Is Day Trading a Good Parnossa for Post-Kollel?
A few days ago I got an email asking if day trading is a good opportunity to go into for those looking to leave kollel. Obviously, the draw towards day trading is that the barrier to entry is low – anyone with a few bucks and a computer can get in. Stories abound about those who have made fortunes from trading, so it seems like an interesting path to pursue.
I am no career expert, but I have seen many businesses and business people try their hands at various different ventures, so I will take the liberty of expressing my opinion. Day trading, as far as I can tell, is a form of legalized gambling. There is a very big difference between investing in the stock market for long term returns, and doing ultra-short term trading, which is highly risky. Investors have a time frame of 5, 10, 20 years or more, for which the historical evidence of positive returns prove that the rewards far outweigh the risk. However, when it comes to day trading there is no historical data. Day traders have to open and close positions in a matter of minutes, often using borrowed money at a ratio of 3:1. In the span of a few minutes, tens of thousands of dollars can be gained or lost. (A couple of years back, a former day trader told me how while he is trading he doesn’t get up from his seat even to go to the bathroom!) It is not for the faint of heart, and contrary to what many believe, there are no “secrets” on how to beat the system.
[Try to find someone who has been successfully day trading for 10 years or longer. You won't be able to find any because they don't exist.]
But there is a deeper issue regarding day trading that should turn any respectable frum yid away from getting involved in it.
Chazal give us a list of those who are passul l’eidus, and in the list are dice players, a.k.a. gamblers. The reason why is because they are not involved in a beneficial work for settling the earth, i.e. their occupation does not immediately provide a benefit to the world.
This tells us something about going to work. When one takes upon the responsibility of earning a living, it should not be done just for the sake of making money – even if the goal is to support one’s family with that money. If that was the case, there would be nothing unacceptable about gambling (as long as you can handle the risk). But working is not just about yourself, it is so that you benefit others with your work by creating products or services that help settle the world. Groceries, insurance, building contractors, tax preparers, attorneys, and even stock brokers are all about helping others – if that wasn’t their primary goal they would not have a business. But a day trader is all about himself. No one benefits from his occupation, and so he is missing out the vital aspect of doing good onto others that is present with every other occupation. So much so, that Chazal felt that such a person cannot be trusted to testify honestly.
If you did spend years learning in kollel, does it make any sense to transition into an occupation that Chazal did not approve of? From the thousands of opportunities that are out there, please realize not all that glitters is gold. What seems easy to get into will cause you lots of heartache, and is not something that makes you a good person in the process. Choose an occupation that helps others. There really isn’t any other choice.
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Filed Under: Career Advice
I do trade or invest for a living. But I will vouch,day traders on the whole lose money. Making money in the stock market isn’t as hard as it seems, but you do need money, patience and nerves of steel. Like many businesses you have to go in for the long term .
My advice, buy dividend paying stocks with super strong balance sheets and wait and relax.
This should be your goal, to retire on the income your stocks provide you.
YOU ARE TOTALLY IGNORANT ABOUT DAY TRADING
If you really believe Day Trading is gambling, stay away. But it is not!
I love your blog, but here you said something very stupid, and gave your opinion on something you DON’T KNOW.
I know people who Day Trade for years and yes, earn very good money.
The problem is YOU HAVE TO KNOW to trade, and people think that ANYONE can trade succesfully.
You have to learn, prepare your self, know people that do it, and GO GO GO!!!
AGut Joidesh
I have been a day trader for many years I went from being very successful to losing it all to now where i am almost scraping out a living. I will tell you that it as totally horrible business for frum people who need parnassa. Their is an old saying in the business the hardest buck to make trading in the buck you need to make and I noticed myself that having pressure on me made trading very hard. Me like most other traders are trying to find another thing to do but it is very hard to find something when the experience you have is in a business people look down on. It is also very bad for shalom bayis as well
The thing about day trading (Including ForEx) is that while you *CAN* make money at it, it is a venture with a very high risk. A fact which most people seem to ignore. Its one thing if you work on a trading floor for a big bank (IE Citi or HSBC) but to do it with your own money? That’s crazy!
A friend of mine worked for a forex firm and he told me that like 80% of their customers lost money! If you are a broke ex-kollel type this is not something you should be doing. You should be investing for the future but after you have paid the rent and the food bill etc.
I will say that while I was job hunting a while ago I was called to interview at a ForEx company in Tel Aviv, I refused to even setup an interview because I wanted nothing to do with the business.
You could say that one who invests for long term returns has strong emunah in the false god of endless economic growth.
I don’t think you know much about the topic. I do.
Here is some advice.
Be capitalized, very capitalized. Make small bets. If all you can afford is 100 shares relative to your capital, don’t trade a 150.
Consider week trading…holding the position for a few days. Day trading, any hiccup and you’re out.
Never go short until you made money consistently going long. Avoid options the first year.
If you’re wrong, are you buying something solid, preferably below value? If tommorrow the market opened up down 25%, would you be happy to hold onto the stock.Don’t buy fads,junk, stocks below $5.
Have a charting system. Don’t buy that which is going down EVER.
Control your losses…
If you are a nervous, anxious type don’t trade.
Look…don’t judge, look… learn to see what is happening, not what you wish to happen.
With a few changes the above is also good advice for living.