The Term “Day Trader” Should Not Exist

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I received this note from a pissed short-term trader:

You could probably do a blog post on the term “daytrader”…….i.e., how this is negatively perceived by the majority outside of trading…..and even some within trading. Daytraders are portrayed as reckless, void of knowledge, gamblers, and somehow the piranhas of the trading community. Pisses me off. Which why I also do not like the term. But it is thrown at us constantly.

Take two truck drivers. Each works the maximum hours permitted by law of 10 hours. Each do the same thing. One is a long haul driver – trucking goods all over the country. He/she may drive from NYC to Oklahoma & back over 2-3 days. The 2nd driver drives local. #2 has probably more stops, deliveries, pick-ups, etc………delivering to the tristate area as an example — CT, NY, NJ is on their regular route. #2 drives the same # of hours. Is driver #2 any less of a truck driver than #1? Is driver #1 considered a real truck driver and #2 and lower-regarded facsimile? Nope. Neither is an intraday trader vs a swing trader vs a position trader IMO.

The negative “aura” surrounding the term daytrader via many is incredibly annoying.


1. I completely agree. You may notice on this blog, and in One Good Trade and The PlayBook, that I refer to us as intraday traders or short-term traders.

2. The term “day trader” was invented by the financial media—or the Financial Media Entertainment Complex, as I call them in The PlayBook. The way the Financial Media Entertainment Complex covers our markets is ridiculous, @jasonzweigwsj. It is beyond me why the Financial Media Entertainment Complex has gotten away with encouraging viewers to pass on stocks since 2009. This derogatory term was coined during the Internet Boom, which coincided with the explosion of electronic trading. It applied to the masses who were buying and flipping it for a higher profit. A significant increase in professional short-term traders also occurred, many of whom were not professional at all. Few have sustained since the era, but all are still left with the label of day trader. I refuse to recognize the term as it is intentionally derogatory to what I do: trade short-term patterns.

3. Traders at GS, MS, JPM, Lehman, Bear Sterns, Spear Leads used to make millions on the floor making intraday markets and trading intraday patterns, the same patterns they call “day traders” are trading. Most of their edge was a result of seeing customer order flow, which allowed them to be incredibly profitable even if they didn’t have fully developed trading skills. Yet they were never referred to as day traders, but floor traders. They were seen as big traders who were minting money.

4. Who is making the most consistent money these days? Traders who are trading the shortest of time periods at expert level: short-term algorithmic traders. They are mining data to find trades where they have a mathematical edge. They are called quants of HFTs (or jacka$$es depending on whom you ask). When these traders go to cash their outsized checks at the bank, the bank deposits the money (not referring to predatory algorithmic trading, quote stuffers or arms-race HFTs).

5. Trading is about developing trading skills and a PlayBook of patterns that make the most sense to you and then building from these setups. Develop your methodology for trading these setups. This is hard work, takes review, rehearsal, study, tweaking, losses, perseverance until you build skill. Microscalping is a pattern. Scalping is a pattern. Swing trading is a pattern. Trading off of fundamentals is a pattern. Technical trading is a pattern. We’re all pattern traders seeking our best product, time frame, and setups. One is not better than the other nor worse. Derogatory labels for those who trade a particular pattern is inappropriate. It is a massive accomplishment to succeed in any pattern, product, or time frame!

6. We are intraday traders. We are short-term traders. Start calling us by the right name please.

You can be better tomorrow than you are today!

Mike Bellafiore

The PlayBook

One Good Trade

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