Millions of amateur investors got into the stock market during the pandemic, some gingerly, some aggressively, some determined to teach Wall Street a lesson, and almost couldn't help but make money, riding a bull market for the rest of their lives.
They might have to wrestle with a bear.
"It definitely isn't as easy to trade in this market," said Hellmann, a 47-year-old former optometrist in Texas who began investing in April 2020 while isolating from her family.
She banked big gains when the market soared, because she was tracking stock movements on an iPad Mini in her bedroom. She was considering making day trading a full-time job. Since the S&P 500 peaked, profits have been harder to come by.
She said that she is glad to not be red for the year.
The S&P 500 has fallen for five months in a row, putting it on the verge of a bear market, a drop of 20 percent or more from its most recent high, which is considered a psychological marker of investors' view of the economy. The index is down 17 percent from its peak, after a tumble of more than 2 percent on Wednesday.
In response, many of the estimated 20 million amateur traders who started trading in the past two years have either stopped or shifted their portfolios into more defensive positions.
S&P Global Market Intelligence said retail trading activity was down 20 percent compared with the meme-stock frenzy of January and February. The number of active users at popular retail brokerages has fallen off in the last year.
The recent decline was tied to users with lower balances who are engaging less in the market.
The mood has cooled on some forums. In the heat of the market, traders made fun of the fact that stocks only went up. One recent post included an image of the grim reaper killing low interest rates and stock market bulls.
The market began to retreat. He put $3,000 into an account with the app and sold it early this year as the stock market fell. He had a $100 loss.
He said it was like when you were a kid and were hit on the hand a few times.
Mr. Colon, who will graduate from Brooklyn College this month with a finance degree, was inspired to invest by a stock market competition that one of his professors offered as extra credit in March of last year. He sought out companies that appeared to have been sold off too aggressively, or those that traded above their usual range, which made them candidates for a short sale.
He began investing his own money a few months later, but struggled to replicate the returns of his mock portfolio. For example, certain stocks were not available for shorting. The bid-ask spread, which is the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept, was costing him fractions.
His commute from the Bronx to his classes resumed in person by January. Instead of trading for an hour every morning, he cut back to twice a week. It was difficult to hold his positions as the market became choppier. He used stop-loss orders to prevent disastrous declines. He was pushed out of his trades with constant drops.
He said it would if you thought it wouldn't go lower. With less time on his hands, he sold everything for safety.
Retail trading activity is still above prepandemic levels despite the fact that the rush to open new accounts has stopped. JMP Securities estimates that retail brokerages opened two to three times as many accounts in 2020 as they did in the previous year.
Despite the market's recent tumbles, retail traders aren't necessarily panicking according to Thomas Mason, a senior research analyst at S&P Global Market Intelligence.
Even if their tastes have changed, they are still a slice of the trading population that is still showing an appetite. The firm said that their interests have been shifting towards less volatile names and more stable holdings.
Ms. Hellmann said that she was sticking with it, learning more and refining her approach as she goes along.
She wakes up at 3 a.m. and then watches CNBC to figure out her strategy for the day.
After the death of her grandfather, who was a propane salesman, she received $50,000 from the shares of ConocoPhillips that she had left. She took a large position in an exchange-traded fund that bets against the price of natural gas last fall, as Russia's invasion of Ukraine roiled energy markets.
She said that the war causing natural gas to spike up at a time when it comes down did not help her.
Even so, she's more than tripled her money since early 2020, riding the strength of a rally that has the S&P 500 up nearly 80 percent since it bottomed out in March 2020.
Dan Egan is vice president of behavioral finance and investing at Betterment, which builds and manages diversified portfolios of low-cost funds and provides financial planning services.
He said that if you have a good initial experience with investing, it will be fine.
Eric Lipchus, 40, has felt a lot of pain in his nearly two decades of full-time day trading, and he owned options on Lehman Brothers, the investment bank that collapsed during the financial crisis of 2008-9. During the dot-com boom and bust, he had watched his older brother and father invest in the markets.
He said that he has been on a roller coaster. It seems like it could be a tough year, not as good as in previous years.
Mr. Lipchus said that challenging conditions can make investors stressed out in a hurry. He is taking a fishing trip to the Thousand Islands in a couple of weeks to clear his head and he is keeping half of his portfolio in cash.