“You’ll never make a penny from it – you might as well blow your money at the racetrack or on lottery tickets!”
Has anyone ever said that to you?
When I started trading, I can certainly remember friends making comments along those lines. And in the darker hours (there have been a few!) I sometimes began to believe them.
I’m always concerned when I get emails from Maven readers who aren’t trading – it seems like such a waste of time to be interested enough in trading to subscribe newsletters, and yet not to get stuck in there.
Most non-traders will come up with a reason (or two) why they are sitting out of the markets. But then, my kids have always got a whole string of reasons why they haven’t made a start on their homework …
Not enough money
Having no money may seem like a tough one to argue with – and I’m certainly not interested in persuading anyone to trade with money they can’t afford to lose.
However, if you’ve no spare money to be trading with, then it could be the best thing that ever happened to your long-term trading career.
Most traders start out with a relatively modest bank … they make mistakes (as you’d expect any novice to) … and they lose that money.
And often that’s the end of the story.
They’ve been put off.
If you’ve no money to trade with at the moment, then you can learn the ropes without risking a penny. I’m talking about demo accounts here.
Some people are a bit sniffy about demo trading. I really can’t think why. They’ll say that you’re not really learning the cut and thrust of trading without having the pressure of trading real money.
So what? There’s more to trading than just the psychology of winning and losing.
With a demo account, you can test out strategies … you can hone your skills with technical indicators … you can learn how different forex pairs behave …
And when you do have some money to invest, you’ll have already learned from many mistakes.
And there’s no reason why you need a huge sum to invest. Many spread-bet firms will allow you to start trading with very low stakes – just be realistic about making money slowly.
It’s too risky
There’s an often-quoted statistic that 90% of spread betters lose money. I really can’t imagine where or how this stat was arrived at – I suspect it’s some kind of marketing ploy to make you think you need “help”.
However, there’s no doubt that many people do lose money, and that trading can be a risky business.
But risk is everywhere – I’m not just talking about crossing the road here, I’m talking about big financial risks that we all take, day in, day out. Stuff like the home insurance policies we take out – do you know exactly what you are and aren’t covered for? Your liability insurance on your car – how much is that?
Starting up your own business always involves risk – financial outlay, plus the time you put into it. Put into context, I believe that trading (as long as you start small) is one of the best ways to “branch out” on your own. Plus, risk in trading is very easy to measure – how many other areas of life and business can you say that about?
Not enough time
It is very possible to trade by spending almost every waking moment glued to your screens, watching candlesticks … checking economic data … and generally fiddling with your trades.
But there are other ways.
First off, there are set-and-forget strategies that allow you to spend just 5 minutes at your computer each day. (I’ve covered a number of these in Market Maven.)
There are also trading techniques that use automated signals that will alert you when you need to check your trading account.
And finally, there are longer-term trading strategies. There’s a strong bias (I’m guilty of this myself) towards day trading – it’s exciting and it gives me something to prattle on about. But the truth is that some of the most successful traders are following longer-term chart patterns. And these strategies can require very little time – even just once a week.
Over the coming months, I’ll be covering longer-term trading in more detail – and I hope to dig out some good strategy recommendations for you.
I don’t understand it enough
If you don’t “get” trading – then there’s no better reason to start trading with a demo account.
Start making mistakes and start learning – without risking a penny.
And keep watching out for some great Market Maven ideas that I’ve got coming up this autumn.
The markets are just too volatile
Okay, now this really is the worst excuse.
If you’re waiting for the markets to “quieten down” or “get back to normal” – you might as well wait for the sun to burn out.
Markets are unpredictable by nature – and anyone who tells you otherwise, is simply stringing you along. And volatile markets can be the best environment for scoring profits – as long as you start small and don’t overstretch yourself.
The only “right” time to get stuck in, is as soon as possible.