Noise Trader
Categories: Trading
Let’s play a new game: Are You a Noise Trader?
Do you make trading decisions based on whatever you last saw on YouTube? Do you consider a 20-sided die to be your best form of financial research? Do you think the term "EPS" refers to a form of psychic power?
If you answered "yes" to any of those questions, then you might be a noise trader.
Fundamentally, the term "noise trader" refers to dopes who move money around seemingly at random. Noise traders don't base their decisions on a lot of rigor or analysis. They just bounce around with market trends (adding to the market noise, as it were), waiting until they get caught up in an otherwise avoidable downturn. When they lose so much money, they have to quit their day-trading dream and go back to being a dentist or whatever.
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Finance: What is a Day Trade?2 Views
Finance, a la shmoop. What is a day trade? Ding-ding-ding-ding-ding, spin the wheel
roll the dice, craps, hit hit hit, damn twenty two I'm [Casino games being played]
out. Okay so day trading well a bit quieter than a Vegas casino blackjack
thingy there.. Yeah well this was how it felt when he bought Amazon at a thousand [Guy looking tired staring at a computer]
two hundred and sold at eighteen minutes later at a thousand two oh eight, woot
sorta eight bucks and profits in 18 minutes for doing a whole lot of this.. [Finger clicking a mouser over and over]
Well day trading is just that, trading stocks back and forth in a given day
hoping to make more than you do while driving for Uber or Lyft and knowing [Guy looking excited driving a car]
that you're one click away from Easy Street or the poorhouse. Well day trading [Old battered house with smashed windows]
is a relatively new thing before computers got cheap and fast and
everywhere. Commission's on trading stocks were really high like [Stock ticker showing prices]
prohibitively high like 40 bucks a trade or more high so you couldn't day trade. [Red cross over computer screen]
But with the advent of online trading traders can now buy more or less all the
trades they can eat for less than a hundred bucks a month and all that's [Guy handing over money to the computer and getting lots of stocks]
great if you can sustain wins again and again in the world of day trading and [Dollar signs coming off the guys computer]
even if you do win all those winnings are gonna be taxed at the very high
ordinary income rates so you'll be giving something closest to half of your [Pie chart showing taxation]
gains back to the government, and that's assuming you're a relatively rare winner
like most people lose at this. Lots of people got rich owning Amazon for twenty
five years same with Google and Facebook doing
nothing like no trading just owning. But very very very few people in history [Pots of gold at the end of the 25 year timeline]
ever got rich from day trading, oh except one yeah that guy he's the [Guy holding a huge sack of casino chips]
house...