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Now facing a net loss of $180,000 and $6,200 in monthly costs on an income of just around $4,000, Alex fears he might lose his job as a postal worker because he can no longer afford the delivery vehicle required by his employment contract.
Alex’s story is not unique. Approximately 78% of day traders lose money, as illustrated by another caller to The Ramsey Show who lost $300,000 from an inherited IRA account through day trading. Another example includes a couple whose husband lost over $1 million while day trading, leaving them with just $15,000 in savings despite earning $350,000 annually.
Even supposedly hedged trades can go wrong. The WSB user Ironyman faced a 2,000 percent net loss when he sold a short box spread without considering that American options could be exercised early, leading to an early liquidation of his positions by Robinhood.
The key takeaway is that day trading is risky and should only involve the proportion of savings one can entirely afford to lose. This high-stakes financial game is unpredictable and harsh, and it’s crucial to avoid accumulating debts you cannot handle.
