Day Trading In An Unprecedented And Volatile Market

It was a tough grind through most of January, but I’m happy to say that this past week proved to be a massive one for my trading accounts that ended up pushing me back into the green after starting the month down more than -$90,000.

And while I’d like to say last week’s success was a result of shrewd trading and careful planning, sometimes a blunt instrument works just as well as, if not better than, a finely tooled machine.

I’m of course referring to the action we saw in the ongoing Wall Street Bets short selling saga, specifically in GameStop Corp. GME and Koss Corporation KOSS. Trades in those two stocks alone accounted for more than $600,000 in profit through the week.

However, that figure also carries a caveat, since I experienced about -$200,000 in draw down from my peak in trading those stocks as well.

All of which is to say that we're in an extremely volatile market, one that is unprecedented given the circumstances surrounding the volatility. It’s a time when many new traders have been lured to trading based on the concerted action of a group of online forum users, and that new money that has entered into a handful of stocks or assets is extremely unpredictable.

I’m fortunate enough to have more than a decade of experience day trading to help guide my trades through this period, as well as enough capital to support riskier positions. The same can’t be said for the hundreds of thousands of new traders who have entered the market with simply a Robinhood account and some tips from Reddit.

While I don’t want to diminish the massive acheivement of Wall Street Bets, neither I nor anyone else knows how this situation in the market is destined to play out. We have to wait and see whether this might be the new normal for trading or if the hedge funds and institutional traders will somehow kneecap the extraordinary control retail traders have managed to leverage against them. Nevertheless, I do know enough to confidently say that the next few weeks and months will be unlike any other in market history.

With that in mind, I would like to encourage any traders who have entered the market because of the Wall Street Bets phenomenon to consider broadening their understanding of the market, either through courses with Warrior Trading or, more valuable, simulated paper trading.

Primarily, I would ask them to look into trying their hand at day trading, since many of these new traders are simply executing a buy and hold strategy, which right now seems like the height of risk if the only stocks they are looking at are GME or AMC Entertainment Holdings, Inc. AMC. It’s great that more retail traders are taking control of a market that has been dominated by big money, but, in order to survive in the market, traders have to understand the mechanisms of the stock market on their own and not simply follow trends or ride in the wake of another trader, myself included.

So to all of the new traders who might be reading up on financial markets for the first time, let me welcome you to the world of trading and encourage you to continue on your journey to a successful and prosperous journey.