Should every college student in America turn day-trader to jump-start the economy?
There are actually two questions here. One, ‘Should every college student in America turn day-trader?’ Two, ‘Is day-trading the answer to jump-starting the economy?’ This Factoidz deals with the first. If there is an interest, perhaps I will write another article which deals with the second.
So, should every college student in America (or in any country for that matter) turn day-trader?
First, let us define a day-trader. According to the Chartered Financial Analyst ® Institute a day-trader is:
“[a] trader holding a position open somewhat longer than a scalper but closing all positions at the end of the day.”
Second, from this definition day-trading requires considerable time in picking stocks and other financial assets, watching and analyzing charts and deciding when to close positions, which I think is the most important process. When to close a position defines how much a day-trader loses or gains.
Third, getting a position say, in a stock, long or short (buy or sell), triggers fees – brokerage, commission, sales taxes, etc. Hence, to earn enough from day-trading, the amount of money invested in any position must be considerable.
Fourth, to answer the question on whether a college student should turn day-trader, let us answer the following questions:
1. Does a college student have time? YES! I suppose a college student has relatively more free time.
2. Does a college student have resources to invest day-trading? NO! as a matter of fact an average American college student, by the time he or she graduates, will owe more than $23,000.
In conclusion, advising a college student to become a day-trader is NOT the best option. What I think better is for the college student to get a part-time job; any part-time job will do given that the economy is in a recession and jobs are few and far between. Then, the college student will use the salary from the job to pay down his or her student loans.
I believe that keeping student loans to a minimum is much more important an endeavor than wealth accumulation for a college student. According to a September 31, 2009 article of The Wall Street Journal 39% of college graduates say it will take them more than 10 years–0 years!–to pay off household education-related debts. That is 10 years longer for a college student to start a life, get married perhaps or buy a house. This is a sad fact of an average American college student’s life.
