Category: How to Start Trading – Beginners

How to know if Forex Trading Signals is a scam
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By Gorica Gligorijevic
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Most of the scams were interrupted thanks to the enforcement of rules by bodies such as the FCA. But today we are faced with the more advanced scammers.

Of course, not every forex signal is the scam.

There are still very reliable services but it can take time to recognize them. First of all, there are so many speeches about scams all around the forex. Don’t believe every word you hear. Just because someone offers poor quality, doesn’t necessarily make it a scam with the intention of cheating you. Think about the intent of the sellers. If all they want is your money without making an effort to deliver, it’s a scam.

The opportunity of scamming still exists for many forex scams.

Scammers tempt new investors with a promise of quick fortunes through “secret trading formulas” or algorithm-based “proprietary” trading methodologies. Before choosing a broker or platform, go through your own search.

Forex signal providers may be an individual or retail firm that promises to trade your account or give you signals to enable you to make a killing out of the market. Some of them will promote their experience and back it up with a few testimonies.

Some promise very high returns and guaranteed profits, either through a managed account where the firm makes trades on the investor’s behalf or by trading using the firm’s trading platform. Most traders will receive some initially returns from the firm to give the impression that their trading has been a success.

Scammers will encourage traders or investors to invest more money. But at this stage or soon after the returns stop, their account is suspended and there’s no further contact with the firm.

Important to know is the fact that many scam firms claim to be FCA authorized.

How can they do it?

Many fake trading and brokerage firms will use the title, ‘firm registration number’ (FRN) and address of regular companies and signal providers who are FCA authorized. This is the so-called ‘clone firm’. The fake providers will give you their phone number, address and website details. Sometimes they will claim that a brokerage’s contact info on the Register is out of date. Or scammers might claim to be abroad firm, and that’s the reason they don’t have updated contact and website.

An example of scam trading signals

Some scammers may copy the website of an approved company, and change, for example only the phone number.

When you want to pick your signal provider you have to check several things.

Trustworthy Forex signal service should be verified in websites like the Forex Peace Army. Further, you shouldn’t pay more than a few hundred dollars for a good signal system.

Be especially careful of system sellers who offer programs at excessive prices and claim they can guarantee remarkable results. Choose one of the many legitimate sellers who are decent and whose systems have been properly tested to potentially earn a substantial income.

Another problem is the mixed funds.

Without a record of separated accounts, the trader cannot follow the precise executions of their investments. If you don’t check this issue, you are opening the door to scams. Scammers can use a trader or investor’s money to buy houses, cars, and planes or just vanish with your money. They can offer an investor the false opportunity to have his forex trades managed by highly-skilled forex traders who can offer outstanding market returns in return for a share of the profits.

The catch is, this “management” offer requires the investor to give up control over his money and hand it to someone he knows little about other than the hyped-up and often the completely false record of success available on the scammer’s website and booklet. And the trader or investor often ends up without money, while the scammer uses investors’ funds to buy yachts.

Still, the forex market is not entirely unregulated.

Some forex brokers do not deal fairly with their customers and defraud them.

How does it work?

They start as an unregulated broker. And they publish the offer of large incentives to recruit affiliates who then bring the clients. Once the broker has a few million dollars in funds, empty the accounts, transfer the money to an anonymous tax haven and shut the doors.

Hard to believe?

If some signal seller claims that everything he or she touches turns into gold, don’t trust.

Trust me, I am rich! C’mon!

Their model is a fairytale of sales tactics where clients are suckered into a free seminar, then persuaded to buy several thousand dollars courses, then upsold again to a more expensive course. The tactics are so good the clients don’t even know they’re being cheated. The education they provide is nothing you can’t find for free elsewhere on the internet. Pay them to teach you, start trading, and allow them to buy a Lamborghini. Huh!

Million Dollar Pips was one of the most popular strategies ever sold, but the developer never traded it on a real account.

How does it work?

Develop a simple automated strategy that trades a lot with a high percentage win rate. Run it on a dozen accounts using a variety of settings. After several months, pick the best track record and publish to Myfxbook or some other traders community site.

Develop a sales page detailing how “sophisticated” and “professional” the strategy is. Buy an email list, contact affiliates offering a 50% commission on all sales, then launch!

A few years ago it wasn’t uncommon for someone to sell thousands of copies of such strategy.

This kind of scams will fail, there is no doubt. Like any other did.

Where the warning signs can be found?

If brokers won’t allow the withdrawal of monies from investor or trader accounts. Or, if it is impossible to withdraw money.

Also, if enter or exit a trade during an economic announcement is not in line with expectations. And, if the trading station doesn’t operate to your liquidity expectations.

The best way to determine if a signal seller can benefit you is to open paper money or practice trading account with one of the better-known forex brokers.

Be patient, and eventually, you’ll determine whether predictive signaling works for you or doesn’t.

The list of the biggest scammers you can FIND HERE on Traders Paradise’s Wall of Shame

How to avoid signal provider scams

I think everyone should learn at least the basics of how to spot Forex scams.

First, ensure you deal with signal service providers originating from locations you have heard of before.

Second, if they are authentic, their payment method should be one of the common online payment methods such as PayPal or credit card payments.

Listed here are some of the attributes to look into before following a signal service:

The signal should have verified records of myfxbook, FPA, and other credible verification sites.

The rule is, if the results are not verified, just move on do not waste time or money on unverified results.

In most cases, you will not know on what basis their decisions are made on, so this makes the verification part very important. Focus on signals with over 6 months record of profit and with over 100 trades. If whatever is being shown as results are for less than 100 trades that means the statistics are not sufficient to make any judgment.

The result should be sufficient to offer statistical significance to inform your decisions. Again if the results are for less than 6 months, then the strategy could just be lucky and with time it may be proved wrong.

Make sure the signal operates with drawdown levels you are comfortable with.

This will vary from one trader to the other. Some traders have a bigger desire for risk some have low. If for instance, you take a strategy with 30% drawdown, that means $3,000 could be in drawdown with an account of $10,000 and you remain comfortable. So work with a drawdown that does not give you sleepless nights.

Don’t just focus on how much a strategy earns, take a look at its drawdown too.

Get a signal with reasonable performance or subscription fees. When you are paying to a signal service, also check the fee charged is fair. Unless you are doing this to test the strategy, this strategy will only make sense if you have a huge account.

As we said before, any forex signal service should offer a certain trial period or money-back guarantee. They should allow traders to test before buying. If that is not the case, move on and don’t do not waste your money. If they don’t trust their strategy, why should you?
20th April 2021
How Much MONEY Do I Need To Start Day Trading?
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By: Guy Avtalyon
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(Updated October 2021)

How much money I need to invest in order to start day-trading? This is one the most frequently asked questions I get from people who want to start day trading stocks, forex or futures markets.

Well, the amount of money you need depends on where you want to trade, your style of trading, do you want to trade forex, stocks, or futures.

I’m going to walk you though it all, so stay focused.

And of course, how much money you need to start trading depends on which country you are coming from.

This is how much money you need to trade stocks:

The general rule is if you want to be a day trader in the USA and to trade US stocks, you need to maintain an account balance of $25,000 or more.

You have to start with at least $30,000 if you plan to make more than 4-day trades per trading week.

Four-day trades or more per week gives you “day trader status” and you’re subject to the $25,000 minimum account balance. It is recommended you start with more than $25,000, to give yourself a buffer over and above the minimum requirement.
If your account drops below $25,000 you won’t be able to day trade until you replenish your account to more than $25,000.

But in case, if the country you are in or want to trade, doesn’t require the $25,000 minimum account balance, it is recommended you still deposit at least $10,000 into your day trading account.

With smaller accounts than this, commissions and fees will significantly erase profits you made.
Usually, online trading platforms let you trade CFD and forex, and with them you can start with only $250 minimum deposit.

One of the common mistakes that traders make is being under-capitalized. Losing trades happen, even to the best traders. But after taking losses you still need to have enough money to keep trading.

It’s recommended risking 1% or less of your capital on a trade.

The risk is the difference between your entry price and your stop loss price, multiplied by the number of shares of have.

This is how much money you required for forex trading:

To open an account in the forex market you will need smaller amounts of money as it is not subject to the same regulations as stocks.
Forex provides leverage up to 50:1 (it can be higher in some countries). Increased leverage means increased risk and reward.

Leverage is essentially using borrowed money to trade.

In the forex market, most brokers provide leverage with few strings attached but you have to be aware of a few things.

For example, you may have $2,000 in your account, but you can buy $10,000 worth of the EUR/USD. Your leverage is 5: 1 on this trade.

The broker doesn’t charge a fee for leveraging, but they are still making money in different ways. You have to realize that leverage is a double-edged sword, increasing profits as well as losses.
In the forex market, the larger your position size the more the broker makes/charges on commissions.

While the broker doesn’t charge interest, the market does.

Currency traders are subject to the interest rates prevailing in the currency they trade.
Every transaction is buying one currency and the selling of another done at the same time.
You may make a few dollars a day which will grow your account over time. But you can also earn much money if you open the account with a bigger amount.

Professionals suggest, if you want an income from forex day trading, start with at least $1000, and preferably $3,000 to $5,000. This amount allows you to potentially start building a monthly income.

It is what the most day traders are looking for.

This is how much money you need to trade futures

Futures contracts are traded on all sorts of products, such as oil, gold, natural gas, and stock indexes.

In order to day trade futures most brokers only require a minimum deposit of $1,000. Most brokers require you have at least $400 or $500 of available capital in your account to take a one contract trade.

This is called day trading margin.

Opening an account with only $1,000 isn’t recommended, the word of pros. Open the futures account with at least $8,000. Or more if day trading ES futures. Because your broker may require additional margin.

You may wish to start day trading with at least $10,000 to give you some flexibility in what you can trade.

Risk virtual money before investing funds

Before risking real capital and making a deposit with a broker, create a trading plan and test it out in a demo account.

You have to be profitable for at least a couple months in a row before opening a real day trading account.
This gives you time to see where you need revisions.
6th April 2021
Lies That Traders Like To Tell To Competitors

Some traders’ and investors’ lies will confuse you; the other will take your money. Be aware!

By Guy Avtalyon

Maybe it’s tough to say, but there are too many lies that traders and investors like to tell. It doesn’t matter if they are lying to their rivals or the audience. I’m always astonished how people pinch every cent at the supermarkets but will let someone they hardly know take their money. Why would you believe anyone you barely know?

Actually, I can’t even imagine why anyone likes to tell me lies. Do such people want to make a false picture of themselves? What do they think after telling some lies? Are they bigger in their own eyes? More successful? Smarter? Someone might say they are not lying; they are creating a parallel reality. But why?

Keep in mind, you have to check everything, or you’ll end up losing your assets.

This post aims to unmask the big lies that traders and investors like to tell, yes. All the little lies, the myths, and misleads of traders and investors. I’ll give you the list of traps, so you’ll avoid falling in them.

What are the lies that traders like to tell?

Most of us are self-taught traders. We are learning to trade by reading books on trading; we are watching videos, we like to talk with successful traders and investors. In other words, we’re gathering knowledge from every possible source. And we believe they are trustworthy.

On the other hand, I’m up for the challenges. When someone tells me that something cannot be performed, I’ll spend hours and days showing how wrong such thinking is. That’s in my nature.

When I hear someone is picturing him or herself as a professional trader, my alarm turns red. I know they are convinced they are the best, but the truth is something else. For example, some traders would tell lies to give excuses for their lack of profit. Such traders will tell you that some strategy isn’t good enough or impossible to perform, only because they failed to succeed. If you believe them, take a step back, and think twice. Don’t let other traders’ failures stop you. It could cost you money, or, at least, you could waste your precious time.

If anyone in the world did it, then the contrary is a lie. I always tried to show them how wrong they are. Never believe when someone tells you, “you cannot do it.” Try it; instead, never leave the battlefield. If you know that anyone did it before, find out how it is possible and explore the strategy, method, and approach.

You will never make money in a short time

This is a true lie. Why shouldn’t you make money in a short time? You can do it in any trading period of time. We’re living in a high-tech era; we have computers, phones, laptops, we can trade from any place on the Earth at any time. For some trades, you’ll need a few seconds; for others, you’ll need months or years. Where is the problem?

Remember, you’re the one who chooses the timeframe. Choosing your trades’ timeframe depends on your budget, personality, trading style, goals, etc. That’s why we have short-term traders and traders with long-term timeframes. It’s completely great to have a trading strategy that combines the short timeframes. So, of the lies that traders like to tell is that you cannot make money in a short timeframe.

Lies that traders like to tell: you have to analyze the market full-time

C’mon! Once you understand how the market price is acting, it’s totally possible to turn on your computer at any time and enter the trade. It is actually recommended when you notice the price in the right position or see a good candlestick bar. What is the other way to make a good trade? There is no other way. Just turn on your computer at the right time, enter the trade, and make a profit with the right settings.

Of course, you’ll need to know a lot about price action and trading to enter the trade at the right time. But the truth is, you don’t need to look at your screen all day long or to study the market full-time. All you need is a good strategy to have more wins than losses. Keep in mind; trading has nothing with certainty; it’s all about probability.

You can’t profit with a small trading account

Really? When I hear something like this, I have to ask: Can you tell me what is the right trading account, please? For some traders, $100.000 is nothing. Well, guys, during my early days as a trader, $100 was big money for me. Honestly, it was all I can put into the trade.

Moreover, some of the most successful traders started with much less money. And look at them now!

The truth is that you need to know how to manage your trades to protect your capital invested. Always keep in mind the size of your position. That’s the key. Your primary goal should be to protect your capital. Your account will grow with the winning trades. As the old song says, the winners take it all.

Automated trading algorithms control the markets

The truth is that automated trading algorithms do over 70 percent of all trades. Also, the truth is that they are not the largest part of the trading volume. Large institutions do account for the majority of the trading volume in the market. No one can say that algorithms control or run the market. That would be stupid. But it is one of the lies that traders like to tell when they fail.

How many times did you hear: What can I do against algorithms? They are smarter than I am? Oh, dear man, algorithms are made by people, like you and me, but they are smarter, that’s true. No jokes, these guys are programmers, developers very familiar with complicated mathematical operations, but there is a different case with the markets. Every second of a trading day, you can see traders taking the bull or bear side on every trade. What can you do as a home-based trader? Follow them. Copy their actions. The main goal in trading is to take the winning side—nothing less, nothing more.

One of the lies that traders and investors like to tell, especially to their competitors, is that they can’t learn to trade. They will try to discourage you by saying that you do or do not have the talent or abilities for successful trading. It’s BS, trash, pardon my French! Everyone can lose money; it’s the part of trading. No one is profitable all the time. Losing trades are normal. The goal is to have more winning than losing trades in sum.

Take your time, don’t waste it on lies that traders like to tell, build your confidence, learn as much as you can, and enter the trade.

26th November 2020
Trading Myths That Need to be Told!

Surprisingly, you can find so many myths and misconceptions in trading and get the idea that they have become common knowledge in trading. They can actually hurt your trading.

By Guy Avtalyon

When you start trading, you can be faced with too much advice that other people may give you, and some of them might be about trading myths. Yeah, there are trading myths that need to be told. I know you may think that paying attention to some trading myths could give you more profitable trades. But they are myths. They don’t really exist. Some of them might seem reasonable, but you have to check them. What if some profitable trade came randomly? Honestly, you can not take it as a truth. I’ll point out some of them to help you avoid useless behavior and waste precious time.

You have to understand why they are trading myths.

Trading myths: Only one winning strategy

Honestly, I have heard so many times traders saying that one winning strategy is enough for the whole life. Not many traders would admit they are looking for only one perfect strategy that can work in any circumstances, in any market condition, one strategy that never loses. Based on my experience, many traders are looking for that exactly.

Keep in mind, the majority of profitable traders have approximately 50% winning trades. The point is to have more profits on winning trades and have fewer losses on losing trades. The number of trades you take isn’t important. You might have one winning trade and three losing trades and still be profitable.

You couldn’t be more wrong if you think that some profitable traders are winning all the time using only one strategy. That’s impossible. Also, it’s impossible to have only winning trades and beat the market all the time.

What you can find is some scammy platform offering only one but winning strategy. It would help if you were careful because all data they present you are based on past performances and might not work in the future.

As I said, all you need is to be right over 50% of the time. That’s exactly how you can produce huge returns. You should forget that one perfect strategy, there are more possibilities not to find it ever. Try to create a strategy that will provide you more wins than losses. That’s the whole wisdom.

The entry point is more important than the exit

Traders-Paradise wrote so many times about the importance of the exits. Yes, the entry point is important, but when you know where and when to get out, the trade is more important. The exits show how much you know how to take profits. So, let me know how this doesn’t deserve your full attention.

What else do you have to take into consideration? Position size. With the wrong position size, your entry points and exits mean nothing. If you have the wrong position size, you’ll drain your account in a few trades. The good entry points are important, but we’re talking about the trading myths if you think they are essential. To make this thing simpler, think about all parts of the trade as the most important. Never underestimate any of them. Being dependent on only one aspect of trading is the worst choice. You’ll need them all if you want to be profitable.

Trading myths: Trading is gambling.

Really? If you really think so, you’re wrong. There are some similarities in vocabulary, but that’s the place where similarities end. For example, a gambler places a bet. But traders place trades.

The main difference comes from the prospects and control. You cannot control roulette, for example. All you can do is to pick from proposed odds and place a bet. The rest is a matter of luck.

You have more control over the probabilities in trading. Let’s say you notice a pattern that has a 65% of breaking out and a 35% chance of failing in your chart. What would you do?

First of all, you should use a risk/reward ratio of at least 1:3. This means you’re willing to risk $1 for $3 in profit. So, you have the control. You’re the one who is going to decide when to sell. For this example, let’s say you place a $2,000 trade. You decide to set a stop-loss at 5%, and your profit target is at 15%.

Let’s calculate the expected value of this trade (assuming that both the Take Profit and Stop Loss of an asset has 50% chance for both of them. To check for actual stats about assets, please check on our Trading Strategy Planner):

(2000×0,15)-(2000×0,05) = 300-100=200

The expected value is $200. But you can improve it if you find better probability setups, for example, 70%, or if you use a better risk/reward ratio, for example, 1:4.

The odds are more flexible in trading, and you have control.

You can find a lot of trading myths out there. I pointed out three that are the most common. If you know that something is a myth and not a real issue, you’ll have the advantage in the market. You will not waste your time to examine actually losing strategies or seeking the holy grail. Moreover, you’ll become a profitable trader faster.

Just keep in mind, no one has winning trades all the time.

You don’t need to win every single trade to be profitable. You’ll need time to acquire the knowledge but investing your time is a better choice than losing hard-earned money. Spend some time to learn and master trading, test your strategy, tweak it if necessary, and do it before you place the trade. Trading isn’t just simply picking the entry point randomly. You’ll have to know the right time to enter the trade, the right point to exit the trade, and the position size. These are essentials.

20th November 2020
How to improve risk management in trading?

Improving risk management in trading could be a life-changing factor.

By Guy Avtalyon

I’ll start straight to the point on how to improve risk management in trading. Risk management in trading very often stands very low on the priority list for many traders. The main concern is the entry signal or other indicators. I have to tell you this isn’t the right way. Nothing is wrong with waiting for the proper indicator, but if you don’t have decent knowledge about risk management in trading, you will not have profitable trades. The point is to know how to manage your risk, size your position for each trade, and set your orders accurately if you want to make a profit in trading.

And you might think it is unnecessary, and it isn’t so important. If that is your case, feel free to not continue with reading this post. But I have to warn you that if you never improve risk management in trading, you’re at risk of becoming a steady loser.

And why should you be that if there are some tips to avoid the most common problems?

Tips to improve risk management in trading

If you adopt some of these tips or approaches, you’ll stop losing your hard-earned money.

First, you must realize how you let the trade get out of your hands. Yes, it’s kind of looking back but never think about this as wasting your time. If you make a scrutinizing evaluation of your past trades that ended in losses, you’ll find the reasons behind them, and you’ll find the pattern. The main benefit of this introspection is to avoid similar behavior in the future. Knowing how and why you made mistakes, you’ll be prepared and will never repeat the same trading mistake in the future.

Setting orders and the risk/reward ratio

When you identify an entry signal, do you know where to set your stop-loss and take profit orders? You have to know that even before you enter the trade. How to do that? Let’s assume you know where to set the stop loss and take profit orders after determining the appropriate price levels. The next step should be to measure the risk/reward ratio.

If you find out the risk is bigger than the reward, just skip the trade. The worst thing you can do is stretch the take profit order or squeeze your stop loss to reach a higher risk/reward ratio.

Keep in mind; trading is mostly unpredictable, so the reward isn’t assured. The only thing you can control is the risk involved in your trades. You shouldn’t neglect that and act unreasonably. I’m a hundred percent certain that most of you determine the risk/reward ratio randomly and adjust your stops and profit orders to reach that ratio. Guys, it’s an entirely wrong way.

Compare win rate and risk/reward ratio together

Many traders insist that figuring out the win rate is pointless. But they miss out on a crucial point. Watching the win rate alone has no value, but if you observe win rate and risk/reward ratio together, you’ll be closer to winning trades. Having winning trades is every trader’s dream.

I want to be clear with this, you shouldn’t necessitate an excessively high win rate. For instance, a trading strategy with a win rate of 40 percent requires a risk/reward ratio below 0.6 to be profitable.

A win rate of 40 percent is average for the most profitable traders. Why should you want an insanely high win rate? That’s wrong and could lead you to significant losses.

Balance win rate and risk/reward ratio

You must find a balance between the win rate and the risk/reward ratio. For example, the high win rate could mean that the risk/reward ratio also is high.

Suppose you found a stock that is trading at $20, down from a recent high of $25. And you bought 50 shares because you had $1,000 for that purpose.

If the stock price went up to $25, you can make $5 for each of your 50 shares, and in total it is $250. You paid $1,000 so you have to divide 250 by 1,000 and the result is 0.25.

That means that your risk/reward is 0.25:1. It is a very low risk/reward ratio.

Assume that you have made 15 trades, of which 6 were winners and 9 were losers. So, the win/loss ratio is 6/9, or 2:3. In percentages, the win/loss rate is 6/9 = 0.66. This means you are losing just over 66 percent of the time. Using your total number of trades which is 15, your win-rate would be 6/15 = 0,4×100 = 40%.

You can be profitable with a 40 percent win rate if risk/reward is below 0.6. As can be seen from the formula for calculating the needed win rate for profitability based on the risk/reward ratio, 1/(1+ risk/reward ratio).

The risk/reward decreases when the win rate decreases. In other words, if you have more losses, your winners must be bigger to be profitable.

Size your position

I’ve met many traders that size their positions randomly picking some levels of 2 percent, 4 percent, and never change that. It’s totally insane. You have to estimate the chances to win because trading is all about possibilities. It’s normal to change position sizing for every trade if it is necessary, and mostly it is. Why should you hold the same position size when you see virtually no chances of winning?

In trading, every strategy has a different win rate. So, the risk/reward ratio for each of your trades will vary. This is especially important if you trade using many strategies or setups.

The point is to reduce the trades’ position size with low win rates and increase it for the trades with higher win rates.

If you want to improve risk management in trading, you should never overlook the risk/reward ratio and money management. Otherwise, you’ll blow your account. If you take too much risk to make a quick profit, you’ll likely end up in losses.

You’ll go bankrupt because of a lack of knowledge about risk management. Now onwards, you have to rigorously adhere to position sizing and risk management if you want to be a profitable trader.

Pay attention and improve risk management in trading

You might love your trading style or some strategy, particularly, but you should consider improving it to achieve more profitable trades. After some time, everyone should jump to the next level. I know you could be impressed by indicators, waiting for the right signals to show you the right time to enter the trade. It’s so exciting and sexy, right?

Well, it’s also risky if you never improve your risk management. It isn’t so exciting as watching the charts, candles, following the news, and waiting for the indicators, but it is essential for your future trades and your profits. Blinking indicators and trading strategies will benefit you for some time, but the real difference comes with improved risk management.

Don’t be worried. A small number of traders really pay attention to this matter unless they have a series of losing trades. Then and only then. they will start thinking about how to improve risk management in trading. But you have a chance to shortcut this path. Why suffer losses if you can trade with more attention to the risk management from the beginning instead.

It doesn’t take too much.

Did I miss something? Share your opinion with me, leave a comment, ask me what else you would like to know. I’m here for you, guys.

8th October 2020
Is trading stocks better than forex?

Trading stocks has more options, while forex trading will never confuse you with the number of options

By Guy Avtalyon

Trading stocks have become easy. Some would say that we never had a better time for trade stocks. But how is it possible that almost everyone who wants to start trading, first enters the Forex market?

Yes, I know it is the most traded market. But I think it is interesting due to aggressive propaganda also. We’re in a permanent barrage by forex ads. People, I don’t have anything against forex trading, it’s my favorite too but can we stop for a while and consider the other opportunities?

The main question is should we actually trade forex instead of trading stocks? This dilemma comes naturally after I saw how much my readers are interested in forex. Much more than in trading stocks. It’s unnecessary to say how surprised I was. People just jump into the forex market without actually knowing what it is.

And I was trying to find why that is. I’ll share with you what I find:

Firstly, you don’t need a lot of money to enter the forex market. You can trade even if you have just a little money as, for example, $10.

If you want to trade stock, you’ll need a bit more. Actually, you’ll need much more.

Is trading stocks is better than forex?

Before I answer this question, let me point out some similarities and differences between these two.

Similarities between trading stocks and trading forex

There are some basic similarities. For example, brokers. It’s never been easier to create an online brokerage account. You’ll need just a few steps, several minutes, and voila! You have the trading account. The next step is to fund it, of course.

There is one thing you must keep in mind before choosing a brokerage if you want to trade both stocks and forex. Not all brokerages will allow you access to both markets. Some brokerages don’t service forex trading. Keep that in mind when choosing your broker.

No matter if someone is a stock or forex trader, such heavily rely on short-term strategies. For example, a stock trader will almost never hold stock for several years or so. Trading stocks means to have short-term goals. Otherwise, it’s investing. The similarity comes to trading forex. Trading forex means to hold currency until its changes show you can profit from your base currency. So, you’ll trade it in such a case.

Technical analysis is almost the same

Also, in technical analysis, you’ll use patterns and indicators in both markets traded. If you use technical analysis for your trading strategy (it’s smart to use it, believe me) you will not have a lot of time to analyze news, or to research the company’s outlook. Instead, you’ll look at charts trying to notice indicators that will tell you if your stock is going to rise or drop.

You’ll need to know if the price change will happen soon. The same is when trading currencies. Technical analysis is important for both types of trading since you need to know should you buy or sell.

Differences between trading stocks and trading forex

Let’s take a look at some of them.

For example, leverage. While leverage is somewhat rare in trading stocks it is broadly used in forex trading. Actually, it is crucial for forex trading. Let’s say you have $10 on your account but your broker can offer you the 100:1 leverage. Instead of having the struggle to trade with such a small amount you can suddenly place a trade with $1.000. That’s the power of leverage.

But I have to warn you. Leverage is risky. On the other hand, it can provide you to profit a lot and without really having thousands of dollars to enter the trade.

So where is the risk?

If you miss making a smart trade, leverage can destroy your deposit, your funds, everything you have.

In trading stocks, the best you can have regarding the leverage is 2:1. Don’t be disappointed. Stocks’ prices are changing dramatically. To be honest, you’ll need to put less money to gain more profit in trading stocks.

Trading Hours are not the same

The forex is around-the-clock. How is this possible? Well, the forex market isn’t focused on a single time zone. Each of them has set their own working hours but when one is closed, the other starts to work.

For example, New York starts at 8 AM and closes at 5 PM EST. Oh, it’s time for Sidney to open! Sidney starts at 5 PM EST and closes at 2 AM. Pretty nice, isn’t it?

Stocks markets operate slightly differently. For example, the largest exchange is NYSE, and it starts at 9:30 AM EST to 4 PM Monday through Friday and doesn’t work during the weekend.

Also, the market size is different. The stock market is smaller than the forex market. Every single day, the forex market has above $5 trillion worth trade, while the stock market can count on around $170 million per day trades.

Advantages of trading stocks

It’s easier to get started because almost all brokerages provide this opportunity. So, you have more choices. Also, there is plenty of stocks to trade, more than 2.000 stocks you can trade only on the NYSE, plus over 3.000 on the NASDAQ, not to mention the other exchanges all over the world. The point is that you have more options in trading stocks.

Also, stocks have higher volatility. Higher than currencies. That gives you a chance to earn more.

On the other hand, currency can rise or drop in the fractions.

Advantages of trading forex

First of all, you’ll never be confused with the number of trading options. The number of currency pairs is limited. Further, there is no minimum amount needed to start. You can enter the trade with $10. And, at last but not least, the forex market has more liquidity.
So, you can see that for trading stocks or forex trading you’ll need a strong TA background. Both rely on short-term price changes. Thus, maybe the most important in trading is to get some free up-to-the-minute charting software. It is an absolute MUST.

19th September 2020
Is Day Trading Like Gambling?

If you have poor risk management, if you size your trades higher the more you lose, you are gambling. That is how casino-players lose money.

By Guy Avtalyon

I know some of you are asking themselves is day trading like gambling. Also, some would say yes, it is gambling but not me. Let me ask you something. Would you like to have enough money for everything you need? Even more, for everything you would like to buy, to travel everywhere you want, to have a super designed home, luxury items. Honestly, it’s possible. Imagine that kind of life. No money problems, no anxiety, no stress caused by money issues. Really, that could be a wonderful life. Everyone would like it. The truth is that only a few know how to achieve that.

Having a life without financial stress and suffering is everyone’s goal.

As the days rush by and the nights draw in, it’s well worth resting for a moment to catch up on what’s going on in the world. That’s why I’ve selected this topic to help you do just that. Let’s break this myth! The money belongs to all of us. We all can have it enough to have a dreaming life. In fact, we have all the right to enjoy, to be happy, we are born for happiness.

This isn’t some life coaching mumbo jumbo or MLM trick, this is a real-life story. It’s a business. Day trading is a business so how can anyone talk about it like gambling? Is day trading like gambling? Of course not.

I’ll point out several differences.

Day trading means prompt actions in the markets. Day traders don’t have the luxury of a long-term study of all the circumstances that can make a trade. It is all about odds in your favor.

The main characteristics of day trading

It works very fast. Day traders have to react quickly to any market change because trading means buying and selling securities at the right time with a profit. Short-term changes in the price changes are favorable for day traders. They can think quickly, act promptly, and profit. Day trading doesn’t necessarily mean taking a lot of risks per trade. It’s quite opposite. Traders don’t take a risk on every trade. They are trained to recognize any change in the market, even more, thanks to their knowledge and experience, they know what markets are telling them. So, they can act based on that info. In essence, they are responding to the market’s movements.

Are all of their trades successful? No! Many of their trades are failures. But if more than half of trades are winning everything is okay. Day traders don’t have time for long and in-deep estimations. They can recognize profit opportunities based on price and volume patterns.

Is day trading stressful? It can be. They have to react here and now if they want a quick profit.

How is day trading different from gambling?

In gambling, you put up your money with the belief that some fortunate events will occur. But what about the odds? Are they in your or house’s favor? Behind gambling lies unsupported and unrealistic hope. Do you have any chance to hit lucky? Actually, there is more chance for the airplane to hit you.

On the other hand, hitting losses is more possible. Gambling is exciting for people with the wrong view of money-making.

Day trading is completely different. It is based on knowledge, research, training, experience. You can find only a few traders that enter a trade randomly. Basically, they are amateurs and it is very smart not to take them as the right example. You might think if they don’t take a lot of risks how could they expect big returns? Actually, they don’t expect such a thing. Their returns aren’t big but they are frequent. That’s a big number game. Profit a little but frequently. Of course, some trades will bring you a lot of money, some will end up in losses. The point is to have more winning trades than losing ones. Simple!

Are you ready for trading?

Many of you aren’t ready yet. You might be angry at me but it is true. As the Sun is in the sky and the Earth is a globe. I know you can easily fall into beginners’ mistakes. I saw so many people doing the same. Honestly, I was like you. I know what you mean exactly. You think that day trading is just a process where you can easily find the securities’ price past action, find the current price, and know how it will act in the future. You couldn’t be more wrong.

The truth is that all traders must have a good education about trading, markets, price movements, financial circumstances, securities they are trading. Their decisions are based on knowledge. Are you one of them? Are you able to make money every single day, every month? Do you know that even the best traders have losing years?

Do you understand why are you wrong? You treat day trading as gambling. So, to the question: Is day trading gambling you have only the wrong answer.

How to prepare for day trading?

If you are able to put your emotions away from your trades, you’re close but not ready yet. Why is that? First of all, if you want to be a day trader you’ll need to be indifferent about profit and loss sums. What you need is a workable trading strategy. Are you concerned about losses? If yes, it’s more likely you don’t have a viable strategy, so you’re not able to identify or take a reward to risk trades.

Let me ask you. What if you have a losing trade, what if the trade goes against you? That’s how odds work. You’ll have losing trades from time to time, don’t be afraid to lose money. If you never learn why you have losing trades, you’ll never learn how to have the winning ones. Losing trades are not the end of the world, they are just a phase. That shouldn’t affect you. Bear in mind, as long as you are able to learn and find where you make mistakes, you’ll be on the right track. You must understand that trade will go against you occasionally. Losses are run by possibilities. The point is that the possibilities are changing. Don’t let your losses influence your approach to the markets in the future.

Take the trades that give you the highest reward relative to the risk you take. Size your position properly and never let any trade dominate your profit and loss amounts. Spread your trades. If you do so you will have good results in their cumulative performances. It’s a point of diversification. You should diversify your trades but never over-diverse. Do it to reduce the volatility in securities performances not to tell to friends how many different securities you’re trading.

So, is day trading like gambling? No, not even close.

How to track your profits?

Let’s say you have a viable day trading strategy. That means you are confident. But your job here isn’t finished. You have to track your day trading profits and losses. You may have the best strategy ever but if you don’t have a track record, you’ll be lost. You’ll not know what’s happening. Don’t get careless. That never drives you to success. Keep in mind, you’re not playing a game, you’re doing a job. If you have an accurate track record you’ll be able not only to know how good your strategy is but also you’ll be able to adjust it if it is not working for you.

I’m suggesting you set up a spreadsheet. Add columns for the securities you bought, the exact time you made a trade, the third column should be at which price you bought it, in the fourth column you should add how many assets you bought, and the last column is for the commissions.

Also, set up the columns for closed positions so you’ll know how your trades ended up. Then, calculate how good you are, what is the return in percentages for each of your trades. You can calculate it in currency, of course.

So, at the end of this post, let me ask you, is day trading like gambling?

Waiting for your answer. Happy trading! Do it smart!

10th September 2020
How To Trade On A Laptop?

A trading laptop has to be able to process a large amount of data quickly. You’ll need multiple windows open or you’ll need a few monitors. Here is how to set up your laptop for day trading.

By Guy Avtalyon

Can I trade on my laptop, asked me dozens of readers and I said yes, but you must know how to trade on a laptop. Well, I saw here some misunderstandings about what is the best computer configuration you need for a day trading. Technology is continually advancing, so you’ll need a computer with adequate memory. Also, the processor must be really fast.

Guys, you wouldn’t like your computer lagging all the time. Or even worse, stalling when you need to act quickly. Markets will not stay the same while your computer is trying to load or crashing every several minutes. The trading software will need a great memory and processor. For charting, you’ll need the same. Especially your processor must be fast and up to date.

The simple answer to the question How to trade on a laptop would be: by something really good. Yes, I know. It might cost you a lot but think. If you have a fair enough good machine you’ll be able to trade in a proper time and, this is very important, you’ll be able to use all the necessary tools. For example, day trading is something most traders want. The point is that it demands that you have a whole tools kit. Otherwise, you’ll never do this job well.

How to trade on a laptop easily?

These days’ trading is based on electronics. You enter the markets over the internet, right? So, you need a computer or laptop to make a trade and have direct access to your brokerage. The other tools you’ll need are market data in real-time, and great trading platform. But keep in mind, these are basic tools. You’ll also need a charting platform and many other trading tools. The common thing for each of them is that all of them require great computer performances.

So, how to trade on a laptop?

Isn’t it easier to have two or more monitors since you’ll maybe need to look at charting software monitors, broker’s website, market data? Well, having a few monitors isn’t a necessity but is an advantage.

Well, I have to be honest. Trading with a desktop PC is easier and cheaper than with a laptop. Do you remember what I’ve said about requirements toward memory and speed? Well, a PC is more favorable since it can be configured for more speed and processing ability than a laptop.

What are the main problems with laptops? First of all, they have limited space, the components are smaller but more expensive. So you’ll need more money to spend if you want to have a high-end laptop. It could be cheaper to buy a PC with similar performances.

The other problem could be to connect several monitors. Let’s say your laptop’s screen is smaller than the monitors you can connect via DVI port, for example. So, it could be exhausting trading while looking at a small laptop screen and large monitor next to it.

Well, not all is better if you use a standalone PC. Let’s say they are robust, in the first place. And you don’t like to sit in front of it the whole day or even longer while monitoring your trade. You really don’t need it if you trade on a laptop. It gives you mobility. Especially if you prefer automated trading that is known as robo or algorithmic trading, also.

So, how to trade on a laptop? Yes, I see you’re impatient. You have to install your system on a virtual private server (VPS). What is this? It is a remote server that is located near or close enough to the broker’s server. You’ll have a minimum of latency, minimum delay in placing your trade orders. In essence, your trades will come from the remote server connected to your laptop.

What do I have to do to trade on a laptop?

If you have a high-end laptop the only thing you’ll need extra is a separate monitor connected to the right port. The other solution, if you want to connect more monitors, is to buy one USB video adapter for each monitor you want to connect.

Yes, you might say your laptop doesn’t have several ports. Well, there is a solution also for that issue. Just get a USB hub and voila, your two or more extra monitors are connected.

Hey guys, one thing more! Don’t try this if your laptop doesn’t have enough RAM, for example, 8 GB at least.

What tools will you need for trading on a laptop?

As I said before, you’ll need a powerful laptop. The other important tool is a trustworthy platform to trade. Numerous brokers will give you access, you have to be smart and choose one with good charting software. Why is this important? Because if you want to be a profitable day trader you’ll need to act quickly and how to do that if you don’t have an option to see the tick charts and timed charts. For day trading it is imperative to have 1-minute, 5-minute, hourly charts.

As a day trader, you’ll need software that allows you to place trades quickly. Your trading success heavily depends on your strategy but if you don’t have advanced software you won’t be able to execute your strategy properly.

The main goal here is to find the best software to meet your needs and to connect it with your trading service. That is how you can trade on a laptop.

The problem may arise if you don’t have fast internet. With a slow internet connection, it is impossible to trade. In day trading, hundreds and hundreds of data will stream directly to your laptop every second. What do you think, is it possible to follow the price moving in real-time with slow internet? Of course not! So a fast internet is an important tool for your trading success. Otherwise, you’ll receive out of date data and your trading will fail. You’ll lose your money.

Also, you’ll need to backup your internet access in case of service’s outages. Yes, shit happens! Use your smartphone as a backup. You can create a hotspot and continue to use your laptop or you may have direct access from your smartphone to your trading platform. Never use the same internet provider for your laptop and for your smartphone for this reason.

Appropriate market data is a necessary tool

Day trading demands a perpetual stream of market data, info about the price movement. Your broker will give you market data, but it’s up to you to demand the kind of data you need. For example, if you trade forex, you’ll need forex market data. Forex brokers give data for free for all forex pairs which is convenient because all you need to do is to open a chart and you’ll see the price data.

For the stock market, you’ll have to subscribe to the data you need. Don’t add too many.

It is possible to trade on laptop

When you ask me how to trade on a laptop I have only one answer. I’m trading on a laptop. I’ve never used a PC. Is it a harder or simpler solution I don’t know since I never made a comparison. And know what, I’m satisfied. This doesn’t mean you’ll be also. But this post is written because you asked me. So, this was how to trade on a laptop.

Happy trading, guys!

21st August 2020
Trading Personality – How To Know What Style Suits You best

What are the main characteristics of different trading styles, how to choose the right one based on your trading personality? How to pick the trading style that suits you the most?

By Guy Avtalyon

I hope you figured out the “best” trading system for you but do you really know your trading personality? Of course, the trading system you chose is one that suits your personality, I hope. No? Where is the problem? How is it possible you made such a mistake? You tried with some quizzes on the internet, right? But is that the right way to figure out your trading personality? It’s for fun, for God’s sake! You must be serious when choosing the trading style, your money is in play.

How to choose a trading style based on your trading personality?

We have four basic styles of trading and each trader will choose the one that suits him or her best. We all have to choose between day trading, scalping, position trading, and swing trading. Which one will a trader choose depends on trading personality. In other words, our trading style depends on our personality.

If you think it is an easy task I have to tell you’re completely wrong. Your trading style must be in harmony with your personal characteristics and knowing them is just half of your way.

Are you still with me?

Okay! Let’s go further!

I suppose you’re new in this field. So, here is how to match your trading style with your trading personality. If you’re still reading this it is more likely you didn’t find the right trading style yet. I can help you.

Finding the right trading style that fits your trading personality is extremely important. Otherwise, you’ll have losses. And nothing but the stress, losing money and finally you’ll give up. That decision could be wrong because you’ll miss the chance to earn money.

How to choose the trading style that best suits your personality?

If you never harmonize your trading style to your trading personality or even worse, if you never recognize what your personality is in trading, you’ll never become a profitable trader.

But here is a tricky part. You have to be honest about your wishes and your possibilities. Moreover, you’ll have to put them in alignment. They have to walk side by side, supporting and taking care of each other.

So, be honest when answering these questions.

– What time frame do you prefer when trading? Is it position trading, swing trading, day trading, scalping?
– How do you recognize yourself, as a fundamental or technical trader?
– What is your risk tolerance?

These are three basic questions and based on your answer you’ll figure out what is your preferred trading style. I have to repeat, you MUST be honest. The most important thing is to avoid your emotions. It really doesn’t matter what style you like more. It is all about how to match your trading personality with your trading style and you’ll have to do that without emotions.

I know it is the hardest part.

To put more pain into your life I have to tell you that you’re not choosing the style only, you’ll need to decide the type of trader you want to be.

Are you a discretionary trader and system trader?

Some of you will be able to recognize at first glance but the others will need to try both types before making any decision. Nothing is wrong with that. Always keep in mind that your hard-earned money is in play and you want to see it growing, not to lose it.

From my point of view, both types have the potential to be profitable. But it’s up to you to find the one that suits you best. My choice shouldn’t be yours necessary. Choosing the right style and the right type of trading that suits your trading personality is an individual decision. What I can do for you is to give you some hints and clues on how to do that and avoid mistakes that could lead you to great losses.

I want to share one secret with you – when choosing your trading style keep in mind that less is more. What does it mean? It is better to choose one strategy that works for you and when you master it and advance it, you can easily shift to another if it is necessary or you want changes.

So, let’s go more deeply into each trading style and see how they match your trading personality.

Position Trading

Position trading is suitable for long-term traders since it is comparable with holding an investment for a long time. In position trading, your trades may last between several weeks to several years. The length of your trade will depend on trends because the main focus is on the price movements. Position traders seek stocks with the ability to grow in the long run. They believe when the trend appears, it is going to continue.

Trading personality characteristics for a position trader

First of all, you don’t like or don’t have time to monitor the markets all the time. Further, you’re not an aggressive type of trader. You don’t prefer instant treatment and, more importantly, you have a large portfolio.

In what circumstances position trading isn’t suitable for you?

If you are an aggressive trader this isn’t for you. Also, if you’re not patient and have a small portfolio, so you would like to enlarge it. Or maybe, you want to profit instantly.

Day Trading

For day trading style you’ll need a good education and large funds. For being a day trader you’ll need a great knowledge of short-term strategies and to recognize even the smallest market’s moves. Day trading is when you enter and exit the position during one trading day. Your profit will come from small changes in the market.

Trading personality characteristics for a day trader

You’ll need a great knowledge of the market you want to trade. Also, you’ll need a large capital ready to invest. In case you’re a quick thinker and quicj=k decision-maker this strategy is suitable for you. If you think you can maintain severe discipline, this could be the right trading style for you.

In what circumstances day trading isn’t suitable for you?

This isn’t a good choice for beginners or for the traders with a lack of capital. If you’re not experienced and tend to sell your winners too early or you’re keeping your losers too long, this style isn’t for you.

Let’s go further! I hope you’re interested.

Swing Trading

In this trading style, you don’t need to continually monitor your trades. You’ll hold the position for a few days because you’ll follow the trend and it may last a few days. When it is an uptrend you’ll go long, while when it is a downside, you’ll go short. This is a perfect style for traders who have regular jobs and can’t monitor trades all the time.

Trading personality characteristics for a swing trader

If you’re patient and can wait for the best trading opportunity this is for you. This means you’re not going to panic when the trade changes direction and moves against you. In this style, you don’t need full-time devotion to the trade and you don’t need to make your trading decisions quickly.

In what circumstances day trading isn’t suitable for you?

If you feel nervous and get panicked when the markets change direction against your favor, it is better to avoid this style. Also, if you’re not able to recognize the trend. Trend following is very important in swing trading. If you can’t, just don’t swing.

Scalping

This is the quickest strategy among trading styles. You’ll take profits from tiny price changes, but they will frequently occur. If you want to become a scalper you’ll need to make several trades within a few seconds. For this style you;ll need a great and accurate exit strategy. You’ll have small gains but frequently. These small gains compounded, have the potential to generate a large profit. But be careful, this style could be a double-edged sword. Just one big loss could delete all your small gains.

Trading personality characteristics for scalpers

If you’re a quick decision-maker, and able to act without hesitation, this is your best pick. Also, you’ll have to be fully focused on your trades while performing them. This style requires a lot of time to devote to trades since you’ll need to act quickly. Moreover, you’ll have to know how to handle stress while trading.

In what circumstances day trading isn’t suitable for you?

If you’re not focused enough, feel stress while have to make quick decisions, or hesitate to trade

How to pick the right style based on your trading personality

I have to be honest, there is no magic or easy answer. It depends on your individual characteristics and conditions. Also, you have to take into account some other variables.

The most important part is to be realistic and honest when evaluating your trading personality. You MUST know what trading style is easiest for you to handle, which style will best fit your abilities. When you choose one it doesn’t necessarily mean you’ll have to stick with it. You can change it. Choosing a suitable trading style is a process. It’s not set in stone. Hence, it’s changeable. But don’t change it fast and try numerous styles in a short time. Evaluate and estimate before choosing any. And stick to it even if you have losses at first. Try to find where you make mistakes and fix them, make some improvements. The trading journal will be a great help to do that. If you made the right decision you’ll take profit. Your loyalty will be rewarded.

14th August 2020
Lies About Stock Investing And Trading

To know about stock investing is something that will pay you off for the rest of your life.

By Guy Avtalyon

Several years ago Forbes published an interesting article on the topic lies about stock investing and trading. The headline wasn’t exactly like ours but something similar. If you’re interested to read the whole article try to find it in the archive.

Brokers, financial gurus, even governments lie to us about global warming, the national economy, giving us false promises, lie about the stock market, taxes, or the national debt. We are also faced with so many lies about stock investing and trading. What we really need is the truth even if it isn’t pleasant.

Since the Traders-Paradise team thinks that an honest approach is necessary to this topic, we collected several unbelievable lies about stock investing and trading. Investing and trading are very serious jobs and any investor or trader doesn’t deserve to get lies instead of the whole truth. They have to survive this tough business. However, it’s impossible without telling the truth.

What are lies about stock investing and trading?

The first lie is that we should beat the stock market! Why should anyone want that? Why is it such a big deal? Theoretically, when you pick the stock randomly you have 50/50 chances of beating the market. Your stock will perform better or worse compared to the overall market. Yes, we know! The point is to hold some stock with a better return than investing in, for example, some index fund. When you want to buy the stock that is advertised as winning one, count how much fees you have to pay when buying and later, when selling. This means the return on that stock has to be much higher than you can see it at first glance.

Beating the market means the great risk involved. If we know that only 2% of stocks can match the market well, so your stock may not be able to beat the market all the time. So, be prepared to lose money most of the time. The main problem is in your capability to gather the true information about the company which stock you’re buying.

Honestly, it is almost impossible unless you’re an insider. No matter if you’re buying a hot-stock. You’ll have zero guarantees that it’s able to beat the market. Past performances will not guarantee you a big future return. This led to the stock buying to the level of casino games. Meaning, you can beat the market from time to time but you’ll fail to do that in the long run. If nothing else, the transaction costs will get you. So, beating the market all the time is one of the lies about stock investing and trading.

Investing and trading are risky, the stock market is volatile

The stock market is fluctuating, it will go up and down. Investing is risky but there are so many strategies to reduce investment risks. The possibility to make money on the stock market is bigger than the possibility to lose. What you have to do is to follow some rules and avoid randomly picking the stock. Also, with a strongly created investment portfolio, diversification, and strong risk management, your chances to profit from stock market volatility are bigger.

We wrote about risk management so many times. Also, if you add new info for every trade in your trading journal, you’ll have the pattern in hand. Hence, you’ll be able to act on time and protect your investment if it is necessary or place the trade at the right time and exit in profit.

If you hold a large portfolio of stocks over a long period, for example, 20 years, you’ll be able to significantly reduce the risk of losing your capital. There still will be some risk but reduced.

Also, traders and investors should consider how realistic it is to ride out the ups and downs of the market over the long-run. What will you do when the economic downturn comes, for example? Will you sell your stocks to fulfill the gap made by a potential job loss? Some life events could make it difficult for some of you to stay invested. But if you have a trading plan and stick to it, everything is easier. So, stocks are risky investment is another lie from the corpus of lies about stock investing and trading. The stock market is volatile, also, it is a lie because that risk is part of your plan and you’re counting on that when trading or investing.

In the stock market, you’ll lose all your money

This is one of the biggest lies about stock investing and trading. Behind this lie stand incredible lack of knowledge and misunderstanding of where the money is going. The stock market is a zero-sum game. The total amount of money invested is what you have there. If you want to profit, someone else has to lose. That’s the whole wisdom. The truth is that you’re not going to lose your money there. Yes, from time to time the price of your stocks will change in value. The prices will go up and down, that’s the way the stock market operates based on supply and demand.

Also, the truth is that stocks can be a good way to earn an investment return over a longer time. If you take a look at historical data you’ll find that, for example, that market indexes, for instance, the S&P 500 have been better than average. When you look at long periods, there were fewer negative years than positive.

What investors have to do is to find a balance. This means understanding how the risk of investment works and how much risk you’re willing to take to earn a satisfying return.

It’s difficult to invest

This is also, one of the lies about stocks investing and trading. This is a story about Average Joe. Well, Average Joe is completely capable of managing his investment, and, for him, it isn’t difficult to invest. Moreover, he has done decent research and trade according to them. In the stock investing, you could have a lazy portfolio or any other that will never confuse you. But let’s go back to the first among many other lies about stock investing and trading. When you hear someone claiming that it is hard to invest in stocks, just recall the first lie mentioned above – beating the market. It’s hard to beat the market constantly if not impossible. But in a long-term investing or active trading you can easily cover your losses.

Yes, you can find some surveys out there that show the average investor has underperformed the market during the past two decades. But the point is that you can’t be a professional trader if you spend a few hours per week analyzing the market and stock performances. You’ll need more time to dedicate to it. You’ll have to be fully focused on your investments.

But you don’t need to beat the market. Keep in mind data. Data shows that the most successful investors are not right all the time, they are right below the 60% of the time. Isn’t it interesting when you know that Warren Buffet is wrong 40% of the time? So, why should you be right all the time and beat the market constantly? To be honest, it’s impossible.

Investing requires a lot of time – No!

This is completely one of the greatest lies about stock investing and trading. This particular lie can be true if you look at professional traders, people whose job is to trade stocks every day. For the average investor as the majority is, one hour per week to start investing in the stock market is quite enough. Don’t even think that you don’t have that time. If anybody thinks that investing requires a lot of time it is due to a lack of knowledge about how the stock market works.

Yes, investing means engagement but your effort will be prized by profits. Actually, investing is a much better way to earn than savings. That was good news. The bad news is that you can’t learn to invest while sitting in the pub and drinking beer, for example. But here’s another good news. To learn how to trade or invest all you need is a little bit of time, basically, the rest is so simple. And the most important, investing could make you rich. Are you ready to drop it?

Did you ever catch yourself thinking:
“I’m too old to learn new things.”
“I’ll never reach my goals.”
“I was born this way, I’ll never change?”

The thing is, many people believe that once we hit a certain education, our personality becomes so rigid that it’s hard for us to grow and learn more. But this is nothing but a lie! When it comes to investing in stocks all you need is a bit of time and willingness. Investing doesn’t require a lot of time. Face these lies about investing.

The biggest lie about stock investing and trading

Maybe the biggest lie is that you have to know a lot about investing. Having in mind the way of investing today, you have to know nothing about it. Nothing at all. What you must have is an investing goal. The investing itself is actually automatic, you can find so many investment services available online. For example, start with some robo-advisor. You’ll pay the fee but not too much. Also, one of the lies about stock investing is that you need a lot of money to start. The truth is that today you can easily find a trustworthy investment platform that will allow you to start investing with a little money, for example, $100.

Don’t let these lies about stock investing keep you from investing. The consequences of not investing are bigger.

18th June 2020