Advertisements for some day trading systems make investing look like a virtual bonanza where everyone’s a winner. Any company guaranteeing huge earnings is feeding you a load of bull. Some people win and some people lose. Those who believe the hype and have no strategy will lose. Zero-Sum.

Ad: If an ad promises… The potential to make a six or seven figure annual income from trading is at the ends of your fingertips.

Fact: It’s possible, but not probable, and these guys guarantee it. Trading is risky. You need a plan to win. The false hopes of day trading is not a plan.

Ad: If an ad promises… The absolute best trading system with a profit-to-loss ratio of 12-to-1 and an average return better than 18 percent per trade…

Fact: Anyone who guarantees 18 percent a trade is not being truthful. You can’t predict the markets. There are ups and downs.

Ad: If an ad promises… Our recommendations returned an average annual return of 250 percent. If you just follow our recommendations, you will make money.

Fact: Just following a recommendation is a sure way to the poor house. To trade successfully you must understand the trading approach yourself in terms of why it works and what it is trying to do. Guaranteed returns are flat out lies. No one can guarantee a return.

Bottom Line: Day trading is the dirty underbelly of the marketplace. It is based on false hopes and false dreams.

The three ads above follow the same template: large numbers, a sense of ease, and a guarantee. The guarantee is always the tell. No one who actually understands how markets work will guarantee a return, because markets are probabilistic, not certain. The 12-to-1 profit-to-loss ratio sounds precise and scientific. The 18% per trade sounds measurable and documented. The 250% annual return sounds verified. None of them come with audited track records, defined methodologies, or honest disclosure of drawdowns. They are designed to trigger the same emotional response in the reader that the lottery triggers: the vivid imagination of what winning would feel like, before any rational evaluation of the probability.

The zero-sum framing is the honest starting point. For every winner in a day trading market, there is a loser on the other side. The professional firms with faster data, better technology, tighter spreads, and dedicated quantitative teams are on the other side of the retail day trader’s order. That is not a disadvantage that skill or a newsletter recommendation can overcome at the time scales day trading operates on.

Daily Top 10 Winners

One of the favorite devices used to keep day traders interested is the daily top 10 winners and losers in the equity markets. Take a look at the top 10 gainers during random days over the next week. Notice how many gainers are bulletin board stocks trading between 1 and 5 dollars? Why does the media often lead with news of penny stocks showing 20-30% daily moves when in all actuality those shares are being manipulated through internet chat rooms? Because those top ten lists keep day traders spending their money.

The top 10 gainers list is a particularly effective psychological trap because it presents survivorship bias in its purest form. The stocks that gained 30% today are visible. The hundreds of bulletin board stocks that lost 30% or more today are not on the list. The day trader who chases the 30% winner tomorrow is not chasing a repeatable phenomenon. They are chasing yesterday’s lottery ticket winner. The manipulation angle compounds this: many of the largest single-day moves in penny stocks are the result of coordinated pump-and-dump schemes where the operators exit as the retail traders enter on the news of the move. The retail day trader is not trading a market. They are the market exit for the scheme’s promoters.

The contrast with systematic trend following is total. Trend following does not operate on daily noise. It does not respond to penny stock moves, newsletter recommendations, or top ten lists. It reads sustained directional price movement across liquid, transparent global markets and follows it with predefined rules. The time frame is weeks and months, not minutes and hours. The approach is systematic and documented, not guaranteed and vague. For what a genuine systematic approach actually looks like, see the TurtleTrader rules.

Frequently Asked Questions

Why is day trading described as the dirty underbelly of the marketplace?

Because it is sustained by false promises, manipulated penny stocks, and marketing designed to extract money from aspiring traders rather than to produce consistent returns. The top 10 winners lists, the guaranteed return advertisements, and the newsletter recommendation services all benefit from day traders continuing to trade, regardless of whether those traders make money. The business model depends on activity, not success.

Why can no trading system guarantee an 18% return per trade?

Because markets are probabilistic and no one can predict the outcome of any individual trade. Anyone who guarantees a specific return per trade either does not understand markets or is being deliberately misleading. Legitimate systematic approaches describe historical win rates, average win to loss ratios, and overall performance statistics across large samples. They do not guarantee results on individual trades.

Why is following recommendations without understanding them dangerous?

Because you cannot evaluate whether the recommendation is sound, cannot assess whether your circumstances fit the approach, and cannot maintain the discipline to follow through when it produces losses. Understanding why an approach works is the prerequisite for following it through the periods when it is underperforming. Without that understanding, the first losing trade becomes the reason to abandon the approach and look for the next newsletter.

What makes the daily top 10 winners list misleading?

Survivorship bias and manipulation. The list shows only the stocks that moved up, not the many that moved down. It highlights extreme outliers without context about frequency or repeatability. Many of the largest single-day movers in low-priced stocks are subject to manipulation through coordinated buying and promotion. Retail traders who chase these moves are typically entering as the manipulators exit.

Trend Following Systems
Want to learn more and start trading trend following systems? Start here.