He Thought Day Trading Would Be A Thrill. He Ended Up Losing $127,000

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The Robinhood investment app appears on a smartphone in this photo illustration. Day trading has surged during the coronavirus pandemic as stay-at-home people try buying and selling stocks, often for the first time.

Jim Watson/AFP via Getty Images

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Professional day traders spend hours every day sitting at their computers, watching charts and trying to profit from tiny fluctuations in stock prices. They may make dozens or even hundreds of trades a day, but aim to sell off all their holdings by the time the market closes.

Now, with millions of people stuck at home as a result of the coronavirus pandemic, online brokerage sites such as E-Trade, TD Ameritrade and Charles Schwab have seen a blistering growth in their customer base from those who have never traded before.

The trading app Robinhood, which is popular with millennials, saw its customer base increase by 30% through October of this year.

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Not all of these customers are day traders, but the number has almost certainly risen since the pandemic lockdowns got underway, says Brett Steenbarger, associate professor of psychiatry at SUNY Upstate Medical University, who coaches professional traders.

And studies have shown that most day traders lose big.

«On average, day traders do horribly, and the percentage that end up sustaining success are in the low single digits, Steenbarger says.

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It is a reality that Matthew knows well, one he now warns others about.

Matthew started trading stocks more than a decade ago as a business major at an Ontario college.

For the first six years, he did well, turning a few thousand dollars into a nest egg worth more than $150,000. But he gradually grew impatient with the slow pace of the returns he was getting and decided to try day trading.

«I like risk. I like to just know I have an opportunity that’s potentially there. So even like losing is still a high. Winning’s a high, he says.

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The logo for TD Ameritrade appears on an office window for the company. Trading apps are seeing a boom in customers as people flock to trading stocks during the pandemic.

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Several times, Matthew tried to quit, only to get pulled back in.

Day trading can quickly become an addiction for many people, not unlike casino gambling, says Keith Whyte of the National Council on Problem Gambling.

«When it’s trade after trade after trade, it’s that same hypnotic effect that people report when they sit in front of a slot machine, Whyte says.

These days, Whyte says, he is hearing from more and more day traders who got in over their heads.

That’s what happened to Matthew. He says his blood pressure rose. He stopped seeing friends. And he ended up losing $127,000.

«There’s two or three times I broke down, almost bawling my eyes out, Matthew said. «Like what am I doing? This is my dream to do this, and how can I be like failing?

Two years ago, he quit day trading to become a real estate agent and a professional investor in that field, which he says he’s much better suited for.

There may be people out there who can make money day trading, he figures. But it’s not for him, and he feels others will also lose big.