Looking to get rich quick? Slow down if you want to make money trading

Want to make money trading? Read on so that you are aware of the inherent risks ... photo by CC user 68751915@N05 on Flickr

Have you seen all those ads that tell you how much cash you can generate by trading online? Ever wondered what they involve? In case you have and haven’t got round to checking it out for yourself here’s a curiosity buster that doesn’t involve anyone trying to steamroller you into something that sounds too good to be true.

By and large online trading involves buying and selling stocks or currency on a very short term basis. Whereas we have historically tended to think in terms of share dealing as being a really slow moving process that can last for decades, day-trading is at the other end of the scale. In fact, despite the suggestion that it represents easy money, trading is an activity with many risks.

The people who ordinarily do make a living on this basis to do by making multiple – sometimes hundreds – of quick trades over the course of a day. The idea is to simply take a small gain from each trade. The process is known familiarly as scalping – as in scalping a small margin between the buy and sell price.

There are now comprehensive software packages that can enable scalping trading on a semi-automated basis that make it less demanding, but even with the back-up of some of the most sophisticated trading informatics there is no guaranteeing precisely how something as multivariate as a currency, a stock or a market index will perform.

Increasingly, derivative based trading options enable ordinary people to make the same short term moves as professional traders. Financial Spread Betting products do come free of the sort of fees and taxes that formal share dealing involves, making it ideal for the nimble, low stakes level of investment that private individuals tend to favour. However, in order to make it pay it does in fact take a considerable investment in time and energy. The opportunity cost is high, even if the price of admission is low. If you are to get rich trading on line the likelihood is that it won’t be quick, but if you can make a success of it there is no doubt it will be worth it.

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