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Ten Things I Don't Understand About Online Trading And I'll Bet You Don't Either

Nov 13, 2007
The average person who considers opening an Online Trading Account doesn't realize what it all entails. You remember the news blip where people on phones are sending undecipherable signals to the stockbrokers who are seated across the room and apparently taking the bids. There doesn't seem to be any animosity between the two groups. Evidenced by the fact that it is a forefinger they are signaling with. There is another group of people milling around in between the stockbrokers and traders. They must have a purpose for being there although it isn't apparent to the outsider.

Online trading would represent the stockbrokers and you would become one of the bidders. The only difference is -- you are online and can't monitor the action. This leaves you even less knowledgeable than the group on the trading floor. Your stockbroker is there to provide charts and graphs showing trends in certain companies. You will need him to explain what this all means as well.

Think of yourself as the blind man and the stockbroker as your guide dog. You need him for his knowledge -- he needs you to make a living. The blind man needs his dog to help him navigate life -- the dog needs his master to provide food and shelter.

On that premise. Here are five random thoughts to ponder before signing up to play the online trading game:

--Do you really want to do this? You are interested. There definitely is a chance that someone is going to profit and it may be you. You believe the knowledge you gain will make you a wiser person. You enjoy the challenge of taking on a complex endeavor.

--Do you like being online as much as possible? You have joined online groups. You do your banking online. You pay your bills online. Maybe you order your Friday night pizza online too. It wouldn't interest you to trade by snail mail or phone but online it'll be entertainment.

--Do you hope this will enable you to quit your job? Right here is where you have to change your way of thinking. The stockbroker, college trained and capable of passing complex exams on the subject of trading makes a living helping others learn to trade. He does not make his living by doing his own trading thereby putting his own money at risk. This indicates that even with all his knowledge, he may still lose money when he trades in stocks or futures.

--Are you a generally happy person? Make sure this will be a way to enhance your life. If it is a desperate attempt to either find something interesting to do or lift you from the depths of despair you should move on to a support group or a photography course. Support groups are often filled with good people to have as online friends. Photography is life-enhancing and interesting. Try one of those.

--Are you willing to put in time and effort before you begin trading? This one is self-explanatory.

--If you should lose some of your hard-earned money will you hate yourself in the morning (as the saying goes)? If after all your time and investment you are a failure at online trading would it affect you to the degree of eroding your self-confidence. If that's the case -- don't set yourself up. You would be joining a large group of citizens who failed before you. It would not make you a less competent person. After all even some of the stockbrokers lose money. The trick is to be moderate - never jump in and bet your kid's college fund on a future or a stock that has an equal chance of rising rapidly or plunging down to a single digit amount, possibly both - during a twenty-four hour period. Your bid can be delayed by a slow ISP or a delayed FTP queue. That will not be the fault of either you or your stockbroker. Good luck to you.
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