Author Topic: INTERESTING NOTES ABOUT STOCK MARKET FROM INVESTOPEDIA.COM  (Read 324 times)

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GreenMoney

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From Investopedia.com

Anyone who has ever dabbled in the endeavor of trading markets and enjoyed the experience has likely dreamed of becoming a successful full-time trader. While that optimism is certainly positive from the standpoint of eagerness to succeed in a truly fascinating business, it is also probably unrealistic.

Becoming a successful full-time trader of markets is akin to playing golf: There are countless good golfers, many of whom can even play at par. However, only a very select few golfers can ever make a decent living by just playing the game. (To read more on this subject, see Preparing For A Career As A Broker Or Trader.)

Keep Expectations in Check
It's important for all traders, especially those new to trading, to realize that nobody - not even the most experienced of traders or the most powerful of computer trading systems - can consistently and specifically predict exactly what the markets will do in the future. Markets can't be tamed. (To find out more about trading systems, see Direct Access Trading Systems, The Global Electronic Stock Market and Survive the Trading Game.)

There is an old market adage that says, "Markets will do anything and everything possible to frustrate the largest amount of traders." Trading markets with some success is no easy challenge. Trading markets full time, with no other source of income, is an extremely difficult endeavor.

At this point, some may be thinking, "This is not very encouraging news. Maybe I should listen to some of those other guys that say I can have immediate trading success by learning their 'secrets' or adopting their 'proven' system or strategies."

Many traders are lured by fast talkers or fancy wording into thinking that someone or some firm has a sure-fire trading "secret" or system that beats the markets on a consistent basis and racks up big trading profits in the process. But the truth is, most of these claims are half-truths at best and downright lies at worst - and they come from people who are out to take your money. (Find out more about these smooth talkers in The Ghouls And Monsters On Wall Street, Online Investment Scams Tutorial, The Biggest Stock Scams Of All Time and How does a pump and dump scam work?)

The truth of the matter is there are no "trading secrets." Achieving futures trading success is not easy - it takes hard work. And even hard work does not guarantee futures trading success. Unfortunately for many traders, it takes the pain of losing substantial amounts of money early on before finally realizing this truth.

Candidate for a Full-Time Trader?
But for those who are still determined to make it as a successful full-time trader, below are some key questions that should first be addressed, to help determine if one is a candidate for graduation to that elusive rank.

1. Are you a successful part-time trader? You'll need to be successful at trading futures on a part-time basis before you think about moving into the full-time trader ranks. Don't be fooled into thinking that trading on a full-time basis will allow you to spend more time to cure your part-time trading ailments. In other words, don't say to yourself: "If only I could spend more time trading markets, I could have more success than I've had just trading 'one-lots' here and there."
2. Do you have enough money available to live on when (yes, when - not if) you hit a streak of losing trades? A losing streak will inevitably occur, and probably sooner rather than later. It may seem like a losing streak of just two weeks, but it could stretch up to six months, or longer.
3. Do you have the psychological stamina to be a full-time trader? Quite frankly, most people do not. Can your psyche (not to mention your pocketbook) handle six months of losing trades?
4. Will your immediate family members support you, even during a prolonged rough stretch of trading? Believe it or not, this is a very, very important question. For example, if your spouse does not support your decision to trade full-time, then you are likely doomed to failure. The pressure of having to produce winning trades and knowing that your spouse is skeptical of your efforts can be insurmountable.
5. And on your part, will you be able to uphold your family or other important responsibilities even during a rough trading stretch? Or, will you brood when you start to lose your "golden" touch?

The above questions are tough to answer, but they need to be faced if you are to continue on your trading journey.

Full-Time Trader
Finally, there are "full-time traders" who do fall into a different category than what is described above. These are people who have enough money to trade futures on a full-time basis, even if their trading profits alone will not support their lifestyles.

These are individuals who already have significant amounts of money derived from means other than trading. Also, there are full-time traders that have retired from other professions and want to spend the "autumn of their lives" not in a rocking chair, but in a field that is challenging to them. They also have other income besides just trading profits and they are better suited to the job than those that live paycheck to paycheck.

Don't Take It Lightly
Becoming a full-time trader is not as easy as buying a computer, a data feed and opening a trading account. It takes hard work, dedication, psychological stamina and a strong support base. Unfortunately, even if you have all four, there is no guarantee that you will turn a profit. If you are willing to pursue this endeavor, make sure that you understand all that it entails and the stiff challenges it poses.

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