with FTX and sbf, right. Obviously he was doing the wrong thing in the market, but when you have so much money in the market, they can move people around, they can move the market and manipulate it to a point where they actually can take advantage. And as you as the retail investor or you as a retail trader that only has a small like trading account, that is where the problems come, alright? So be aware of that. Know that there's winners and losers and who is on the other side of the screen. Now when you're looking at day trading and technical analysis, there is some fundamental skill sets that are actually really beneficial to understand. And there's a checklist I want to walk you through right now. It's going to help you look at those day trading skill sets that's going to help you also with your fundamental investing really as I mentioned, separate that day trading account out from your fundamental long term investing account. Because the long term investing account in a bull market I guarantees pre probably going to outperform your trading portfolio. So looking at some things like price and understanding where the price is is the most important and most basic of course, then looking at the volume of that cryptocurrency. So if you're going down the list of different altcoins, especially as you're looking down below the 200 mark, looking at the volume and the trading volume of that asset can give you a good indication of how popular it is. Liquidity is another really important one, especially if you go and execute a larger trade on a smaller altcoin. If you go into a dex, looking at the liquidity is super important because if you don't understand that there's going to be a lot of slippery slippage and you might not actually be able to execute a large or small order, then looking a couple of those technical analysis things like the RSI and the moving averages, there's some really just basic trends and indications that you can get over a longer period of time. It's going to give you an indication of where the market's going. I think they're really cool as a way to add into your investing thesis. And then some other really basic things like your candles and your time cycles just give you a really good longer term perspective. And then we overlay that with our on chain analysis and fundamental analysis to give us a good idea of where we should be placing our capital in this bull market. Most importantly though, on the sell side, these indicators from a technical analysis standpoint will help you understand when the market is getting overheated and when the time is to start taking profits. So these are some basic things that you're going to learn through either doing day trading or just some basic technical analysis information to help you with your long term investing. But again, with your day trading, you're going to need a lot more time, a lot more capital and a lot more resources to really get that edge and come up against, as I said, those whales and those institutions to win against them. So who can actually be a day trader? Well, I think for starters, it's got to be someone that doesn't have that emotional tendency to be too emotionally connected with their trades. Someone that is extremely logical and can take the hits of the wins and losses. Trading cryptocurrency is a little bit like poker where there is strategies, but over the course of a period of time there's going to be wins and losses just due to the nature of the market. The way trading works is you're coming up with narratives, using a little bit of math and science to come up with narratives and trends to try and predict what's going to happen next. But as I mentioned, if you look at Any different trading course, they're all probably telling you and explaining things in different ways. Everyone's got their own unique spin on things. So having enough money on the sidelines to weather the storm of trading crypto is super important. If you've only got a few thousand dollars left in your savings and that's. That's then going to zero, and you can't afford to pay for food and rent, I would not recommend trying to start day trading. All right? Getting into trading should be when you've got enough crypto in your portfolio or enough capital in general, and then you've got enough time, time and resources and interest to do it, because if you don't have the time, again, it's going to stress you out. So if you only have $4,000 in your account, and if that goes to zero, you can't pay for your food or your rent. Well, you're probably not the right person to be trading cryptocurrency because you're going to be fully stressed out. A friend of mine recently was trading cryptocurrency and he was telling me about how connected, whether or not he was in front of his computer or away from his computer, he was with that trade. You know, he'd be going for walks with his family, family, he'd be at lunch with his mum on a Sunday, and all he could think about was that trade he had on. So he wasn't present in his life. So understanding the downsides of trading cryptocurrency, especially if you have large positions, it will infiltrate other areas of your life and you need to be aware of that. And that's also where your edge can come from. So if you don't necessarily have a family or you don't spend time with them, maybe you're single, maybe this is the only thing you want to do and the only thing you have time to do that could become your edge. But understand it could be 10, 12, 14, 16 hours at the beginning desk, looking at these charts, looking at how you can take advantage. It looks like a great life from Instagram and YouTube. But the reality, it is not. It is hard work. And I'm friends with a number of big traders and I know their lifestyle. It's brutal, you know, putting up huge capital, huge margins, and you might only be making a few percent, similar to poker. You've got to be grinding away for a long time. And over that period of time, you can build up that capital. But understand your edge. Understand if you're the right person to be doing it before you really go all in. But by all means try day trading. Start with a smaller amount of capital. Sample it, trial it out. Don't put all your money in one basket. Take a little bit of a test capital, put it into some markets and try testing it out and get a bit of a taste for what the lifestyle will be. You'll quickly know whether or not day trading is for you or whether you should just stick to fundamental investing. I was able to make over a $1 million crypto portfolio purely by fundamental investing and that is through the edge I received through the team we have around us at Collective Shift to get the best insights on new up and coming coins to get in before the retail do if your dollar cost averaging into good assets and holding during bull markets the returns in bull markets are ginormous. The first three halving cycles of the Bitcoin halving Bitcoin went up 8,000%, 350% and then more recently 500% and this halving is happening in April and I fully expect the bull market to kick off off the back of this as well. So you might be better off just holding in good assets rather than trying to trade cryptocurrency which completely can kill your portfolio. Hopefully that's helped. My name is Ben Simpson from Collective Shift. If you like these videos. Would love for you to share some feedback in the comments below and we'll see you on the next video.