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Comment by abrahamepton | Hacker News Reader

Maybe, except the college kids who just give all their money to mutual funds will make more money. The day-traders won't "learn how markets work," they'll learn how to lose money by making dumb trades based on less information than their counterparties. They won't learn anything, aaaannnnyyyyything, of actual value.

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College kid who started trading in RH a while ago here. After reading some basic investment books from authors like Peter Lynch, Taleb, and What Jim Paul, decided to get some experience in the markets. Invested a little saved and since then made a decent return, better than if that money was in a bank. So far, I'm doing better than the large-company mutual funds after 3 years, but as I've been reading, that's probably good luck.

It's been an interesting experiment that gave me incentives to learn more about financial markets, which I otherwise would not have touched. However, I started by reading and knowing a little bit, so I won't touch crypto trading until I know more.

> Invested a little saved and since then made a decent return, better than if that money was in a bank. So far, I'm doing better than the large-company mutual funds after 3 years, but as I've been reading, that's probably good luck.

The only thing you should be comparing yourself against is the s&p500, if you haven't beaten that, then you're down.

Also, the markets have been in an unprecedented bull run. Everything you've learned will be useless once the tide turns

Well, I don't think everything will be useless. Think it was John Maynard Keynes who said "The market can stay irrational longer than you can stay solvent." While that quote concerned shorting a bubble, I'd say the principle holds for determining when a bull market will turn, as well.

While I'm 'beating' the S&P by 10% over my puny 3.2 year life, I gained more value from feeling the urge to trade during downturns, but resisting, seeing bad investments fade away (thanks, SolarCity), and effects of global events, such as Brexit and Trump USA. I would recommend trying stocks to people who can afford to do so as a way to really learn what books mean when they say there is an irrational 'fight or flight' instinct that individual investors have, not to mention the herd mentality of institutional investors.

Hope that clarifies things.

I believe the unprecedented bull run is also a contributor to Robinhood’s success. Most of your mobile app day traders are going to drop off when the market turns bearish.

I think many young people don’t understand this. They just think it’s guaranteed returns at this point with the amazing market and btc, etc.

I agree. A lot of young people have not seen anything except the economic expansion we have experienced for the past 8 years.

>Also, the markets have been in an unprecedented bull run. Everything you've learned will be useless once the tide turns

This is the real problem. Easy to beat the markets in a bull run when you're invested in high beta/high risk stocks.

The fact you’re browsing HN and have read all those books probably means you’re not the average user (read more intelligent) of RH. Just read the RH subreddit and looks at all the novice questions the users there ask.

Ha, yea, didn't even know they had a subreddit. I wouldn't go there for financial advice.

if the premise is that you can't make money as a day trader, no matter who you are, because the stock market is essentially efficient, then they aren't making dumb trades with less information, because all information is reflected in the price. What they are doing is accumulating more risk, giving them higher odds of fluctuating out, but the expected value is the same as holding mutual funds, maybe even a little higher, since mutual funds have administrative fees, and robinhood is free.

If that is not the premise, then it's not good general advice to tell people to avoid day trading as they won't learn anything. If the market is not efficient, then return on investment is correlated with your amount of information, and they will absolutely learn things of actual value, or at least their experience with trading will contain information about the strength of their hypotheses, regardless of whether they infer that information.

There are plenty of ways to learn the market without spending money as a day trader on Robinhood.

Most financial events are cyclical. Trading really hasn’t changed much since the late 17th century so reading a history book on financial speculation and market cycles would teach you plenty.

Another alternative is simulating trades without allocating real liquid to it. Watch how those assets evolve over time.

it's improper to be glib on HN, but did you really just call it "spending"?

Regardless, there's a lot to be said for putting actual money down on your beliefs, it has a non-negligible impact on the learning process.

If the goal is attaining wealth then “wasting money” is probably a more accurate statement.

How someone decides to use their money is up to them. If emotional reinforcement helps them remember something then I suppose day trading is an option.

I’m only suggesting there are frugal ways to learn if your ultimate goal is to build wealth.

If you are no more likely to lose money day trading than you are to make money, then it's not wasting money.

Or worse, I assume a lot of beginners aren't losing money in this market which will only fuel Dunning–Kruger effect when they have "real" money.

How else do you think people learn? Losing money by making bad trades IS learning something of value- like learning not to touch the hot stove.

You certainly don’t learn anything from giving all your money to a mutual fund.

I would imagine losing money usually causes people to learn.

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