Lately we’ve seen a big surge in these self-proclaimed day trading “geniuses” who experience one or two months of success and then graduate to a life of educating by selling their knowledge. Of course, not all of them are outright scams, but it’s certainly worth being weary of one’s expertise and general strategy prior to investing money into their platform. Here we’ll explain why day trading alerts are scams, especially those involving options.
The world of day trading relies exclusively on the following motions: Waiting for a setup to form with a favorable risk to reward ratio, hitting the buy button the exact minute you see a setup manifest, and finally hitting the sell button within a few seconds to a couple of minutes after. If all works out, you’ll walk away with a profit. If not, you may incur a small loss. Notice how in this entire process, the entire trade can span less than one minute. Not only is it so fast paced, but it’s also so time consuming because you need to be staring at charts for hours upon hours to find setups. With options on the general market (SPY or QQQ), day traders love to leverage 0DTE options because a small quarter percent move on the market can move some of those options 50% or more in one direction.
Unfortunately, many are misled into believing that following these short-term day trading alerts channels is their gateway to passive income and financial success. When you run into an options alert channel that focuses exclusively on day trading, you should run as far away as possible. Remember, the time it takes just to type something like “Bought SPY 7/15 $380C @ $1.5” can be the difference of the entire move that the trader was intending to capture. That’s why often times you’ll see in those channels, alerts can be choppy and literally seconds apart, while the average recipient of the alerts can’t even open up their phones or computers fast enough to mimic the trade. In just four or five seconds, the 0DTE option that you purchased may already be up or down 35%, which is likely more than enough for the trader to exit happily with a nice profit. What about you as the alert follower? Odds are, you probably missed it. Not to mention, they were probably staring at a chart all morning that looked like this until they took a trade:
Day traders will also boast that they’re able to consistently earn 1-2% per day on their investing accounts. So that means, with 252 trading days, they should be able to multiply their trading accounts between 12 - 150 times higher each year, right? In other words, they can turn $100,000 into $2.25 Billion in just two years. Sounds beyond crazy, doesn’t it? Now, we’re not here to say that day trading itself is an outright scam or impossible to achieve success in, because with any system involving a low risk and high reward, you should come out profitable in the long run. However, the dreams that some of these naive “traders” are selling to you are beyond scams. They are outright lies. Even if their system works for them, odds are it will not work for you once you factor in the timing element.
Here at Mad Options we do not engage with day trading. The truth is day trading quickly becomes and feels like a full time job requiring you to sit and wait for setups. On days that you’re not active, you don’t earn any money. On days that you force trades on mediocre setups, you only lose money. That’s why our trading styles are far more laid back, with the goal of only trading a few times per week, when there are top grade opportunities. Additionally, when we send our alerts, the intent is to be able to participate in the trade even if it is seen and taken thirty minutes to an hour later, oftentimes for even a better fill than us. We do not scalp or trade fast paced, but many of our trades only take 1-3 days to close out for a nice profit.
For the average person at home with a 9-5 job, a family, and other commitments in life, you're better off staying away from day trading as a whole. Feel free to give it a shot if you really want to, but it's time to stop getting sucked into the continuous lies that you see on Facebook, Instagram, and all other social media that boasts crazy five-figure gains made in "Two minutes or less." Even if they're real, it's not going to be reproducible on your end if you try to blindly follow them.