I hope this article will help to ease the minds of beginning traders and maybe ease some of their fears. This article contains 3 parts, styled as little stories, little upsetting things that could happen to any trader, all exaggerated of course, but true as well. Each part is devoted to a different kind of trader, from Mr. Sucker to Mr. Nice Guy and the Shark, each character is a different type of crazy and exaggerated trader. I hope that these nice virtual traders will help ease future trader’s fears and help them invest their money more wisely.
The “Sucker” Trader
This guy, like many of the traders I know, received an e-mail from unknown senders. “Imamillionaireoptions.com” company offers you great returns, up to 90%, in 5 minutes. Also, if you deposit now, you will receive a welcome bonus of 5 times the deposited amount and a personal assistant that will help you set up your account and make you the first million in a few simple steps. Mr. “Sucker” doesn’t really know who this company is, not to mention he doesn’t really know what Forex, CFD, Crypto or Binary Options actually are, but he is more interested in the bold letters that say that all he has to do is simply fill in his phone number, and they will contact him soon, and so he does. But a guy like The “Sucker” won’t wait for the phone call to come. He isn’t a fool, so he goes online and checks “online trading” on Google. “I knew it!” the sucker shouts, “There are other brokers who offer me more bonus and better returns in even less than 5 minutes!”. Well, he is not a sucker so he quickly contacts “Imabillionaireoptions.com” to get what he deserves. The support girl will tell him that for an initial deposit of $500 he will receive a bonus of $1000 and a cool T-shirt from the company. “We have a deal”, says one smiling sucker.
The “Sucker” goes Trading
He begins trading. So simple, he just looks at the charts, picks a direction, buys and sells all over the place according to his “guesstimations” and then just sits and waits a half an hour to check the outcome. Mr. “Sucker” knows a thing or two about the market, so he made around $100 on his first day of trading. Things were going pretty well, so he decides to raise the bar and trade for more. Unfortunately, after a while he discovered that consuming live financial news isn’t enough to make a million dollars. He began losing more and more, and then he started investing even more money to cover his losses until all he had left was $150 in his account. He decided to withdraw his cash, but then the company told him that he needed to trade more if he wants to be entitled to his bonus, and he has already lost all of the bonus amounts, so he just needs to keep ongoing. He didn’t read the small print; he was blinded by the crazy opportunity ahead. Mr. Sucker never learned strategies, tools, not even simple risk management. He was so sure of himself when he received this e-mail, he thought – Hey, if it’s easy, anyone can do it. Well, I guess suckers never die; they are just being replaced by others.
Don’t Be A Sucker!!
Don’t be a Sucker. Learn the market well, know your broker, read everything you can about online trading scams and frauds, about trading tools, and Trading Strategies. But most importantly – don’t just give your money to a company you’re unsure of. It’s not the bonus and/or the extra high profits that matter – it’s the reliability, customer service and if they are a top trading platform – those are the things that really matter. Those advantages make a mediocre CFD / FX / Binary Options broker into a top class broker. Remember – even the Best Brokers Suck Sometimes.
Part 2 – the “Nice” Guy
Most people just hate to take risks, they might not be pessimistic as persons, but they are too afraid of the consequences. Most individuals won’t risk their hard-earned money on sophisticated assumptions trading. In other words; they would rather put the money in a bank or stash it inside their pillows. Let’s face it – the economy tends to be unstable, saving some money for rainy days is important indeed. The majority of us, I presume, understand the situation we’re facing and respond accordingly.
Once in a while, a new trend, a new way of leveraging our capital will emerge. The first to enjoy the fruits of the excitement will be the Sharks, the innovative individuals who have the resources and the time to invest. The rest of the people will follow them after they completely understand the risks and profits involved. These are the Nice Guys… and girls, no offense please, Mr. Nice Guy sounds better in my opinion, plus I’m already pretty sure you’re all very nice… Back to the nice guys, they follow the Sharks, but sometimes they just don’t understand the rules of the game correctly, and therefore they lose their money instead of leveraging it.
The “Nice Guy”
The “nice” guy is a working man. He works hard for a living, and he has no complaints. Just like most of my readers, he heard about online trading of FX, CFD, and binaries through Google or a random e-mail. At first, he sent those e-mails into his virtual trash, which for some annoying reason tends to behave very much like a real trash can, it just never empties by itself, so you actually have to throw the trash bag away. After a few more weeks he runs “online trading” in his powerful Google search engine. He tries to understand what the big excitement is all about. He’s smart, so he studies trading deeply, he asks some friends and colleagues until he knows he is ready for the thrill. He has some cash saved for those kinds of opportunities, so he decides to open an online trading account.
The “Nice Guy” Goes Trading
The problem with Mr. Nice Guy is that he just doesn’t like to risk much, like most of us, as I assumed above. You see, Mr. Nice Guy has done his research, he’s no fool. He knows what he’s doing, it’s not the first time he has traded, he likes playing online poker from time to time, he knows the risks. And that’s exactly his problem. Mr. Nice Guy deposited the minimum amount required, he just wants to try it first, after all, he has never done it before and $100 is all the risk he is willing to take. Unfortunately, Mr. Nice Guy didn’t check the minimum investment per trade that the broker requires. The broker’s minimum trade was $25, and after just two unsuccessful trades his remaining credit was only $50. He panicked, so much so, that he decided to open a Buy on Google, without a Stop Loss… 30 minutes later he had nothing. Mr. Nice Guy never went back to trading. Other nice guys became suckers and invested another $100 immediately, then lost it soon after trying to quickly cover their losses. The most common “I got scammed” comment trading sites and forums come from these kinds of traders. They wanted to trade but couldn’t afford the appropriate risk.
Trade Only If You Can Afford It
First, I want to make it clear – I’m not implying that any individual that begins trading with only $100 will lose their money. Second, don’t get me wrong – investing the minimum amount is the right thing to do if you can’t afford to lose. Trading, in general, is a skill, whether we are talking about CFDs, Forex, Crypto or binary options and just like any other skill you should nurture it slowly.
Developing trading skills means that you’ll lose some at first, that’s a lesson every beginning trader should learn. When there’s loss involved, one should be aware of the consequences and should have the necessary budget to afford these potential losses. The thing is, when the minimum investment offered by most online brokers is around $20 or $30, it means that a $100 deposit is worth about 4 trades. Most brokers will offer you a certain bonus to leverage your initial deposit, that’s good, but remember to accept only low bonuses or bonuses that don’t tie your money to the broker’s platform. Either way, there’s no reason to invest $100 if you can’t afford to lose $200. My conclusion: trade online only if you can afford to lose double what you have deposited. There’s no reason to be a nice guy and just give away $100.
Part 3 – The Shark
Sometimes we name a shady broker who hunts our money a “shark”… or a self-proclaimed Guru who tries to sell his crappy educational material. But I don’t want to talk about that kind of “shark”. Instead, I will focus on the shark as the ultimate trader, one who is not afraid of taking risks, knows the market inside and out, has money to invest and is always hungry for more… but he wasn’t always like that. So what made him the kind of trader he is today? Keep reading and you might find some answers.
A Shark’s Tale
Remember the Sucker and the Nice Guy? Well, the Shark probably started as one of them and slowly climbed the “evolution” ladder to get where he is today. Just like the Sucker and the Nice Guy, he probably got burned in the beginning, but unlike these two, he did not give up. Early in his trading career, he was probably mocked by other traders for his lack of experience and paid good money for his naivety in trusting the first broker who came along and promised to make him a bazillionaire in no time. His trading is not good either; he loses more than he wins, he lacks the discipline and mindset to follow a system… in other words, he is a poor little fish trying to swim against the main current without knowing exactly what his destination is.
At this stage of his “career”, the future shark reaches a turning point and it’s where all the similarities with the Sucker and the Nice Guy end. He has his first “Eureka!” moment and he realizes he needs to step back and find his balance. At this moment he also understands how little he actually knows about the market and decides it’s time to take things seriously if he wants to achieve his goal. Now the real study begins… countless hours spent understanding price movement, market cycles, reversals, breakouts… He turns into a vacuum, developing almost an addiction for knowledge and he never settles for “I know enough”. Money management becomes his second nature and he even starts to develop his own techniques; he learns to master his emotions and finds ways to stay on track no matter what.
He can still hear the jokes of other traders in the back of his head. The fact that he lost money is still bothering him, but a little smile appears in the corner of his mouth… he realizes he is now above those traders, he knows he will make back the lost money and that he will be successful. Trading success is not an “If” anymore and doubt is a feeling he hasn’t experienced in a long while.
The Shark Goes Trading… With A Cigar Of Course
The Shark inside him is fully developed now and he sees market trends as if they were the ocean’s currents and his experience tells him it’s not a wise thing to swim against the current… why fight it when you can join it? After all, he has nothing to prove to the market. Just like a real shark doesn’t need the whole ocean to swim and hunt, our shark doesn’t need to trade all the market moves or 100 assets. His deposit with an online broker is at least $1K because he has money to invest and knows beforehand his probability of success. A Shark will not accept a bonus which he considers too high because he doesn’t want any strings attached and he always makes sure he reads the entire Terms and Conditions document. That way, he is never caught off guard and knows what to expect from his broker. A real Shark will never rely, even for a second, on an Account Manager provided by his broker because he walks his own path and has no need for someone to shine a light. Everything is crystal clear and his teeth are sharp as blades… he is the ultimate predator!
“If you can’t swim with the sharks… Stay out of the water!” – Unknown author
A Shark trader is not born that way, he develops himself and constantly tries to sharpen his skills and adapt to new conditions. Some of us will never become sharks, but that’s OK, we need losers in this game too… sharks have to feed, don’t they? Hmm… you find that last sentence too harsh? Well, the market is a lot harsher than that and if you can’t get over that little sentence, maybe it’s time to get out of the water… Remember, we all have a Sucker, a Nice Guy and a Shark inside of us… all we need to do is decide which one of the three guys we want to allow to come forth.