In this lesson
- understand the difference between investing and trading
- find out what regular purchases (DCA) are
- see what a large study says about day trading
"Trading" sounds exciting: charts, quick decisions, profits within a day. "Investing" sounds boring. But boring often costs less in fees and stress – though it does not guarantee a profit either.
Three approaches#
| Investing | Swing trading | Day trading | |
|---|---|---|---|
| How long you hold | years | days to weeks | minutes to hours |
| Time it takes | little | some | a lot, every day |
| What drives it | long-term trend | medium-term moves | short swings |
| Fees and taxes | low | medium | high – on every trade |
| Stress | low | medium | high |
Regular purchases (DCA)#
The simplest long-term strategy: buy the same amount regularly, say 20 euros every month, whatever the price. It is called DCA (dollar-cost averaging).
- When the price is low you buy more, when it is high you buy less.
- You do not have to guess "the right moment" – not even professionals manage that.
- You make the decision once, not every day under the pressure of emotions.
DCA does not mean you cannot lose – if the price falls for a long time, so does the value of your purchases. But it protects you from the worst beginner mistake: buying everything at the top.
What the data says about day trading#
Brazilian economists Chague, De-Losso and Giovannetti studied everyone who started day trading futures on the Brazilian exchange between 2013 and 2015. The result:
- of those who kept at it for more than 300 days, 97% lost money,
- only 1.1% earned more than the minimum wage.
Day trading as "working from the beach with a laptop" is mostly marketing – usually for the courses selling it.
Trading is not a road to easy money
Most people who trade actively lose money in the long run – because of fees, emotions and the fact that professionals with better tools trade on the other side. If you want to get into trading, start with small amounts and learning, not by quitting your job.
Common myths#
- "The more I trade, the more I earn." The more you trade, the more you pay in fees.
- "Day trading is a quick road to wealth." The data says the opposite.
- "Investing is for pensioners." Investing is for anyone who does not want to watch a chart every day.
Summary
- Investing = years and few decisions; trading = frequent trades, more time, fees and stress.
- Regular purchases (DCA) remove the guessing of the right moment.
- In a large study, 97% of persistent day traders lost money.
- If you trade, do it with small amounts and mainly to learn.