"Trade What’s Happening… Not What You Think Is Gonna. Happen.”Most newbies lose when trading online.
Updated: Nov 23, 2020
Why do so many trade online when the disclaimers show so much risk?
Do bookmakers show risk disclaimers?
Example of disclaimers on nearly all regulated online brokers websites.
“CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. *72.29% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money”.
Scary facts, but why bury our heads in the sand?
I was in two minds to write the above title considering I introduce beginners to the market. However, tens of thousands trade online every day and will continue to do so and more and more will try it. In a 2014 study by Bapi Maitra, Citigroup expert, there are 4 million retail traders globally.That figure has accelerated in recent years.
The ethos of insiderkk.com is to be transparent to individuals who are considering speculating the markets.
Let us not get too scared, some traders make very good returns and more importantly enjoy the challenge.
Why do people trade.
Firstly, lets understand that trading is not investing, trading with *leverage offers higher returns than traditional investments. Forex/CFD trading involves identifying market trends and then quickly buying or selling the underlying asset to make profits.
Investing, on the other hand, as an example, is based on buying stocks of a company after carefully analysing the business. Holding over a longer period. In some cases, decades.
Since the banking crisis in 2008 & Covid19, returns on safe low risk investments such as Bonds have literally gone to nothing, look at interest rates etc.
This is one reason trading online is so popular, offering higher returns over a shorter period.
The higher the potential return the higher the risk, simple. If anyone offers you an investment with high returns and low risk, they are trying it on. If it sounds too good to be true, it is.
Another reason we trade online is that Forex/CFD’s trading allows you to easily gain exposure to markets around the world with little capital. You do not need to be Donald Trump to enter.
Trading in the stock market has become less time consuming these days as you can trade all by yourself without the assistance of a broker by means of online trading. Just need the internet.
One of the clearest advantages of online trading is the reduction in transaction costs and high fees associated with traditional brick-and-mortar brokerage firms.
With online trading, you can execute a trade almost immediately. You can act quick if you access a movement. There are many reasons we lose trades, I always say I never lose, “the market went against me”, because I try to make informed decisions, however, sometimes, it just goes wrong.
Do not get me wrong, there is a risk and you should only speculate the amounts you can afford to lose.
Why do Traders Fail?
The common scenario I have seen over my years in finance is that people start to trade to make money fast and do not go through the process of learning the basics.
There 3 main reasons traders take losses:
They will almost never have a daily target and will always want more. When they are on a winning streak, they will keep trading until eventually the market will go against them.
When a client takes losses, he is riddled with emotion. They will always want to recover their losses on the spot and they usually will end up opening larger trades without doing proper market analysis to see their balance return to its previous state.
No matter how sure you are a trade will come through you never increase your trade size. Even when you know for a fact that something is about to happen stick to money management. The market CAN and WILL go against you. If this were a sure thing everybody would be a millionaire.
There are no right or wrong ways, it’s not an exact science and newbies are often proving better than experienced Wall street veterans in recent times. However, this may be short lived.
Finally, many of today’s regulated and reputable online trading brokerages offer clients an array of tools providing valuable information and helping optimise trades and returns.
To conclude, online trading is becoming more and more popular and the best brokers are cleaning up their acts to retain their client’s long term. Higher risk to reward but in my opinion easier to get a return than betting on the Grand National.
"Trade What’s Happening… Not What You Think Is Gonna Happen.” – Doug Gregory
*this is an example not industry average.