Online trading is so seductive - just sit, click, and rake in the profits! But as anyone who has ever seriously attempted online trading will probably tell you, it's just not as easy as it sounds.
Many novice traders are seduced by the lure of the "home run", that big trade
that makes you an instant millionaire and pull at night your own
private island paradise.
But when she wakes up.
To be on the trading of all kinds, really successful you need consistency, even if it
with small quantities. The ultimate goal is to keep the trade and then to
final wealth, but always go for the big wins they usually wind up with
large losses instead.
It is perfectly understandable that people are not interested in small profits.
After all, what would you have, big or small profits? Rather But the fact is
it's not a simple choice. Small gains are achieved more often, but
traders when they refuse to participate, they often lose much, much more.
Small but steady increase over time can add up to some truly huge numbers. For
For example, in option trading (my main area of focus for the last few years) is
not at all uncommon to hear about the profits of 100%, 300%, even 1000% in a single
trade! And while these results absolutely possible, by expecting them to be
our daily results we train our minds to accept nothing less and eventually
doom ourselves to disappointment.
To 10% profit taking. Imagine yourself training And what if you train
never too much of your money instead into a trade, but
manage it carefully? Say you have only 10% or less of your total trading
in a particular trade? If you would only be entitled to only half a profit of 5%
your total bill each month, compounding monthly earnings, you would
a better than 31% return in one year and more than 115% in just 3 years! How
much investment are you currently involved in the return as to have!
The key is small amounts, no big.
In the market there are usually only four possible outcomes:
1. A great asset
2. A small profit
3. A large loss
4. A small loss
Assume that over time, your small gains and small losses each average
out. That leaves you with only big profits and big losses. If you absolutely,
positively never allow yourself to believe that only leaves a great loss
the big profits. This large profits will ensure you a lot of money on
the long-term. You are not specifically for them, but we know
statistically, that as long as you can survive in the trading game long enough,
you are bound to occasionally some lucky "home runs" each.
You can not win if you're not in the game, and the way to stay in the game
by good money management, risk assessment, position sizing, etc. Without
these parts, most new traders blow up their accounts and never return to
the game.
Do not be one of those merchants.
There are to be made in online trading, fortunes but you should be able to stay in
the game. It is said that "the best offense is a good defense" and nowhere is
this more true than in the trade. Risk management and managing your money will
all but guarantee your success. The last major obstacle is your own emotions, but
that's a topic for my next article, "Emotions: A Trader Worst Enemy".
Jonathan van Clute is a full-time real estate investor, educator, speaker, and online options trader. In addition to his business activities, he is also a musician, video editor / animator, and one of the world's largest Segway Polo athletes. He can be reached via email at
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