Discount online trading has become so popular that it almost dwarfs everything else on the financial markets. It has brought the concept of trading on the stock market to the masses.
And that’s actually the problem. We all know how it happened – computer technology, the internet, automation, and so on. But when you cause complex and potentially risky activities to fall within the grasp of the masses then the outcome is usually far from happy.
So instead of having a new class of successful, wealthy stock market traders and investors, using all the information available via the internet to make mostly successful trades with minimal brokerage fees, we have a new generation of online financial traders who are at best struggling to make any decent profits. Why should this be?
It’s not that there is insufficient information. The internet is awash with it, though regrettably much of it is misleading and sales oriented. The problem lies in finding reliable information and genuine help. Both of these commodities, generally speaking, were available before the internet and discount trading came along. The full service accounts that are still available (at a price) at most stock brokers, online and offline, provided help and advice for newcomers and old hands alike. The chances of successful trading were therefore much higher.
Now the average new trader finds himself alone and often confused, in a business that uses unfamiliar terms and practices, and in markets the behaviour of which seem strange and often illogical. To make things worse, he is often using more of his available capital than he should on each trade, and is finding that trading online can be addictive, risky and close to pure gambling.
In order to succeed in online trading whilst using discounted services you must disassociate yourself from the “herd mentality”. Most new traders see the opportunity presented to them not as a business but as the chance to get-rich-quick (or get-out-of-debt-quick). They’re encouraged in this attitude by the mass of sales pages selling information and software to do with trading the financial markets, especially forex, the graveyard of many hopes of online riches.
You, however, must see it strictly as a business with which to make regular profits. You won’t succeed with every trade you make, but you can take steps to ensure that you succeed in more than half and that every profitable trade more than wipes out the losses of several losing trades.
Investing in your online trading education is essential. But you have to discriminate in the type of information you act on. Learn where the most reliable information is. Experiment with demo accounts, where you can practise trading without risking real money. Take advantage of the discounted fees of your broker by investing in a reliable stock trading package to ensure discount online trading works for you.
Philip Gegan
