Trading for a living is possible for anyone, but unlikely for most people. Instead, what you should be focusing on is developing a conservative strategy that works consistently — and that will earn money for you over the long term. You will never be able to turn a $500 account into a $50,000 acount in a week, a month, or even a year. So it is important to start with the right set of expectations that are actually achievable in real markets.
The widespread prevalence of the internet in personal computers and mobile devices has taken trading off of the exchange floor and into the realm of retail trading. But how many traders are truly successful, and how many people are able to trade full time for all of their income. The binary options market is full of half-truths and false promises, and we must take a conservative approach when we are getting started with a trading career. Here, we look at some of the myths realities seen in daily options trading.
What is Trading for Living?
Trading for a living implies that a person makes most or all of their income taking positions in the financial markets. But what most people don’t know is that nearly 98% of traders ultimately lose money. Sure, there might be some lucky streaks early on, but, ultimately, the house usually wins and individual traders lose. Because of this, successful trading requires a conservative approach that involves study, practice, and dedication. If trading was easy, everyone would be doing it. So, if you truly expect to be a successful trader you must understand that you will need to approach the markets with patience rather than greed.
Myths about Trading
There are many strategies online and each of them claims to be the best. Well a majority of these are actually myths. Many authors would proclaim that their systems work ninety percent of the time and in whatever market condition. Sounds good to be true! The sad part is that these promises are unrealistic and may traders have lost believing these fake stories.
Another myth is that you have to win in most of your trades so that you can profit from it. This of course is not true! An example would be losing ten dollars in ten trades and then you a hundred dollars in your eleventh trade. Getting your head just above water level is what you are trying to do as a trader. This is why you have to structure your trade in a way that you have more gains than losses. This may not be as you have expected from trading but if you can do this then you may be well ahead from the ninety eight percent majorities.
The biggest (and most destructive) myths about trading come when proponents of certain trading systems proclaim to have strategies that work “90% of the time,” or “in any market conditions.” Unfortunately, these are completely unrealistic promises and all traders will have to face losses much more often than this. Another myth is that you need to be a winner in a majority of your trades in order to make money. This is also completely incorrect.
If for example, you lose $10 on nine trades and then you win $100 in the next, it means you are keeping your head above water — and this is all a trader is every really trying to do. Because of this, it is important to structure your trades in such a way that you are making more money than you have lost. This might seem like a dull set of expectations but if you are able to accomplish this, then you are already ahead of the losing 98% majority.
Should You Quit Your Day Job?
The next question that often comes up is whether or not to quit your day job and devote all of your time to trading. If you make more money trading than you could in any other profession, the answer would be yes. But for most, this is totally unrealistic and it always makes sense to treat your day-job as your primary source of income, and trading as a secondary source. Luckily, there are plenty of strategies that allow you to do both at the same time. This generally means you should avoid scalping strategies and instead focus on the longer term opportunities.
what are the right amount of trade?
A lot of people might not agree about the amount that you need for successful trading. Nonetheless, the real fact is that you do not need any amount of cash to do so. This means of course that you can initially use a demo account thus doing away with the possibility of wasting money or earning money. However, there are a number of brokers who might permit you to open accounts in their sites without any starting or minimum balance. You can even have a dollar as your trade size. The only thing that you need to put in mind is that you trade your account with regards to percentages and not on how much dollars you have. You can implement similar strategies if you already have a hundred dollar or a million dollar trading account.
Last but not the least note, you must never do trading for your children or as a form of investment for your kids or life’s essentials. Trading is always a gamble it is almost always not guaranteed. Risks capital has to be the foundation of trading. If you can afford to lose money then trading online can be great for you.
Having Enough Money to Trade?
Many people disagree about the amount of money you need to trade successfully. But the reality is that the answer is $0. Of course, this means using a demo account and removing the possibility of earning real money. But many trading brokers allow you to open an account with no minimum balance, and to take trade sizes that are as small as $1. What you need to understand is that your account should be traded in terms of percentages, not by the number of Dollars. The same strategies can be implemented if your trading account is $1 million or $100.
Last, never trade for your kid’s college money, or anything else that is considered a life essential. No trading strategy is ever a guarantee, so banking on trading for life necessities is always a mistake. Trading should always be done using risk capital.
The bottom line
When you trade for a living it means that you can make most of your income from the financial market. However, a lot of people do not basically understand that almost 98 percent of traders practically lose money at first. There may be some lucky trades in the earlier part bit eventually the house is usually the winner and as an individual trader, you always lose. Due to this fact, good traders need a traditional approach which includes practice, study, and of course dedication. If trading online was so simple then anyone, even teens could be doing it. Thus, if you visualize yourself as a successful trader then you might need to be more patient when approaching your target. You must not let greed get the most of you.