If I had to make a guess, I'd say most of the people on Reddit day trading are "News Traders" (the worst type you can be) and unfortunately have no idea of the freight train that's about to hit them.
News Traders might catch a few quick early wins, emboldening them.
But, over time they always lose money and leave the game because they don't have a proven system in place.
The Reddit trade is over, don't catch the falling knife!
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The Reddit Trade Is Over
Sun Tsu said that if a battle can't be won, don't fight it.
With that in mind, I'll give you my take on the people on Reddit day trading that have been jumping into stocks like Hertz, Gamestop, AMC, and even Dogecoin.
It reminds me of when I first started trading during the frothy days of 2006-2007 when everyone and their mother would go on Yahoo message boards and hype up their stocks.
My experience is that it was the blind leading the blind.
95% of new traders lose money...I know because I was one of these "YOLO" fools years ago...
..trading by the seat of my pants...
...no plan...
..head in the clouds dreamer.
The dreams of telling The Man to shove it, becoming independently wealthy, beholden to no one (minus the IRS), are theirs for the taking...
..IF they follow a recipe for trading.
I've shared this image before, but I'll share it again:
Evolution of a Successful Trader:
Evolution of a Successful Trader
Most of these new Reddit traders are in Phase 1 and are about to lose a ton of money.
The Wall Street establishment has completely jumped the shark.
They are utterly clueless as to how pissed off people are -- or they don't care.
Robinhood is a wolf in sheep's clothing, stealing from the poor and giving to the rich.
Now that they halted trading in stocks like GameStop instead of simply raising margin requirements, everyone knows it was never about the little guy.
The regulators are even blaming retail traders instead of the ding dongs hedge funds that shorted more shares than there was float.
It's about the dumbest asymmetrical trade I've ever seen.
They deserved a swift kick in the nuts.
Now the regulators will get involved to save their buddies from the "evil speculators."
Rules for thee, but not for me!
Sigh...
Conclusion: Reddit Day Trading
- People on Reddit day trading GME and other "Reddit stocks" are going to lose their shirts!
- Be smart and stay off message boards
- Here's what happens when you follow a trading recipe instead of trading willy-nilly and how retail traders can get their revenge >>