Is Trading A Way To Get Rich?

12/26/2012

Those who trade either online or offline are often lured by the promise of fast money, but the fact is that trading is no shortcut to becoming rich. A small percent of people who earn big bucks through trading are unable to sustain their stroke of luck in the long term and cannot trade gains for too long.
Jamal from slumdog millionaireThe race to get rich via trading makes stock traders take on too much risk, which is hard to manage when you invest too much in one position or trade with an excessive margin. The key is to manage trading risk effectively so that you can earn consistently in the long term. Another tip to consider is that there is no direct correlation between the risk you take and the money you make. Online stock trading involves speculation and thereby calls for education, while risk management is more of a skill.
It is important to take measures that use time-tested strategies which boost long term profits and better risk management so that your capital can be safeguarded. At the same time, it is also imperative to remain modest if chance favors you and you have big money coming your way. Standing the test of time in trading is no walk in the park; many people think the stock market operates like a casino, which is far from the truth.
Most individuals who trade do so with indices and foreign exchange. A fewer number of people trade in bonds or interest rates and commodities. However, the expert traders know how to make money by reading the charts and scouting for market trends. Charts are far easier to read than technical data about individual shares, financial indices, or commodities. As a rule of thumb, a market that trends up breaks through resistance levels, while a volatile market cannot create these levels.
If you have even a small understanding of what affects the value of a particular market and how to read charts, your chances of getting rich through trading will increase significantly.