Online Stock Trading: Not For the Faint of Heart

By Myer Thompson

As Dr. Livingston was wont to say: "The tales of my demise are greatly exaggerated." So is the case with the state of the stock market today. The market is still firmly entrenched and despite horrendous losses, still maintains a fair amount of the nation's invested wealth. Volatility in the marketplace has become an acceptable risk. The Las Vegas mentality is now an investment mainstay and you either know how to legally game the system or you don't.

Day traders are those who have the most to lose. These investment mavericks have flaunted the cumbersome need for brokers and brokerage houses. These financial do-it-yourselfers want tangible control of their hard-earned cash. That is understandable. The logic of losing money you invested yourself is far more palatable than being informed via a statement of telephone call that someone else has lost your money.

Most online stock trading professionals would advise against day trading -- and in most cases, their advice would be spot on. Day traders experience a disproportionate amount of losses when compared to professional services. This is undoubtedly due to the fact that professional traders undergo a rigorous training regimen. Moreover, the gravity of buying and selling stocks with other people's money is never lost a dutiful trader.

The curriculum is taxing because finances are taxing. Though much is made about the endless string of financial terms -- they are very real terms and are, indeed, very complicated. It's easy to pigeonhole bankers and brokers and Wall Street -- and for good reason -- but it's important to remember that these institutions create real wealth for real people. Yes, bankers do indeed profit, but so do shareholders. Say what you will about Trickle Down economics, but wealth can indeed beget more wealth.

By all means, day trade away. It's your prerogative. But know the pitfalls and perils. Yes, you are in more control of your money -- but unless you are a professional, you won't enjoy some of the fail-safes and protective measures meant to protect larger financial institutions. The Federal Trade Commission can ensure your stocks are recorded and rewarded correctly, but they can do little if you happen to be defrauded or scammed. Stick with the professionals. They're not the bandits the media would have you think they are. - 31970

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