Online trading is becoming a very popular alternative to more traditional methods of trading stocks. Online day trading allows you to buy and sell your own investments all online, without ever even talking to a broker. There are some people who can use this interface for day trading and make a fortune, but for others who are less prudent, online trading only makes it that much easier for them to lose a fortune in investments.
Because everything is so easy with online trading, it is very easy for many people to forget that they are risking thousands of dollars of their money, and not just playing some game with disastrous results.
The most important lesson to remember if you want to get into online trading is to never make an investment without careful and conscientious research in the first place.
Normally, when you place an investment through a broker, he will give you all kinds of advice about whether it is a good idea or not, whether it goes along with your stock portfolio, or can be used to help diversify your investment, and other similar information to make sure that you are making the best investment that you can.
Online trading allows you to bypass the broker, and implement your own strategy. Keep in mind that it is only a very small part of the population for whom it makes sense to do this. For the rest of us, online trading is a horrible idea, because it deprives us of any guidance as to whether or not our investment is a good idea.
My cousin dove into online trading much too fast, and got seriously burned. He did it on a hot stock tip. This was back in the dot com days, and he knew that a certain company was about to go public, so he was there to grab the IPO. Sure enough, he made a killing, tripling his investment literally overnight.
Unfortunately, this gave him far too much confidence, and he got into online trading, thinking that he had some investment sense that, in reality, he did not have at all. The actual truth was that he had simply gotten lucky, and lightning just doesn’t strike twice. Soon, he had blown ten thousand dollars of investment and had to retreat from the stock game, not destitute, but certainly the worse for wear. This was a warning for me and I think it could be a warning for you too. Be careful!
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