Online trading has the potential to provide you with a lucrative return on your investments. Of course, like any investment there are risks, that’s why you should always use money you can afford to lose and take the time to know your market before investing.
But, with a little patience and time, you can be a successful trader and not one of the majority that doesn’t trade successfully and quit within two years.
All it takes is the right knowledge, and that starts with knowing the myths surrounding online trading to ensure you don’t fall foul of them.
Myth 1: It’s Extremely Risky
Online trading and particularly forex trading are getting a lot of publicity and with this, there is an increased amount of interest in success and failures. The result is that you will hear plenty of stories about those that have lost a fortune through bad investment choices.
In short, you will be forgiven for believing that forex trading is significantly riskier than any other type of trading, especially stocks. However, the truth is that forex trading is safer!
Of course, if you don’t do your homework then there is a high probability you will lose your investment. But, this is the same regardless of whether you choose online trading or stock trading.
If you do your homework and research the markets you will realize that you can start online trading with very little funds and diversify easily. This allows you greater control over your transactions and the ability to generate successful trades.
In contrast, stock trading places large amounts of money on stocks and relies on them to move upward.
Myth 2: It’s Hard To Get Started
To start online trading you need a reputable platform, which is easier than you think, as there are several options including Fineco, to get more information visit fineco.co.uk. Once you’ve chosen your platform and created an account you can access an array of financial instruments with one click of your mouse. You will be able to access global markets effortlessly and you are in complete control regarding how much you choose to invest in each transaction.
You don’t even need dedicated bank accounts, although a business account is a good idea to keep your funds separate from your personal money.
The best platforms will provide you with training guides and tips to help you get started. Of course, you shouldn’t rely exclusively on these, it is important to do your own research.
Myth 3: You Need A Big Pot Of Money To Get Started
If you are interested in investing in the stock market you are going to need to buy shares. The shares hopefully go up in value allowing you to sell them and generate a return on your investment. Of course, share prices generally only fluctuate a little, meaning that the return on a single share s very small.
To generate significant returns you need to invest in lots of shares, and that requires a big pot.
However, it is not the same with online trading. There are plenty of platforms that will allow you to practice for free. This will help you to get a feel for the markets and your trading patterns. When it comes to investing, these platforms will allow you to start with virtually no funds.
In other words, choose the right platform and you can start with as little as $10. Of course, you will want a little more to start generating real revenue. However, getting started and building confidence in your trading ability doesn’t require a big pot.
Myth 4: You Need To Trade Big To Be Successful
You’ve seen it on TV, a trader or lucky gambler risks it all in order to win big and comes up trumps. Whiles this is possible it is not the norm. In fact, most professional traders and platforms will tell you about the importance of risk management.
The generally accepted principle is never to invest more than one percent of your account per day. That means if you have $40,000 in your trading account you only use $400 a day. This ensures you never lose too much.
You can flex this if you don’t have as big a pot. For example, a pot of $100 suggests a maximum trade of $10 per day. It allows you to make losses and continue trading. It is not essential to trade big to make a profit. In many cases, a myriad of small trades will outperform one big, much riskier, trade.
Myth 5: Online Trading Is A Get Rich Quick Opportunity
Anyone who approaches online trading in this way is likely to empty their trading account, and possibly bank accounts, and quit online trading within two years. In many cases, in much less time.
The simple fact is that online trading is not meant to be a get-rich-quick scheme. You need to study the markets, move with them, and place your trades accordingly. Over time the returns will add up and you can make a significant amount of money this way or simply increase your standard of living.
But, that’s the point. This is part of your regular financial planning, not a way to get rich and stop working overnight.
Myth 6: It Is for Professionals Only
The simple fact is that anyone can start online trading. The internet has made it possible for anyone to dabble in the markets with ease. In fact, it has always been possible to invest in the markets but the process was only generally known to the professionals, that’s where the myth originates.
Today, you can create an account, log onto your platform, and start trading in less than an hour. Of course, you still need to know what you are doing.
Everyone should consider the benefits of online trading. It is a useful financial tool that can help you build a pot for retirement without having to rely on pension funds. After all, pension funds are built in the same way but, when you do it yourself, you have more control over the funds you invest and generate. Ignore the myths and start planning your investments today.