All this talk of trading as opposed to investing may have got you excited, or might have you worried about keeping your wealth. Trading and investing are two alternative things that you can do with your money, and there is no right or wrong answer to which you do. Everyone is different, and more people try trading than are really cut out for it, usually with disastrous results.
Certainly, no one is born able to trade, and it takes study and a certain disposition to be able to trade effectively. It places demands on your way of thinking that you may not be able to cope with, and it needs commitment to become a profitable trader, even if you have the mental makeup to achieve this. It is not a question of intelligence, though some say that it requires intuition as well as study and practice.
If there’s one thing that you need to have as a trader, it is the ability to disconnect your actions from your instinctive emotions, and to do the right thing in every circumstance. Most of the time, emotions will mislead you and push you into doing the opposite of what is needed as a trader. For instance, if the trade goes wrong way you may naturally want to beat yourself up for getting it “wrong”. The fact is that you may not have got it wrong, and the trade just went the wrong way, end of story.
If you lose a few trades, you may get the feeling that it is your turn to win now, when of course each trade stands on its own. Even worse, if you win a few trades you may think that you have got the hang of it, and start trading with more money than you should, only to have a catastrophic outcome down the line which leaves you with a much depleted account. All these thoughts are automatic, and hard to overcome, but must be put aside if you are to trade effectively and reliably.
Conclusion
So there you have it, a concise description of what is involved in the stock market, and how you can learn to become a beneficiary of its potential. Whether you choose to invest or trade short-term, there are great possibilities and many pitfalls ahead of you. Don’t rely on any one person’s recommendations, no matter how great their credentials, and make sure you understand why they may be advocating investing in a particular stock, or adopting a certain trading strategy. Remember that at the end of the day it is your money that will be involved in the markets, and no one cares as much about it as you do. The opportunities to “get rich quick” arise from time to time, but if they are genuine it is unlikely that anyone will be sharing them readily with you, so you must make up your mind how and to what extent to become involved.