Top 5 Myths About Day Trading (And the Truth Every Beginner Should Know)
Day trading often gets a bad reputation due to the myths surrounding it. Misconceptions can either discourage aspiring traders or lead them to make costly mistakes. In this article, we’ll debunk the most common myths about day trading and show you the truth behind them. Let’s help you start day trading with the right mindset and tools for success.
Myth #1: Day Trading is a Get-Rich-Quick Scheme
Is day trading profitable?
The Truth:
Day trading is not a shortcut to wealth. While some traders may achieve quick gains, these successes are usually the result of years of practice, discipline, and deep market knowledge. What seems like luck is often the result of preparation and opportunity.
Think of trading like any other career. Would you trust a surgeon who only trained for a week? As in medicine, successful day traders require a strong education, hands-on experience, and continuous skill development.
At Uncommon Education, Jeremy Lieber emphasizes a structured approach to learning. His mentorship combines theory with live market experience, helping students focus on steady progress instead of chasing quick profits.
🔑 Key Takeaway: Success in trading comes from consistency, discipline, and learning, not from chasing unrealistic profits.
Myth #2: You Need a Lot of Money to Start
How much money do I need to start day trading?
The Truth:
You don’t need a huge bank account to start trading. Today’s brokers often offer accounts with low minimum deposits, allowing beginners to start trading with minimal financial risk. The secret isn’t about how much you start with—it’s about how wisely you manage it.
Jeremy Lieber often says, “It’s not about how much you start with but how wisely you trade with it.” At Uncommon Education, we teach students how to:
Allocate funds effectively.
Limit risk per trade.
Focus on capital preservation while learning.
🔑 Key Takeaway: Start with what you can afford, focus on education, and grow your trading account steadily with sound strategies.
Myth #3: Day Trading Requires Expensive Technology
Day trading setup for beginners
The Truth:
You’ve likely seen images of professional traders surrounded by six monitors and advanced software, but here’s the truth: you don’t need fancy tools to start day trading.
All you need is:
A reliable computer.
A stable internet connection.
Access to a trading platform (many are free or low-cost).
At Uncommon Education, Jeremy Lieber teaches students how to maximize practical tools and avoid unnecessary complexity. He emphasizes simplicity and focuses on mastering essential tools, such as charting platforms and trade execution.
🔑 Key Takeaway: A successful day trader relies on discipline and strategy—not fancy setups or expensive software.
Myth #4: You Must Be a Math Genius to Trade
Do I need to be good at math for trading?
The Truth:
Yes, numbers matter in trading, but you don’t need to be a mathematician to succeed. Modern trading platforms calculate everything for you, including profit-and-loss metrics, position sizes, and chart analysis.
What matters most is your ability to:
Recognize patterns.
Understand price action.
Apply risk management strategies effectively.
At Uncommon Education, Jeremy Lieber uses relatable examples and straightforward teaching methods to simplify complex concepts, ensuring students from all backgrounds can excel in day trading.
🔑 Key Takeaway: Success in trading doesn’t require solving complex equations. It requires understanding and applying strategies.
Myth #5: Only Professionals Can Make Money Day Trading
Can beginners make money day trading?
The Truth:
Many successful traders started with no prior experience. The key is not experience—it’s the willingness to learn, adapt, and practice consistently. Day trading is a skill anyone can develop with the right mentorship and tools.
At Uncommon Education, Jeremy Lieber’s mentorship program empowers students at all levels. Whether you’re a beginner or an intermediate trader, the program offers:
Live trading sessions.
Recorded training materials.
Community support to accelerate learning.
🔑 Key Takeaway: With the right mindset and training, anyone can become a successful day trader.
Why Choose Uncommon Education for Day Trading?
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At Uncommon Education, we don’t just teach day trading—we help you develop the mindset and skills to thrive. Led by expert trader Jeremy Lieber, our program combines proven strategies, live mentorship, and a supportive community.
Here’s why we’re your best first step into trading:
Proven System: Clear, actionable strategies designed for all market conditions.
Expert Mentorship: Get personalized feedback and live market analysis directly from Jeremy Lieber.
Risk Management Training: Learn how to protect your capital and grow your profits steadily.
Supportive Community: Connect with like-minded traders who share your journey.
Get Started Today
Free day trading guide for beginners
Don’t let myths stop you from pursuing your trading goals. Break free from misconceptions, gain clarity, and start with confidence.
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Getting started with day trading doesn’t have to require a huge investment. Many aspiring traders hesitate because they think they need a substantial amount of money upfront. The truth? You can start day trading with zero budget if you focus on building your knowledge, practicing strategies, and leveraging free resources.
At Uncommon Education, Jeremy Lieber emphasizes: “The key to successful trading is starting smart.” Here are the first three steps to dive into day trading with $0 while setting yourself up for success.
Step 1: Master the Basics of Day Trading
Day trading basics, how to start day trading
Before putting any money into the markets, invest your time in understanding the fundamentals. Day trading involves buying and selling financial instruments—like stocks, options, or futures—within the same trading day, aiming to profit from short-term price movements. But it’s more than just clicking “buy” or “sell.”
What to Learn:
Trading Terminology: Terms like bid, ask, spread, and stop-loss. (Check out Uncommon Education’s free guides for a quick glossary.)
Candlestick Patterns: Learn how to read candlesticks to predict trends.
Basic Strategies: Start with simple strategies like scalping or momentum trading to understand how traders capitalize on price fluctuations.
Free Resources to Get Started:
Online Articles and Videos: Platforms like YouTube, Investopedia, and finance blogs offer beginner-friendly content.
UET’s Day Trading 101 Guide: A free, downloadable resource packed with actionable insights tailored for new traders.
Simulated Trading Platforms: Practice trading without real money using free demo accounts.
🔑 Key Takeaway: Trading knowledge is your first investment. By building a solid foundation, you’ll avoid costly mistakes when transitioning to live trading.
Step 2: Practice on Demo Accounts
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One of the most valuable tools for new traders is a demo account (or paper trading account). These accounts let you trade in real market conditions using virtual money, making them perfect for practicing your skills without financial risk.
Why Practice Matters:
Experience real-time market volatility without fear of losing money.
Develop emotional discipline by managing fear and greed, two common pitfalls for new traders.
How to Set Up a Demo Account:
Choose a reputable brokerage with a free demo trading option (e.g., TradingView, TD Ameritrade’s thinkorswim).
Master one strategy before experimenting with others.
Track your trades and review what worked and what didn’t.
At Uncommon Education, Jeremy Lieber advises: “Practice like it’s real. The habits you build in a demo account will follow you into live trading.”
Pro Tip: Set a virtual budget that mirrors your future live trading account. This ensures your practice aligns with your actual trading goals.
🔑 Key Takeaway: Demo accounts are your training ground for building confidence and refining strategies before using real money.
Step 3: Leverage Free Tools and Communities
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Even with a $0 budget, you have access to countless free tools and communities that can accelerate your learning and decision-making.
Free Tools to Explore:
Market News Platforms: Stay informed with real-time updates on websites like CNBC, MarketWatch, and Yahoo Finance.
Stock Screeners: Tools like Finviz and Yahoo Finance Screener help you filter stocks based on criteria like volume or price movement.
Charting Software: Platforms like TradingView offer free tools to analyze trends and price movements.
Join a Trading Community:
Being part of a supportive community like the Uncommon Education Discord can help you stay motivated and learn from experienced traders.
Benefits of Trading Communities:
Get real-time insights from experienced traders.
Ask questions and receive feedback on strategies.
Find emotional support during tough market conditions.
Jeremy Lieber emphasizes: “Trading is a solo sport, but success is amplified when you learn from others.”
🔑 Key Takeaway: Free tools and communities provide the resources and motivation you need to stay accountable and make informed decisions.
Bonus Tip: Set Clear Goals
While starting with a $0 budget is possible, you’ll eventually need to invest real money to see tangible results. Before transitioning to live trading, set clear goals:
How much capital will you allocate for your first trades?
What level of consistency do you want to achieve in demo trading?
Which strategies will you focus on when going live?
The Uncommon Education Advantage
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At Uncommon Education, we specialize in helping beginners navigate the complexities of day trading. With free resources, live webinars, and expert guidance from Jeremy Lieber, we provide the tools you need to start strong—even with no budget.
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Starting your day trading journey with $0 is not only possible but also smart. By focusing on education, practice, and leveraging free tools and communities, you can build a strong foundation without risking a penny. Remember, the market will always be there—your job is to prepare yourself for success.
Your journey to financial independence starts today. Let’s trade smarter, together.
Every quarter, companies announce their earnings to the public. It’s a time of excitement and anticipation for investors and traders alike. Positive earnings can lead to a jump in share prices, but not always. Sometimes, stocks can drop after a report of good earnings, and this can be confusing and frustrating for investors. Understanding the reasons behind these drops is crucial for traders who want to succeed in the market. In this post, we’ll explore the factors that can cause a stock to drop after good earnings and what traders can do to uncover why.
Factors That Can Contribute to a Stock Dropping
Regarding the stock market, surprises can range from exciting to downright devastating. It can be incredibly frustrating to hear that a company you invested in beat analyst expectations only to see its stock price drop. Unfortunately, this is a common phenomenon in the world of trading. While several factors can influence the value of a stock, some of the most significant factors include changes in management, weak guidance, buy the rumor and sell the news strategy, lack of volume buyers, and share buybacks. Let’s take a closer look at each of these.
Changes in Management
Investors may be quick to sell off their shares if a company experiences a change in management, even if they just reported impressive earnings. When a new leader takes over, there is always a new level of uncertainty surrounding the company’s future direction and performance. This hesitancy can cause a dip in stock prices, as investors are unsure how the new leadership will navigate the company’s growth. If the leadership is untested or unproven, it only adds to the apprehension and can cause a more significant drop in share prices. While earnings reports are critical benchmarks for investors, management changes can majorly impact a company’s future success.
Weak Guidance
Weak guidance is a situation where a company forecasts future earnings that are lower than analysts’ expectations. Essentially, investors may start to doubt the company’s ability to perform well over the long term, which can cause the stock price to decrease. So, while earnings reports are essential, savvy investors must also pay attention to guidance.
“Buy the Rumor, Sell the News” Strategy
This is a common trading strategy where investors buy stocks based on rumors of positive news and then sell them once the news is officially announced. This can cause a temporary boost in share prices as investors rush in to capitalize on the good news. However, once the news is out, the value can drop as quickly as it rose.
Lack of Volume Buyers (Liquidity)
Liquidity refers to the availability of buyers and sellers in the market. If there aren’t enough buyers interested in purchasing the shares at the current price, there’s no upward pressure to keep the stock price at its current level. This means that as sellers begin to outnumber buyers, the price can start to dip, regardless of how well the company is doing financially.
Share Buybacks
Share buybacks are when a company buys back its shares from shareholders. While this can increase a stock’s earnings per share, it can also decrease the number of outstanding shares, causing the stock price to appear inflated. If investors view this as unsustainable, they may sell, causing a price drop.
Panic Selling and Its Impact
Panic selling is when investors sell their shares in a company because of fear, uncertainty, or doubt. This can cause a rapid drop in share prices, often during economic turmoil or when there’s negative news about a company. The impact of panic selling can be damaging, especially for those unprepared for it. It’s essential for traders to stay calm during market downturns and not let their emotions dictate their decisions. Sticking to a long-term investment strategy may help you weather the storm during periods of volatility.
How Traders Can Uncover the Reasons for Price Drops
As a trader, it’s essential to investigate why a stock has dropped. Traders can use various tools to uncover the reasons behind a price drop, including technical analysis, news and social media analysis, and fundamental analysis. Technical analysis involves looking at charts and identifying patterns and trends. News and social media analysis involves monitoring news outlets and social media platforms for any news or discussions about the company. Fundamental analysis involves looking at a company’s financial statements, industry trends, and other macroeconomic factors that could impact the stock’s price.
Stocks can drop after good earnings, and several factors can contribute to this. Understanding these factors is crucial for traders who want to succeed in the market. While panic selling can be damaging, it’s also an opportunity for traders to buy undervalued stocks and profit from the market’s recovery. To be successful in trading, it’s essential to stay calm, do your research, and always be prepared for the unexpected. By following these tips and strategies, traders can become more successful and confident in their investments. If you need any help with your trading journey, please get in touch with Uncommon Education Trading. Uncommon Education Trading is here to support traders and help them grow their careers through education and mentoring. So keep learning, stay informed, and happy trading! See you at the top of the market!
As an investor, you may have already heard about the concept of seasonality in the stock market. Simply put, seasonality refers to the tendency of stocks to perform differently based on the time of the year. Traders widely recognize this phenomenon, which has been used to develop trading strategies that capitalize on these trends. In this blog post, we will provide an overview of stock market seasonality, its importance, and the trading strategies that can be used to take advantage of these trends. Whether you are a beginner or a seasoned investor, understanding seasonality can help you make more informed decisions and potentially generate higher returns.
The Importance of Stock Market Seasonality
As investors, we all want to make the best possible portfolio decisions. One factor that can help us achieve this goal is understanding stock market seasonality. By analyzing patterns and trends based on the time of year, we can gain valuable insights into which industries and sectors may perform better in certain months. For example, the retail industry tends to see increased activity during the holiday season leading up to Christmas. By recognizing these seasonal patterns, investors can adjust their strategies accordingly and potentially improve their returns. However, it’s important to remember that there are always outliers and unexpected events that can disrupt the typical seasonal trends, so it’s crucial to stay vigilant and adapt to changing circumstances.
The “Sell in May and Go Away” Strategy
One of the most well-known and popular seasonal strategies is the “Sell in May and Go Away” strategy. This strategy is like taking a break from the stock market during the summer months. Like people take vacations during this time, investors sell their stocks in May and re-enter the market in November. The strategy aims to avoid the traditionally weaker summer months when trading activity tends to be lower and market performance may be more fragile. While the strategy has been popularized over the years, its historical performance is mixed. Some years have seen significant market declines during summer, while others have produced positive returns. Factors such as political and economic events can also impact market performance and make the strategy less effective.
The Santa Claus Rally
Another seasonal trend that investors look out for is the Santa Claus Rally. This phenomenon occurs during the last week of December and January’s first two trading days. The Santa Claus Rally is characterized by strong market performance and is attributed to factors such as holiday spending, year-end portfolio adjustments, and tax-loss selling. Historically, the Santa Claus Rally has been a reliable trend, with positive returns in over 70% of the years since 1969. However, like any trading strategy, there are no guarantees and market conditions can quickly change.
Stock Market Holidays
Market holidays can also affect stock prices and create seasonal trends. For example, the market tends to be closed on national holidays such as Thanksgiving and Christmas, resulting in lower trading volumes. This lower trading activity can increase volatility in the days leading up to the holiday or a few days after. Additionally, some market holidays, such as the Chinese New Year, can impact the performance of specific sectors or industries. Trading around market holidays can be challenging, but there are strategies that investors can use to take advantage of these trends. For example, traders may buy stocks before a holiday if they expect positive market performance or sell stocks if they anticipate a decline.
Tax Loss Harvesting/Selling Seasonality
Finally, the tax loss harvesting or selling seasonality can also be used as a trading strategy. This strategy takes advantage of the tendency of investors to sell their losing positions at the end of the year to offset capital gains taxes. Lower selling pressure during the year’s first quarter can result in a bounceback in stocks sold at a loss at the end of the previous year. The historical performance of this strategy has been mixed, but it can be a valuable tool for investors looking to minimize their tax obligations and potentially generate higher returns. In conclusion, understanding stock market seasonality can provide helpful insights into market trends and investor behavior. While seasonality can be a practical guide, it is essential to remember that markets are complex and subject to unexpected changes. Like any trading strategy, there are no guarantees, and investors should always carefully consider their risk tolerance and financial objectives before making investment decisions. Nonetheless, by recognizing and effectively trading around seasonal trends, investors can potentially enhance their performance, minimize risk, and take advantage of seasonal opportunities in the market. Check out the free Masterclass from Uncommon Education Trading to learn more about seasonality and other valuable trading strategies. So, it’s always a good idea to keep an eye on seasonal patterns and use them as one factor in your overall investment strategy. Keep learning, stay informed, and happy investing!
The Alternative Display Facility (ADF) is not a well-known term in the trading world, but it plays an essential role in off-exchange trade reporting. The ADF is a trade reporting facility operated by the Financial Industry Regulatory Authority (FINRA) designed to cater to a niche concern. The importance of off-exchange trade reporting infrastructure cannot be overstated, as it ensures transparency and fairness in the trading market. This blog post will delve into the ADF and its role in off-exchange trade reporting.
What is the Alternative Display Facility ADF
In the fast-paced world of finance, institutions need a virtual billboard to post quotes and report trades that don’t happen on exchanges. The Alternative Display Facility (ADF) acts as this billboard, serving as a display-only platform run by FINRA. It’s like a billboard where institutions can showcase their off-exchange trades. While it doesn’t execute trades, the ADF is vital in ensuring fair and transparent markets. Whether you’re an experienced trader or new to finance, understanding the ADF is essential in today’s rapidly changing market landscape.
Comparison of Trade Reporting Facilities
Regarding reporting trades in the United States, there are two primary facilities to consider: the Trade Reporting Facility (TRF) and the Alternative Display Facility (ADF). The TRF stands out as the more significant player since exchanges operate it. On the other hand, the ADF is a niche player, catering to a specific industry concern. However, since the introduction of Reg NMS, the volume of trades reported by the ADF has dropped significantly. Broker-dealers haven’t been quoting on the ADF for a while, but JP Morgan still uses it for trade reporting. Overall, understanding the differences between these two facilities is crucial for traders who want to stay informed and accurately record their trades.
Off-Exchange Trade Reporting
Off-exchange trading can be quite challenging to regulate and report because it happens outside the exchanges. However, the ADF is critical in promoting transparency in such trading activities. Although no quoting broker-dealers are currently utilizing the ADF, there is potential for this to change. In fact, in 2020, JP Morgan used the ADF to report a block trade of more than 9800 natural gas contracts in the futures market. The Trade Reporting Facility (TRF) and the ADF operated by FINRA form the primary pieces of infrastructure for off-exchange reporting. As a result, off-exchange trades can be regulated and transparently reported to ensure a fair and competitive market.
Analyzing the Weight of ADF-Reported Trades
While the ADF may not be a frequently used tool, there is no denying the value it holds. Trades reported on this lesser-known platform might seem insignificant, but this is not always true. Analyzing ADF-reported trades could lead to fascinating insights and opportunities for rewarding analysis. Despite its infrequent usage and niche concerns, it is essential to ensure transparency and fairness in off-exchange trading. The ADF was established in 2002 and still has a significant role today, even in the wake of Reg NMS’ establishment in 2005. Ultimately, dismissing the importance of these reports could mean missing out on some intriguing opportunities for analysis. To sum it up, the Alternative Display Facility plays a critical role in off-exchange trade reporting, even though its usage is sparse. It is the go-to facility for reporting off-exchange trades that did not fall under the Trade Reporting Facility’s jurisdiction since the introduction of Reg NMS. There is still a lot of potential for the ADF, and we might see an increase in its usage. If you’re interested in learning more, contact Uncommon Education Trading to sign up for our free trading Masterclass to help you navigate the complex world of finance. So, keep an eye on ADF-reported trades and stay informed with the latest market trends to make informed investment decisions. Happy trading!
Day trading is a high-risk, high-reward profession that requires a high level of knowledge and skill to be successful. One of the most important aspects of day trading is managing risk, and a crucial tool for doing so is the risk/reward profile. This profile is a simple yet powerful concept that measures a trade’s potential risk and reward, and understanding it is fundamental for determining whether a trade is worth taking. In this blog post, we will discuss what a risk/reward profile is, why it is crucial in day trading, and how to create your profile to maximize your chances of success.
What is a Risk/Reward Profile?
A risk/reward profile is a measurement used to evaluate a trade’s potential risk and reward. It is calculated by dividing the difference between the target closing price and the stop-loss order by the stop-loss order value. This calculation results in a ratio, such as 2:1, which indicates that the potential reward is twice the potential risk. For instance, let’s consider a trader who sets a target closing price of $50 and a stop-loss order at $45. In this case, the potential reward is $5, while the potential risk is $2.50. Consequently, the risk/reward ratio is 2:1. To illustrate, imagine buying one share of Company A at $20, expecting it to rise to $30. The trader sets a limit sell order at $30 and a stop-loss sell order at $15, creating a 1:2 risk/reward ratio.
Most day traders adhere to standard risk/reward profiles, which are fixed ratios used to determine stop-loss orders or as general guidelines when designing trades. These ratios typically range between 1:2 and 1:5. Ratios below this range are considered extremely risky, while ratios above are highly conservative. For novice day traders, it is recommended to use fixed profiles, while experienced traders may find their own profiles to be more suitable as guidelines for their trading strategies.
Importance of Risk/Reward Profiles in Day Trading
A risk/reward profile is crucial in day trading as it assists traders in making well-informed decisions regarding trade entry and exit points. By comprehending a trade’s potential risks and rewards, traders can choose trades with higher success probabilities while minimizing potential losses. Moreover, these profiles foster discipline and consistency by providing guidelines for each trade, helping traders reduce emotional reactions and adhere to their plans. This level of commitment is vital for achieving success in the market.
Seven Tips for Creating a Risk/Reward Profile
1. Consider your risk tolerance: Assess your comfort level with taking risks in trading. Know how much you are willing to risk and lose to achieve potential rewards.
2. Analyze your trading style: Understand your preferred approach to trading – whether you are a day trader, swing trader, or long-term investor. Different trading styles may require different risk/reward ratios.
3. Evaluate your experience level: Consider your familiarity and expertise in trading. More experienced traders may be able to handle higher risk/reward ratios compared to beginners.
4. Be mindful of missed opportunities: Selecting too high of a ratio may result in missing out on potentially profitable trades. Find a balance between risk and reward to maximize your chances of success.
5. Avoid excessive risk: Choosing a low ratio may lead to taking trades with a higher potential for loss. Strike a balance between a conservative approach and the potential for earning profits.
6. Consider a fixed risk/reward profile: Experienced traders may prefer using a fixed risk/reward profile, where their ratio remains consistent across different trades. This approach adds a level of consistency to their trading strategy.
7. Start with flexible guidelines: If you are a new trader, use guidelines that allow flexibility. As you gain experience and confidence, you can gradually refine and narrow down your risk/reward profile.
Following these tips, you can create a risk/reward profile that suits your unique needs and trading goals. Remember to regularly review and readjust your profile as your risk appetite and trading expertise evolve over time. Day trading is a highly competitive field, and to succeed, traders need to be strategic, disciplined, and risk-aware. One essential tool they can use to manage their risk is a risk/reward profile. This profile is a simple formula that helps traders assess each trade’s risk and reward potential. By doing so, traders can make informed decisions and better control their emotions, which is crucial in such a fast-paced environment. In this blog post, we discussed a risk/reward profile and why it’s important and offered seven tips for creating one. We hope these insights help traders refine their strategies and achieve their day trading goals. At Uncommon Education Trading, we are committed to helping aspiring day traders find success in their careers. Please get in touch with us for more information or check out our free Masterclass to gain valuable insights into the world of day trading.
