Awhile ago, I joined a paid discord group after reading about stories of great returns posted in the group. The membership fee was about USD59.99 per month (and has now increased to a higher pricing of USD79.99).
How It works?
It is a discord group with a few very talented traders who share about their daily trades via the main channel or their own channel. It is usually a buy CALL/ PUT with a very short expiration date, profiting from price action as each contract has very little time value left.
Some trades can make a few hundred percent per trade. Some traders will share their stop loss targets for their respective trades. Essentially, members join the group to follow the trades so that they can benefit from the experience and expertise of these traders.
My Trades
The below table shows my trades for the first week of joining the group. I basically made back the membership fee on the first day.
However, after joining a couple of paid discord groups, the membership fee is not really the biggest investment, but rather how you use the information provided to profit or lose more money in the longer term. There is a chance that the info provided can help you make more money or it can make you lose money.
For the first 2 days, it was great but at the 3rd day, things started to head south for me. The stop loss targets were triggered and I had mostly losing trades. And because they were bigger losses, they wiped out my all my gains for the 1st 2 days.
What You Should Know
I hope to share a few lessons learnt after joining a paid discord group that specializes in day trading.
Lesson 1: You are always one step behind
Following trades from the experienced day traders is akin to trying to pick seashells back facing the sea and getting out when the tide comes, all under the instructions of the lifeguard. In either case, you are always one step behind.
When the trader places a trade and shares his/her trade details, you will need to look for the ticker symbol on your trading platform and place similar trade with stop loss. By the time you managed to do that, the premium of the options contract would have increased.
These experienced traders probably have some scanning tools to detect a surge in trade volume to push up (or down) a stock price. With superior technical analysis skills, they probably got into the trade at the optimum time. That lag of a few seconds or minutes could make a lot of difference (in premium price) if the share price surges.
The same goes for exit positions. When the trader exits at the top before the share price plunges, a few minutes delay could mean turning from profits into losses.
Lesson 2: Your stop-loss can work against you
Setting a stop-loss is critical in such high risk trades but it can sometimes be a double-edged sword due to the volatility and price fluctuation, i.e. the share price can drop or rise fast to trigger the stop-loss and later go back to the intended direction. Thus, you are right eventually but still make a loss as the stop-loss is triggered. Also, you may not get the stop-loss price due to the lack of bidders at that price and you may need to settle for a lower premium than your stop-loss target.
Lesson 3: You really need to stare at the screen if you wish to make money or avoid losses
You really need to monitor the price action when you place your trades as things can change rapidly in a short time. You cannot expect to buy a high risk option contract and then come back to look at it few hours later or the next day. You need to lock in your profits or take them regularly, or risk losing them and incurring loss. If you do not have the time and energy to keep monitoring your stock price or wait for alerts from the experienced traders, this trading style may not be suitable for you. Essentially, it is a fast in fast out style of trading.
Lesson 4: Don’t be tempted by the huge wins that are being showcased
When you are in one of such trading discord groups, it is easy to get tempted by the huge wins posted on some of the trades. Recently, the group posted a 1700% win on Meta. However, it is worth noting such huge gains do not happen on a daily or regular basis.
Also, it is not reflective of the actual gain of the traders even if the trade even eventually runs up to that level. This is because the traders will take profits at intervals as the stock price shoots up, to secure their gains, i.e. they secure their profits at 20%, 40%, and eventually close the trade at 50% gain, while the same contract eventually runs up to 1000%. Then, they use the 1000% results as showcases and advertisements for the group.
Lesson 5: Always put a very small capital as you may lose it all
This is a reminder to get out if things are not working and to always use a small capital for each trade. The overall capital for day trading should not be more than 1% of your total investment capital. In the worst case scenarios where you keep losing, you only lose 1% of your total capital. As much as you desire to win it all, you also can possibly lose it all.
Concluding Thoughts
I think that if you have the time and energy to keep monitoring the stock price movement and wait for alerts, and do not mind setting aside a very small percentage of your capital for such high risk trades, you may want to try it out for the fun of it. However, be very mindful of getting greedy, especially if you are winning from the start. You may be tempted to increase your capital because you want to win more and win big, in a short period of time.
That is what happens to gamblers going to casino and losing more than what they can possibly lose. It usually starts with the greed of wanting more that got them sucked in when they start to win small. They pump in more money, hoping to win more, and when they start to lose and lose more and more, they are still in denial and want to win it all back with bigger trades. Then, they end up losing much more than what they can lose.
Thus, if you think that you do not have the discipline to leave the table when you have lost all of the chips, then it is better to stay away from such trades.
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