With very few options for solid returns on their investment money, many retirees are desperate and they are considering much more risky opportunities in order to get a solid return on their savings. A growing trend is day trading their retirement funds, but is day trading your retirement funds a wise decision, even if using price action strategies? Since learning to day trade profitably is very difficult and since most day traders lose money, our opinion is that this is not a good idea. You should only day trade with money or funds that you can afford to lose, and if you are already worried about your retirement to the point that you feel you need to day trade in order to make it more secure, then you have already answered your own question.
You see, day trading is not easy, and unless you have already proven that you can trade profitably, then you are taking a huge chance by risking your retirement funds to an endeavor that more than 90% of all who attempt it fail, and fail miserably. Those that eventually make it struggle in the beginning as well, and often lose large sums of money before they are finally able to make money at it. Obviously the rewards are great if you are able to turn the corner, but no matter how smart you think you are, and no matter how “different” you think the day trading experience will be for you, I can assure you it will take a lot more time, effort and energy than you think it will. This is not an easy business to conquer, and most give up before they really even have a small clue as how to day trade properly, because most run out of money very quickly.
Here is what we found in regards to the trend of day trading your retirement funds in an article that was recently posted in the Shreveporttimes.com.
Americans worried about running out of money in their golden years are trying a new investment strategy: day trading their retirement funds.
Disillusioned with the conventional buy-and-hold approach, baby boomers are anxious to improve their retirement prospects after two punishing bear markets in the past decade.
Some people are trading the mutual funds in their 401(k) plans more frequently. Others are venturing into options. And some aggressive investors have begun day trading their nest eggs — all in a bid to make up for lost time.
“A lot more frequent trading is happening,” said Chad Carlson, a financial planner based outside Chicago. “People are saying, ‘I’m that much closer to retirement, so I have to do something.'”
That thinking prompted Vlad Tokarev, of Minneapolis, to start day trading his three individual retirement accounts last year. The 49-year-old biomedical software engineer wants to quit working before age 65. But after watching his 401(k) get pounded in the last bear market, he fears another plunge in the stock market could wreak havoc with his plans.
Minutes before the market closes every day, Tokarev buys or sells a mutual fund linked to the Standard & Poor’s 500 stock index. His goal is to profit from temporary fluctuations in stock prices, so he buys when stocks are falling and sells when they’re rising. “I didn’t see a lot of returns using the buy-and-hold method.”
Most Americans with IRA or 401(k) accounts embrace the “set it and forget it” philosophy. Only about 15 percent of investors made any change to their 401(k)s last year, according to benefits firm Aon Hewitt.
But among those willing to make shifts, there’s a growing inclination to do so more frequently as retirement approaches, some financial planners say. These experts sympathize with investor frustrations but predict this type of trading will backfire for most. You can read the rest of the original article here.
Hopefully it is very clear to you as to what our stance is on the idea of day trading any funds that you can not afford to lose. We have been at this game for a long, long time, and we have experienced all of the same up and own emotional pitfalls that most every trader has experienced, so we have been there and done that so to speak. Our recommendation to anyone looking to break into day trading is that you start only on the simulator and that you never attempt to trade even a single dime of your real money until you have proven that you can trade the simulator profitably for many consecutive months.
Most traders don’t have the discipline to do this though, and that is the first sign that they are not ready for the live trading world, as it takes intense emotional discipline to ever succeed at day trading. If you don’t have the fortitude to stay out of the live market with your real funds before you have proven that you know what you are doing, then you certainly don’t have the discipline that it requires to make money as a day trader. Most will ignore my warnings though, because everyone thinks that they are different. Either because they are type A personalities or because they have been successful at everything they have done in life. Trust me when I say this though, trading is much different, and personality and prior success does not translate to “success” when day trading markets of any type. Most traders learn the hard way!
I can tell you now what happens with most traders, and you may even see some similarities to your trading experiences. Most traders get an offer from some trading guru promising them the magic formula for profitable trading, and all they have to do is pay “X” amount of dollars, and in no time they will have their hands on the secret sauce that will carry them to success in the day trading world. However, soon after spending their hard earned money, which is often many thousands of dollars, they find that they are no closer to success than when they started. In fact, they are down the cost of the course, plus they have likely lost most or all of their trading capital as well. Does this sound familiar to you?
If you truly want to become a day trader, then the key is learning to read a price chart. If you want to learn how to trade with price action and learn how to read a price chart like the pros, then you have come to right place. Once you get started on the road to learning how to read a price chart, the next step is practice and experience, and that is done on the simulator without ever risking one red cent of your trading capital until you can trade profitably that way for many consecutive months. If and when you can successfully trade and double or triple your simulator account, that is when you will be ready to dip your toes into the live market, and even then, you must start small, because you will make some mistakes trading live that you don’t make trading the simulator. This is due to that mystical word we discussed previously call “discipline!”
Hopefully there is no longer any doubt as to the question is day trading your retirement funds a wise decision, even if using price action. Even if you are a proven day trader, we think day trading your retirement account is not a smart move, but if you have never proven that you can trade the markets profitably, then do not even consider it! Get started properly by learning how to use price action trading strategies first, and then get the proper experience before trading live. By following these steps, you will increase your odds of success in the day trading world considerably. If you want to get additional information on trading with price action, please visit http://priceactiontradingsystem.com/pats-price-action-trading-manual/.