Is It Possible to Make Money Trading?
Trading is buying and selling financial instruments such as stocks, bonds, options, currencies and futures in a short period of time. The goal of a trader is to make a quick profit on the direction or trend of a financial instrument's price. Trading can range from day trading where positions are opened and closed out in the same day to holding the financial instruments for a few days or weeks.
Other People Are Reading
-
Professional Traders
-
Large financial institutions employ traders to generate profits with the company's and customer's money. These traders work with large sums of money, sophisticated computer trading systems and have access to large amounts of data.
Individual Traders
-
There are individuals who make profits from trading. Some earn their entire income from trading. Earning a regular income from trading requires knowledge, experience and a significant amount of money as capital.
-
Trading Costs
-
The Securities and Exchange Commission (SEC) requires anyone who is classified as a day trader to have a minimum of $25,000 in a margin account. Traders must allow for commissions from buying and selling as well as spreads between bid and ask prices before earning a profit on a trade.
Warnings
-
The SEC has published information and guides for traders. Here are some of the warnings from the SEC's tips for day trading:
"Be prepared to suffer severe financial losses."
"Day trading is an extremely stressful and expensive full-time job."
"Don't believe claims of easy profits."
Considerations
-
Trading is stressful, demanding work where the trader faces potential loss and profit, sometimes in large amounts. Traders must be confident, understand exactly the possible outcomes of their trades and not be risk averse.
-
