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Who should trade?


Apr.25.2014

"Is Trading for Me?"

I often get this question from students who are just about to enroll in the Invest Diva education services. Especially  among the millennials who saw their parents lose all their savings during the crash of 2008, fear of trading is undeniable. It certainly is a legit fear, and trading is NOT suitable for everyone.

Previously I covered the question "how to overcome fear of trading" which you can find in this article. But figuring out if trading is suitable for your specific financial situation takes more than a generalized video.

 

We are on your side, not the brokers' side.

While a six-figure inheritance or high-paying job can land you in the top 1% of earners, it’s the little things—your money habits—that often make the difference between a life of prosperity and one of constant financial stress.

Financially responsible and successful people don’t build their wealth by accident — or overnight. Becoming rich takes serious willpower and long-term vision. You have to be able to keep your eye on the prize of financial freedom, be willing to sacrifice your present wants for the sake of your future and develop good habits to win.

There are countless articles on the Internet about things you should do to become wealthy. On Google, one of the top searches is "How to Become Wealthy." Many of these articles attempt to tap on top 10 (or 9 or 20) habits of rich people, and often times, they are very well to the point. You are likely to see these items on the list:

1- Get educated

2- Get your money to work for your by investing

3- Diversify your portfolio

Thousands of readers come across these quotes and articles on their social media everyday, think about it for about 55 seconds, and forget about it in less than an hour.

What do you think happens here? Is it lack of motivation? Is it because you don't REALLY want to get rich? Is it because you don't have what it takes? In my experience with my students, often times it has been this thing:

 

FEAR

 

It takes a lot to recognize why you are not doing it. But once your recognize the issue, at lease you are half way there.

Then, we have to dive deeper down and see what is it that you are fearful of? Common responds include fear of losing money, fear of not understanding the market, and fear of getting scammed.

Another barrier that is stopping you from growing your money, is fear of choosing the instrument to invest in. The amount of investing opportunities out there could indeed be overwhelming. Some people consider real estate, some stocks, ETFs, bonds and some equities.

Currency trading (FX, Forex) is also one of them. The largest market in the world with over 4 trillion dollars worth of transaction everyday, is a popular trading instrument in many countries.

Watch today's video to see if FX trading is right for you, and how to get started.

Once you're done watching the videos, I would like to hear from you and your stories. What is your greatest fear when it comes to trading? Join the conversation and share your story on our Facebook page.

 

Today's Q&A Friday question is from Leonor Dias who wrote:

What do you perceive is the greatest barrier to entry for people wanting to learn about FX and becoming  forex traders with no prior experience?

get educated now

This is a very interesting question Leonor because it’s important to understand what’s stopping you from doing something in order to overcome that barrier and get things going. In my experience with my students, the greatest barriers have been fear of losing money, and fear of not understanding forex trading; would it be thinking it’s way too complicated for them to learn, or not being able to out-smart the big traders, or even being scammed. And all of this comes back to lack of education, because “not knowing” is scary.

Now fear of losing money is the most fundamental barrier because it’s all about money afterall. We are in it for the money, and nobody likes to lose their hard-earned cash. The important thing to remember is that the risk remains true with any kind of investing. Many Americans think that real estate is the best and safest place to invest their cash, but as it was wisely mentioned in a Washingon Post article by Catherine Rampell, such investments are no less risky than trading the online markets, if not riskier. When you invest in real estate, you are putting in a huge chunk of your money and often times that includes loans. If you lose in Real Estate, You. Are. Done! But that doesn’t prevent you from dreaming about becoming a home-owner, does it? Same can be done with trading FX. If you educate yourself the right way and are fully aware of your risk tolerance and appetite for money, you can start a calculated and fearless FX trading journey.

 

Another barrier is the horror stories you might have heard from people around you, who gave their money to “professional traders” or the so-called “money managers” who got their money and lost it. I was actually a victim of this years ago before I got into trading myself. As an over-achieving college student on scholarship with various sources of income on the side, I was approached by a company from Friends Provident called Cambridge Capital (and yes I’m naming names) who got me into giving them around $100,000 over time so that they will trade it for me in mutual funds, and guess what, I never saw that money again (and I most likely ever will.)

But instead of focusing on the downside of trading, I decided to take control of my hard-earned money, and learn to trade by myself. After all, no one cares about your money more than you, right?

So my recommendation is this. Get yourself educated. Get a mentor. Start trading in demo accounts or put in very small amounts to start with. Trade with your friends and bounce back ideas. Not only you will learn a new valuable skill and expand your network, you’ll be surprised how diversifying your money in different markets can increase your wealth.

Some may ask, well, I really don't have the time to learn or trade. I'd rather just give my money to a money manager and have the experienced ones do it for me.

My question to you is this: Would Warren Buffet ever say that?
To get a private lesson  click here.

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