In defence of day traders: Not all of us are ‘Dumb Money’

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The release of Dumb Money in cinemas this week gives us retail traders a bad name. It glorifies irresponsible, gambling-like behaviour, and glosses over the hard work and dedication required to be a successful trader.

The movie, directed by Australian Craig Gillespie, follows the infamous 2021 pandemic short squeeze when Keith Gill, aka Roaring Kitty, drove the share price of failing games retailer GameStop more than 2000 per cent over a few weeks.

Paul Dano plays Keith “Roaring Kitty” Gill in Dumb Money.Credit: AP

The unprecedented moment in markets is being heralded as a David-and-Goliath triumph of the retail-trading “dumb money” over the “smart money” of Wall Street. It happened at a time when most of us, including myself, turned to markets as a form of entertainment while locked up indoors.

It was a euphoric time when billionaires’ tweets moved crypto markets and pictures of apes sold for $5 million. Every man and his dog were making money, and everyone was suddenly an expert investor, endlessly quoting Warren Buffett.

But in the aftermath, years later, it’s clear that for every trader who stormed the Bastille of Wall Street, two were sent to the guillotine. Research has found 80 per cent of traders lose money and quit in their first year, and only 7 per cent remain trading five years later. Some, who amassed millions, gave it all back, with one trader who made $1.5 million now working in a Las Vegas deli.

Market veteran of 38 years, Nick Radge.Credit:

“The kicker is to not confuse brilliance with a bull market. We can all get lucky here and there, but staying the course for 10 years, or even 30 years, is a different level,” says Nick Radge, a 38-year veteran of the markets who lives in Noosa, NSW.

“It takes a very special psychological fortitude to cope with a career where losing money is an integral part of success,” adds Radge, whose trading strategy has returned an average 24 per cent per year for the past decade.

Trying to fight Wall Street is like trying to take down a casino by gambling. Trading is not about ideological campaigns to stick it to the big end of town, and it’s certainly not about dumping your life savings into a stock because a YouTuber told you to.

Real traders don’t try and harpoon the Wall Street whales but instead ride in their wake like barnacles, using their market-moving momentum to our advantage.

For those who put in the time and effort over decades, the rewards are plentiful, with average salaries upwards of six figures and a work-life balance that the rest of us dream of.

“The best thing about trading for yourself is the freedom and not answering to anyone else,” says Radge. “I’m still in contact with old friends in the corporate world and I get a good laugh when they talk the corporate speak and monotony of it all.”

Another Sydney-based trader, who goes under the alias “Cyclops Trader” on X (formerly Twitter), says real trading is nothing like that depicted in Dumb Money. “I’m dumbfounded as to some of the questions [on social media] that come from people who are trying to ‘trade’ or ‘invest’ [with] absolutely no idea what they are doing.”

Throughout his 10 years of trading, Cyclops has put in the hard yards and is now reaping the benefits where in a “bad year” he takes home $150,000-$200,000, and in a good year about $1 million-$1.5 million. “I’d get into the office at 4am, roughly, to be up and in-office for any US data, and leave most nights around midnight or even 1am sometimes.”

“Trading is extremely technical, very cyclical and requires a mental fortitude that few people possess,” adds Radge.

In my own short time in the markets I’ve learned it requires self-control, discipline, hours of research and dedication, that greed will be your undoing and that, whatever you might think, the market is never wrong.

As for Dumb Money, it’s an entertaining recount of an unprecedented time in financial markets, but it’s far from the reality of what it takes to be successful.

Spoiler alert: while the ‘villain’ of the film, hedge fund manager Gabe Plotkin, lost an estimated $460 million as a result of the squeeze, when you consider the previous year he made $850 million, ’tis but a scratch. He has since gone on to open another fund and purchase a basketball team – clearly doing it tough.

The good guy Gill has since disappeared with an estimated net worth of $34 million, leaving countless retail traders who followed him holding the bag. Hardly a David-beats-Goliath story.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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