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Stock Trading & Day Trading

If you only do one thing

Open a brokerage, max your tax-advantaged accounts (401k → Roth IRA → 401k → HSA), and auto-invest in low-cost index funds (VTI/VXUS/BND or your broker's equivalent). For the median reader, that beats every active strategy you'll consider in this wiki, after fees and taxes, over any horizon longer than 5 years. Do this before reading further. See the Quickstart.

A guide to participating in equity markets — from passive long-term investing through swing trading to active day trading. Covers what each style actually is, what edges (if any) exist, what risk management means in practice, and what's realistic for someone with a full-time job.

Up-front honesty

The base rates for active trading are bad. Studies on retail day traders consistently show 70–90% lose money over multi-year horizons. Common Brazilian, Taiwanese, and US studies all converge on this. The minority who profit are usually disciplined, capitalized, and treat trading as a professional craft — not a side hustle.

This guide doesn't sell you anything. It describes what trading actually is, the strategies that have been studied, the systems professionals use, and — crucially — what's realistic if you have a day job that pays your bills. Spoiler: the "working full-time" plan is mostly not day trading. Day trading is a poor fit for full-time workers; swing/position trading and disciplined investing are far better fits.

Sections

  1. Usage — brokers, order types, market mechanics
  2. Tutorial — Level 1 (open an account) → Level 5 (systematic strategies); includes the full-time worker plan
  3. Examples — concrete worked trade setups
  4. Best Practices — risk, taxes, psychology, journaling
  5. Learning — books, channels, real research

What this guide does not do

  • Tell you what to buy. Specific tickers go stale and "tips" are how people lose money.
  • Promise returns. Anyone promising specific returns is selling something.
  • Cover crypto, forex, or options in depth. Cross-references where relevant.
  • Give legal/tax advice. Tax sections are generic US frameworks; consult a CPA for your situation.

The mental model

A market is a continuous double-sided auction: buyers post bids, sellers post asks, trades happen when they meet. Your edge — if you have one — comes from one of:

  1. Information — knowing something the market hasn't priced in (illegal if non-public material info, hard otherwise).
  2. Analysis — interpreting public information better than the average participant.
  3. Speed/structure — being faster, paying less, or having better access (HFTs live here; you don't).
  4. Behavioral arbitrage — exploiting predictable irrationality of others (this is where systematic strategies live).
  5. Risk premia — accepting risk others don't want, in exchange for expected return (the foundation of long-term investing).

Most retail traders implicitly bet on #1 or #2 without knowing whether they actually have an edge. Categories #4 and #5 are where amateur participation can be profitable — and #5 is by far the highest expected outcome per hour of effort.