People make all kinds of excuses as to why they cannot get involved in investing
or trading the financial markets. In this article, some of the most prominent are debunked.
“I don’t have time”
Despite being one of the most frequently heard, this is probably the most
pathetic excuse for not trading there is. Why? Because the availability of
technology and information in the modern day means that we can operate in
literally any time frame we want. Many people, when they hear “trading”, think
it means sitting in front of the computer all day. While that certainly is one
form of trading, most of us do not have the schedule to allow us to dedicate
hours each day to monitoring the markets. The good news is that we don’t have to
in order to trade effectively.
I will use myself as an example. My college coaching position has me frequently
in the gym, in meetings, and on the road. What’s more, I run a club program and
a couple of businesses on the side. In 2004, even though there were long periods
when I did not trade at all, and I probably only put on a dozen total positions
all year, I was still able to make 200%+ in the stock market. If I can trade
given my schedule, and have performance like that, anyone can.
“I don’t have the money”
In the past, this was a pretty viable excuse for not trading. These days,
though, one can trade with relatively little money. Transaction costs have
dropped dramatically over the last decade and there are more trading options
than ever before. There is one particular trading platform which allows an
individual to put on trades of at little as $1 in value, and they have no
minimum account size requirement.
Is it better to have more money? Absolutely. The more capital you have at your
disposal, the better are your available options and the more actual money you
can make in raw dollar terms.
Having more money is not always a good thing, though. For the inexperienced
trader, it is better to have only a little money at risk. Why? It is the same as
anything else. Just like anyone new to a skill make mistakes as they are
learning, so do new traders. And just as a coach would not willingly throw a new
player in to a championship game against experienced opponents, neither should
those new to the markets to take on large trades and put significant portions of
their assets at risk. It’s common sense. Better to make the inevitable mistakes
when there is relatively little at risk.
“It’s too risky”
Trading is only as risky as you make it. If you take risky trades, then trading
is risky. If you don’t, then it isn’t. There will always be the risk of losing
money on a trade. That is completely unavoidable. But that could be said about
all of life.
Driving is one of the most risky things in the modern world, but we still do it.
We reduce the risk by obeying traffic rules, planning our route, wearing
seatbelts, paying attention, and all that. Does that completely eliminate the
risk that of ending up in an accident? No, it doesn’t. Nor does it necessarily
keep us out of traffic jams or from getting lost. We understand the risks,
though, and weigh them against our need to get places in a timely fashion.
Trading is the same. We do it because it helps get us where we want to go, in
this case financially. There are going to be hiccups along the way, but if we
are focused and conscientious, we can minimize the risks, and potentially the
damage an unfortunately turn inflicts, and remain on course.
“It’s too complicated”
Technology and competition have combined to make trading so much easier than it
has ever been before. All it takes is a couple of clicks and you can execute a
trade, check your positions, get news, and anything else you need to do.
The fact that you are reading this article says you have all the basic skills
necessary to trade or invest.
Can trading be complex? Sure it can. There are those in the markets who use
complicated software, mathematical algorithms, even artificial intelligence.
None of that is necessary, though. Some of the best traders use little more than
price quotes or a simple bar chart. How intricate you get is strictly a matter
of personal preference, not necessity.
Is there a learning curve? You bet. Trading is like anything else. There are
things you need to know. The good thing, though, is that there are loads of
resources out there to help you learn.
John Forman is author of The Essentials of Trading, and a near 20 year veteran of trading and analyzing the markets. For a free e-book on getting started in trading, click here.
Source: High Quality Article Database - 365articles.com
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