Online Trading - Be Very, Very Careful

Of all the possible choices to use as a home business, online trading is the most dangerous.

In A Nutshell

Carries the most risk out of any home business
You need to be of the right temperament
You need plenty of capital... minimum Ł6,500/$13,000
You need a competitive edge... these are available
You need time to gain experience

This is the 3rd biggest element advertised in Business Opportunities. Who is advertising, why and can they benefit you?

A great many of the home business adverts use blatant Copy or hype and are designed for the shovel buyers.

There is no need to drown in technical detail, to make a profit people need to be able to make winning trades regularly and cost-effectively. That takes talent, skill, and time… it can’t be bought or learnt in a day’s seminar.

You can buy a book for Ł10 to teach you the basics of swing or day trading, and all you need to know about indices, equities, commodities, bonds, forex, fundamental and technical analysis etc. This should be done first rather than parting with hundreds or thousands for seminars or software.

People often become caught up with all the weird names and abbreviations: CFDs, Annuities, Bollinger bands, Dojis, Candlesticks, Fibonacci, Gann fan, Andrews pitchfork, Stochastics, etc.

Before you waste your time pondering whether you should be using these and looking at spread betting, futures trading or forex trading etc you need to answer a far more important question:

This is the one home business that has the potential for you to lose the shirt off your back.

It is mind boggling that people with no trading experience, dive into this minefield with great expectations and guns blazing. The big question is: are they a stock trader? If not why do they think they are suddenly going to develop twenty years of experience overnight?

People are not thinking about trading they are thinking emotionally about the figures banded about.

‘Men who can both be right and sit tight are uncommon'
- Jesse Livermore

Emotion, hope, impulse and optimism are absolutely the last things you need here. Unfortunately trading the markets appeals to 'gambling types', and there is no doubt that it is stimulating when you trade for real.

Hindsight when looking at a stock movement is one thing, it’s easy to see when you should have entered and exited a trade, but it’s another thing when it's happening live on your screen.

It is also an eye-opening experience when the market goes into freefall before your eyes after the Fed chairman pauses too long during a speech.

One of the nasty parts of trading the markets is in many cases for everyone who is winning someone else is losing. What do you think people new to online trading do more often?

Ignore the ‘Tax Free Profits’ bit that is plastered all over the adverts (although this usually refers to 'betting' trades in the UK), you should be delighted to pay tax on any type of online trading as it means you are in profit... a position 90% of new traders will never be in.

This sounds like a typical Copy advert though slightly over the top. Bizarrely this is just what Dan Zanger did, and he does not advertise that others can do likewise.

However on closer inspection Mr Zanger spent 20 years honing his skills, learning and reading for 4 years before even starting to trade. Then it was a case of winning and losing his capital many times along the way. This particular period was also the bull market of the dot.com bubble.

Mr Zanger looks at over 400 stocks everyday and his experience and talent sees what others don’t. He uses no indicators at all, relying solely on chart patterns, price and volume.

It is also his passion, that’s why despite being affluent he still hunches down over computer screens every day.

Online Trading Overview