My Rich Nerds,

I get constant messages all asking the same question: “Unc, is day trading worth it?” Ironically, I get fewer messages like this one from a 23-year-old: “Unc, I just lost $10,000 day trading. Am I cooked?” While I don’t understand what cooking has to do with this, it raises a good question. Should you day trade? In this newsletter, we’ll break down what day trading really is, expose the hidden costs no one mentions, and show you—using real data—whether it’s actually worth your time.

Day Trading 101

Day trading is like couch flipping. You buy one for $100 and hope to resell it for $200, earning $100 in profit. The difference is that you’re flipping assets like stocks and cryptocurrency. The idea is to buy at a certain price, hold it long enough for it to increase, maybe get through a 90-second anime episode opening (if you know, you know), and sell it for a quick profit. Then repeat until you’re rich. TL;DR: Buy low, sell high. Easy right? Yes, this is foreshadowing.

What No One Tells You About Day Trading

Unfair Fight

You’re not just competing against other day traders; you’re up against algorithms firing in microseconds, quant teams stacked with PhDs, and hedge funds with more computing power than some countries. This isn’t hyperbole: Renaissance Technologies, one of the most successful hedge funds of all time, boasts “90 PhDs in mathematics, physics, computer science, and related fields, a research database growing by more than 40 terabytes a day, and 52,000 computer cores with 150 gigabits per second of global connectivity.”

Furthermore, many institutions locate their servers right next to the stock exchange infrastructure to minimize latency. Studies show that in modern markets, speed literally determines who wins trades — even institutions are racing against each other. Meanwhile, you’re trading from your iPhone 11 on the toilet. It’s not a fair fight. The solution is to switch to Android, obviously. Just kidding… kind of.

The Stress Tax

We can’t ignore the emotional toll of trading. One moment, you’re up 5% and feeling like a market genius; the next, NVIDIA drops 2% and it feels like a personal attack. One study tracked the real-time psychophysiological activity of professional traders alongside their financial transactions and market fluctuations. TL;DR: trading literally changes your body—heart rate, cortisol levels (the stress hormone), everything.

A similar study—whose co-author compares trader stress to that of air traffic controllers—confirms that traders often have elevated cortisol levels. These spikes make them more risk-averse, and when markets fluctuate, this heightened caution can reduce trading activity. If enough traders react this way, it may even contribute to financial crises. Fun stuff.

Opportunity Cost

Even if you manage to turn a profit (you’ll soon learn the statistics around this), the opportunity cost is brutal. Every hour spent staring at charts is an hour not spent learning a high-income skill, advancing your career, building a long-term portfolio, or spending meaningful time with real human beings. You could be becoming an engineer, a plumber, a nurse, or a top-tier sales rep — all of which are far more reliable paths to higher income with a fraction of the psychological wear and tear. Time is your most valuable asset. Day trading, by contrast, is a black hole for time.

Survivorship Bias

I can’t tell you how often Gen Z and Millennial men come to me saying, “I feel like every 18-year-old kid is making $20K per month trading”. Since social media is a highlight reel, we only ever see highlights. The reality is, most people aren’t going to post about losing $10,000 trading stocks. It’s the same distortion you see in any competitive field — a few visible success stories (Zuckerberg dropping out of college and creating Facebook) create the illusion that the path is common, when statistically it’s anything but. This is known as Survivorship Bias. Without recognizing it, it’s easy to mistake anecdotes for outcomes.

Day Trading Statistics

The truth is, almost no one beats the market long-term!

A famous study analyzed every trade on the 12th largest stock market at the time—Taiwan—from 1995 to 1999. It found that day traders underperformed low-cost index funds by 2–3.8% per year—money they could have earned simply by buying and holding.

You might say a few things, “Imran, that study is from the 90s—I don’t even know what the ’90s are.” or “sybau, boomer”. To that, I say: Dalbar (also, rude).

Dalbar, a third-party research firm, has tracked investor behavior for nearly 50 years. Their latest data shows that in 2024, the average equity investor earned just 16.54%, compared to the S&P 500’s 25.02%. Over decades, the story is consistent: investors who try to outsmart the market almost always underperform broad indices.

Dalbar’s QAIB (Quantitative Analysis of Investor Behavior) confirms this. Over the 30 years ending in 2020, equity fund investors trailed the S&P by several percentage points annually. And let’s not forget—the S&P 500 has returned roughly 10% annually over the past 40 years.

My Take

Do not do it. Day trading isn’t “investing”. It’s speculation. If you genuinely enjoy it or find it intellectually stimulating, that’s fine — just treat it like a casino hobby. Keep your risk small, don’t put more than 5–10% of your net worth into it, assume losses are the default outcome, and walk away before it starts doing real damage. Or even better, work for an investing firm and lose their money instead of yours 😉.

To build real long-term wealth– and many of you already know this but choose to ignore it for many reasons– invest in low-cost index funds within tax-advantaged accounts. Then focus on three things that are actually worth it:

1. Learn skills or start a business that will increase your earning potential.
2. Build GOOD habits. Seeking short-term gratification (via trading) is not one of them.
2. Go outside and touch grass. AKA enjoy your life.

P.S. If you’re in America, Happy Thanksgiving — may your family drama be minimal and your stress levels lower than a day trader’s at 9:31 AM.