Expenses Starting Financial Trading Career

Expenses Starting Financial Trading Career

When trading Forex or other financial markets, some expenses are unavoidable, especially in the beginning -youll have to buy a few books, download trading software, sign up with a data service, and so on. It is important to keep your expenses as low as possible. Amateurs have a charming habit of paying for their trading-related expenses, such as computers, subscriptions, and advisory services, with credit cards, without taking money out of their trading accounts. That protects them from seeing the true rate at which they are going downhill.

Good traders add to profitable positions and reduce the size of their trades during losing streaks. We can apply the same sound principle to expenditures. Losers like to throw money at problems, while winners invest a fraction of their profits in their operations. Successful traders treat themselves to a new computer or software package only after they have enough profit to pay for it.

Even the best tools can blow you out of the water. At a recent seminar we ran in Malaysia, a trader was excited about a powerful analytic package for which he was going to sign up the following week. It cost almost $1,000, but it was going to give him a tremendous analytic advantage. How much money do you have in your trading account? I asked. $2,500. Then you cant afford it. This software will cost you so much that youll have to generate almost 50% profit simply to pay for your signals. No matter how good the software, at this rate youll lose money. Look for a cheaper package, something thatll cost no more than about 2% of your account.

Institutional traders get support from their managers, peers, and staff, but private traders tend to feel lonely and isolated. Vendors prey on them by promising to help lead them out of the wilderness. The more overloaded you feel, the more likely you are to listen to vendors. Nine out of ten professionals in any field, be they lawyers, auto mechanics, or doctors, are not good enough. You dont trust an average auto mechanic or a doctor, but rather ask for referrals from friends you respect. Most private traders do not know who to ask and respond to advisors with the loudest advertisements, who are rarely the best trading experts.

Some trading advice can be amazingly good. A few dollars will buy you a book that holds the experience of a lifetime. A few hundred dollars will get you a subscription to a newsletter with original and helpful advice. But gems are few and far between, while legions of hucksters prey on insecure traders. I have two rules for filtering out the worst offenders: avoid services you dont understand and avoid expensive services.

If you dont understand an advisor, stay away from him. Trading attracts people of above-average intelligence, which probably applies to you. If you cannot understand something after an honest effort, its probably because the other guy is giving you double-talk. When it comes to books, I avoid those written in bad English.

Language is a reflection of thought, and if a guy cannot write clearly, his thinking probably isnt too clear either. I also avoid books with no bibliography. We all borrow from our predecessors, and an author who doesnt acknowledge his debts is either arrogant, lazy, or both. Those are terrible traits in a trader, and if he writes like that, I dont want his advice.

My second rule is to avoid very expensive services, be they books, advisory letters, or seminars. A $200 newsletter is likely to be a better value than a $2,000 one, and a $500 seminar a better value than a $5,000 one. Merchants of super-expensive products sell an implicit promise of the keys to the kingdom. Their customers are usually desperate to dig out from under abysmal losses. Football players call this a Hail Mary play – when a losing team in the last seconds of the game desperately tosses the ball forward, hoping to score. Theyve already lost the game on skill, and now try to come back in a single desperate gamble. When a trader who lost more than half of his account buys a $3,000 trading system, he is doing the same thing.

Helpful advisors tend to be modest, and price their services accordingly. In our office in Malaysia you can gain plenty of useful advice completely for free. An obscene price is a marketing gimmick that conveys a subliminal message that the service is magic. There is no magic – no one can deliver on that promise. A relatively inexpensive service is a bargain when its good, and a cheap loss when it isnt.

Someone once asked Sigmund Freud what he thought the best attitude for a patient was. Benign skepticism, answered the great psychiatrist, and thats good advice for financial traders. Maintain an attitude of healthy skepticism. If you find something you dont understand, try it again, and if you still do not get it, it is probably not worth having. Run, do not walk, from those who offer to sell you the keys to the kingdom. Keep your expenses low and remember, any information you receive becomes valuable to you only after youve tested it on your data, making it your own.

For a comprehensive and inexpensive or even free F orex training do not hesitate to visit our website or contact me personally.