Is it really possible to become rich from trading?

[1FinickyOne]

The longer the term of your trade, the better the possibility - - as in buy and hold which is not really trading. Day trading is extremely difficult and seems to take a very distinct and unusual personality in addition to the hard work and naalytical skills that will increase your odds.

You give few specifics but try it out on paper first - then buy mutual funds.

[AyG]

Also choose a company that pays a dividend of about 5/6%, so that if your trade gets frozen at too high a price, you can still pick up a dividend until the price comes back up.

Putting that in context, markets are only now getting back to where they were 10 years ago. As Keynes (allegedly) said "markets can remain irrational longer than you can remain solvent."

And there's no guarantee that the price of an individual stock will ever recover. That's a risk compounded by choosing companies paying a high dividend; there's a reason they're paying a high dividend, and it's often a bad one. And anyway, there's also no guarantee that the company won't cut its dividend over the years - perhaps to zero.

The Dubai market went down by about 30% today....just a coincidence...fears of a real estate bubble bursting.....no way even a professional trader can anticipate that....this is truly a Black Swan event.

But Black Swan events happen all the time. They're not rare.

[Greg Nixon]

I was trading on the TMX and i knew a fix was possibly in. The QRM stock went from $0.04 to $4.00 in 6 months and in one more year went to $8.00. What would happen to 10,000.00 invested at $0.04 ? What would happen to $20,000.00 ? In another 6 months the stock went to $ 0.29. So was it fixed? There is a ton of background information missing so you are unable to decide.

[JacChang]

So many excuses.

Please... if something is hard, the problem is with yourself, lack of skill, education, and experience. Don't blame the market. So sick of it, it offers absolutely no advice. If we accept something is hard, then that's the dead end road. Have you asked yourself why it is hard? Why others can do it? 90% of the population really don't. I can even guarantee you 90% of the population if they meet 10% of the successful ones, they would not be listening, they would be doing the talking. The 10% will just shrug their shoulders, "No loss on me, your choice."

The stock market is not an emotional game. You need to lay down your own rules, and strictly enforce it. Most of the time it is purely mathematical and technical charting. For those who say, there is more loss than gain, I would counter against that. Price of 100 to 90 is a 10% loss, and for that 90 to climb back to 100 is 11.11% gain. The price system is in our favor. Don't ask me why do people lose money. I don't know why people with little cars park in 2 parking spots. We, gentleman, choose which side we wish to be on. The successful keep doing what they do, the unsuccessful complain without the intention to seek what is the cause of the problem and to fix it.

I am not worried about institutional investors at all, in fact, I abuse them. They are a huge truck compared to our small cars with agility and ease. Whenever they make a U-turn, they are slow and it takes time, when they signal their lights, usually we can cut them off in front. Once an institutional investor decides to buy/sell a particular stock, he/she will need usually 5-10 days time, to completely perform their transactions. The size is just way too large for the market. They usually don't have time to play "fakes". If you see any first indication of an institutional investor buying a stock, it's safe to say, you are in for a 5-7% gain on that particular week. Same will selling. There is ample time for you to see the change of it's course.

As for advices, most people would not give any. Those that do give you advices voluntarily, are normally one of the worst advice scams you can receive. The ones that give good advices, are those who will not gain from you. In fact, most successful investors would not share what they know, it's not a team sport, someone's gain is someone's loss. No mutual benefit. However you will meet investors who do share, because once they are at that level, it's not money they are concerned about, it's the passion and ease of this great subject. They just love talking about it all day.

Knowledge gives you the power and ability to make money in the market, at this stage, I would even rate it at easy with a margin for adjustments. It's a system once you have everything in place. Routine trades, make money, no surprises. Also do check eps ratios, earnings growth and so on. You can give me any stock name without its price, and I can name it's fair value with just those numbers, same with how an appraisal agent can give a value to a housing.

As far as stock investment goes, in my opinion it's one of the safest and best investments we can ever buy. Bonds are not what I consider an investment class, they can barely beat the inflation. That is very dangerous and risky in my opinion.

Buy low, sell high. Simple. People are predictable, don't be one of them, observe them, act how to defeat them. When everyone is buying something, I'll be sure I am not one of them.

Edit

P.S. I started out with 100,000THB, no inheritance, no mentor, just passion. So don't be put off if you don't have the large funds to invest. Everything starts with the first footstep. As long as you build it up, you can have an empire like what I have achieved and money just keeps flowing in, more and more each year. It's a lifelong process, it doesn't stop there, I got 100 trees of apples, gives me 500 apples per year, I eat 400 apples, grow another 100 trees, next year I get 1000 apples per year, and so forth. It never ends. Money is not the problem to life, money is so easy to make.

Edited June 25, 2014 by JacChang

[smotherb]

In theory yes, but the odds are stacked against you.

It is a negative sum game in which a small % of traders have a huge advantage (through knowledge/experience/skill/access to capital/influence).

So unless you're extremely lucky or within that small % of traders, you're likely to lose.

Really, I wonder what the more advanced economies of the world would say since they are in great part built upon trading.

[AlexDorneles]

I started trading in the tech boom during the late 90s, I was just 23yrs old when I started, they still used fraction instead of decimals. Back then it was easy to make money, I could make $1k dollars in 5 minutes. There are many types of trading, I started doing intraday and it used to work. I started with mostly tech stocks then moved on to more complex strategies trading index futures and options on index futures.

When the market collapsed in 2008 I went down with it, I went on for another year after that but I could not take the stress anymore. I was mentally broken.

I would do it again but not with my money, none of the traders I met in my carreer made any significant amount of money and all just got burned out with the stress and quit.

[yieldman]

I spend from 2003 to 2010 learning about and trading Shares, CFD's, Forex, Futures and Options.

I started learning with Home trader in Sydney. The course was great teaching the basic of the market, trading (placing and managing trades), risk management, technical trading and so on. They also suggested many approaches to systematic approaches to trading (algoritmic trading) & system testing.

I also did a Forex course that with them that flaunted the very good principles they taught in the Shares and CFD's course. It did teach the Forex basics and trading methods, but the algortihms developed were useless (No, actually one method was workable).

I worked with a varying group of people developing ideas fro trading system and machine testing them against historical data.

Along the way came across many of the people involved in training. The obvious questions always is why do you bother training other people when you could just trade? The equally obvious answer is that you make more money selling the dream to other people!

There are some very convincing tactics out there:

One company advertised "Look over our shoulder doing live trading". with impressive historical results. How could they possibly fake that?

Then, when looking over their shoulder we noticed their charts were 3 minutes delayed compared to our live data feed! Finally, they would announce a possible trade, then respond to people that might comment that the trade did not appear to satisfy the system purportedly used. While discussing the trade the price would develop and, if it went in the right direction they would comment "We entered that trade at 9:11 AM for $..." OR " Our order was not accepted, there must have been insufficient volume".

Another supplier allows you to trade "With their funds". You subscribe for the course, say $8000. The supplier gives you a nominal trading fund of $20,000 (on Margin). They stop you trading when your losses exceed $5000 and you must abide by ther trading rules.

The people I worked with included a builder who has been trading now since 2003 and is doing reasonably well, a programmer with Westpac who spend many years backtesting systems and with whom we developed an automated trading system, a couple of guys involved in training, a guy who retired early after selling his IT business in the Netherlands and so on. Between us we easlily spend 50,000 man hours on trading systems.

My conclusion:

Share and CFD trading works well in a trending market in the period 2003 -2009 oops 2008 it was possible to make 23-28% trading CFDs. The systems then folded (That is they did not announce potential trades, good, no further losses, but bad: no income). I found people were then temped to develop systems that on the face of it ought to work well in the adverse conditions but rarely did. Example if the trend now is down: Trade short or Combine trend follow, reversal, long & short systems, while one , tow or three are dormant the other should work. Unfortunately I have never seen a short tarding system that worked.

Forex trading: The Forex market is not centralised , neither are the data! So if you question a trade with the broker you are at their mercy! You can't go to a authority to determine wether or not there was trading at that level. Secondly great sudden peaks and troughs would appear in the live trading data (that would hit my stops and take me out of the trade) that never made it into the historical data (which you can purchase from various sources, but not necessarily from your broker!). This made a mockery of any systematic testing we did agaist the historical data. Further I worked out even if our system worked half as good as tested, the hours involved in monitoring (Starting at New York open, midnight our time) the market, placing and controlling the trade would give us a return of $100 per sleepless, antisocial hour with an investment of $500,000!

Futures trading: We developed a trading system (in Amibroker) that flagged setup of a trade, then marked entry of a trade if the data suggested we should have entered a trade (By the system rues we developed). Then something strange happended: The setup and entry flags would disapppear! We found the cause was that Amibroker would re backfill the now historical data. (E.g. the data from a few minutes ago) and this data was not the same as the data reported immediately! Did we enter or not enter the trade? If not was it because of the corrected data or because of the original data? (Hint the broker will use the data that is to your disadvantage).

Options trading with a gentleman that had worked for many years with various banks and finally with a trading company. HIs comment was there is no way you can consistently do 20% or more. He claimed the Options trading methods he used alowed 1.5 to 2% better return on any system. At the time he said you would be doing bloody well to make 10% if you knew what you were doing and had access to all the banks intelectual resources. I found Options trading the most difficult and least supported by mechanical trading systems (making back testing very difficult).

For a detailed introduction to system testing and trading have a look at the Howard Bandy books (Blue Owl Press).

Also look up Collective2, which as an independent party tests the live trading signals provided by system developers and logs the system performance. It clearly indicates the return curve for many systems, many never performing at all, others initailly performing well, then loosing. That is no system performs well forever, so ongoing development has to be part of the plan. Look at the charts, cover your self for the inevitable reversals (Some people suggest alow for double the reversal in your system that you see historically, but then the next record drop will be in the future!).

No I don't trade financial markets anymore, but it is an exciting idea (and exciting to do).

For the consiracy theorists out there: 2003 was the end of a bear run that started before September 11 (Did the market antcipate the attack? or did Bin Laden attack at a most vulnerable time? If so did he short trade on the financial market?), bull runs started with the Afghan and Iraq wars, The Iraq bull run ended in the GFC in 2009.

[bangkapi]

Insiders do it all the time.

[Naam]

As the old joke goes:

- How do you make a small fortune trading on the stock market?

- Start with a large fortune.

Certainly it is possible to make money trading equities, bonds, foreign exchange. That's why many (most?) banks have proprietary trading desks, trading the bank's own capital to generate profits. Though, interestingly, an executive of a global bank recently told me that the return on investment was higher from the bank's banking activities than from proprietary trading.

Life on a trading desk in a bank is pretty cutthroat. If you don't make a decent profit, you're out. (More usually, you don't get a big bonus, which is the signal for you to move on before you're sacked.) Through a form of Darwinian selection only the most profitable traders survive - and that's only for as long as they continue to be profitable. As an individual, those are your competition.

The odds are stacked against you. The big boys have the best data, best computer systems and the best skills. However, if you're playing in a niche market you might have a chance. It's not something to be undertaken casually. It requires a lot of time and commitment. You can't just buy something and walk away in case the market moves against you.

Personally, I don't trade. I invest. I'm perfectly happy with getting a fairly steady return of 10-12% a year from a diversified, relatively cautious portfolio which only requires a few days' work a year to maintain. At least I get to sleep at night and don't have to worry about losing my shirt.

achieving 10-12% p.a. is even nowadays not difficult. but not with what i would consider a "cautious" portfolio and a few days of work per year.

[Pattaya Pat]

I agree with nearly all the comments here. To make big money, you need to be rich before you start. (That is why banks dominate the markets.)

But if you DO have say 100k to throw away (in other words, the stock market is like a casino...you have to be prepared to LOSE and not worry about the money you have just lost), you can make money.

One aspect of trading might make you money on a regular basis: choose a bank or oil or gold company and follow its trading pattern for a few months. You need to find a company whose shares trade in the millions (very liquid therefore) and in a volatile situation (oil and gold, for x). Also choose a company that pays a dividend of about 5/6%, so that if your trade gets frozen at too high a price, you can still pick up a dividend until the price comes back up.

So, say Citi Bank's shares are $100 and you have $100k. So, at 9.30 am (ET) you buy 1000 shares of Citi Bank at $100. By 11am the shares have gone up to $101 or 1%. You sell your 1000 shares at $101 and now have made a profit of $1000 in a few short hours. Hard work.

But if Citi B has gone down to say $95, you can still hold on, confident that you will at the very least be able to pick up a dividend payment of $5000 per annum. As I say, this will not make you rich, but at least you are minimising your losses.

But note, you are not going to get super rich that way. If you can make that trade just once a week, you would make about $50,000, which is not at all rich in NY, but would be super duper rich in Thailand......

Bt1.6 mil a year is super duper rich?? Ha ha ha.

[Naam]

"Is it really possible to become rich from trading?"

Just take a look at Dubai....that should answer one side of the question anyway.

The Dubai market went down by about 30% today....just a coincidence...fears of a real estate bubble bursting.....no way even a professional trader can anticipate that....this is truly a Black Swan event.

one has to differentiate between markets and markets. the Dubai stock market is nothing but a "7/11" compared to huge shopping malls such as NYSE or London SE. the daily number of transactions is equivalent to the number traded in milli- or perhaps nanoseconds in New York or London.

moreover, Dubai is not diversified. most of the listed companies are commercially tied together by immobile property (construction companies and banks).

problems of one big developer can result that the whole market crashes as it did yesterday. out of 30 stocks 29 are down, 1 is up.

[Naam]

I agree with nearly all the comments here. To make big money, you need to be rich before you start. (That is why banks dominate the markets.)

But if you DO have say 100k to throw away (in other words, the stock market is like a casino...you have to be prepared to LOSE and not worry about the money you have just lost), you can make money.

One aspect of trading might make you money on a regular basis: choose a bank or oil or gold company and follow its trading pattern for a few months. You need to find a company whose shares trade in the millions (very liquid therefore) and in a volatile situation (oil and gold, for x). Also choose a company that pays a dividend of about 5/6%, so that if your trade gets frozen at too high a price, you can still pick up a dividend until the price comes back up.

So, say Citi Bank's shares are $100 and you have $100k. So, at 9.30 am (ET) you buy 1000 shares of Citi Bank at $100. By 11am the shares have gone up to $101 or 1%. You sell your 1000 shares at $101 and now have made a profit of $1000 in a few short hours. Hard work.

But if Citi B has gone down to say $95, you can still hold on, confident that you will at the very least be able to pick up a dividend payment of $5000 per annum. As I say, this will not make you rich, but at least you are minimising your losses.

But note, you are not going to get super rich that way. If you can make that trade just once a week, you would make about $50,000, which is not at all rich in NY, but would be super duper rich in Thailand......

Bt1.6 mil a year is super duper rich?? Ha ha ha.

if you have a house maid ask her whether Blazes is right. i am convinced she would agree with him.

[dotpoom]

"It is not what we take up, but what we give up, that makes us rich."

~Henry Ward Beecher

[belg]

open the first thai casino

go ask permission from the good general

[Rimbuman]

For the wannabe and the recovering loser education is key, this is the only chance to become consistently profitable.

I recommend Al Brooks, for the advanced day trader Bob Volman (micro scalper)

[how241]

In theory yes, but the odds are stacked against you.

It is a negative sum game in which a small % of traders have a huge advantage (through knowledge/experience/skill/access to capital/influence).

So unless you're extremely lucky or within that small % of traders, you're likely to lose.

+1...well said...

[Chris Lawrence]

Sounds like a troll. Why hasn't the OP replied. Looks as though he sets up a question all on trading but not hear anything after that?

Any way the short answer is get some education. Other than that send me the money and I will pray for you to win Lotto?

[Friendly Stranger]

What is rich? Just have a plan, this means follow certain co's or sectors with goals.

Ppl are in too much of a rush and don't have a plan or they get so called "hot tips" and don't understand how the market works. Just do your homework like any other job as swing/day trading on solid companies can be rewarding if you have set limits and a plan. When I isay rewarding, this means 400 to 700 at a time. It's obviously not guaranteed but there are other strategies like short selling, hedging and averaging down.

Good luck.

[timewilltell]

Tony Paul said:

"You may well meet traders that say they make money but the Forex traders are classic for incessantly talking about the day they made 100 pips. They just fail to talk about all their losing days."

Great point! The capacity for self-delusion in any form of gambling seems endless. And this is gambling. The only winner is The House. Always.

In a way it is gambling for you need to accept the market can and will do as it pleases. However if you study hard and put in the hours and keep records, and trade the right instruments with the right vehicles then you can win at the game. You can even win with systems where you lose more times than win because it is all about probabilities, risk management and knowing your R. Apply money management 2% risk a trade is pretty good or maybe a little less! and if your numbers are right you should be good to go. Options are good if you can highlight the right candidates and don't hold on while theta destroys your edge. Lots and lots to learn but its possible.

The difference is that unlike a casino you can put yourself in a position with better odds, but most can't be bothered to work out how.

Sent from my iPad using ThaiVisa app

Edited June 25, 2014 by timewilltell

[techboy]

You mean like trading stocks? Yes but difficult for many reasons. I see someone has said you have to be lucky. This is not true. Luck can help anyone for sure. But those who just "get lucky" almost invariably lose it all back.

[khunPer]

Define 'Rich'

years ago i scolded my oldest and best friend for claiming "rich is not having money, rich is spending money!"

since a few years i agree with him.

British (filthy) rich people used to say: »Money is not something you talk about, money is something you have...«

[khunPer]

»Is it really possible to become rich from trading?«

Yes – history has proved that several times...!

[a99az]

My boy everything is possible, but if you have to ask this question I think not.

Edited June 25, 2014 by metisdead
Offensive image removed.

[KKr]

SURE, if you belong to the 1 per cent of people that are disciplined enough to manage the trades; run the profits; cut the losses; not enter on breaks, only cut; never go outside without leaving stops; do not trade for the sake of trading; use the trend as your friend; not to catch a falling knife; understand what you are doing in micro and macro economical terms; and use charts to support your decision, rather than driving using the rear-view mirror; or, and that is the pretty sure option: if you get your cut on every trade and interest on the margin money, i.e. WHEN you own the website :-))

[Ulic]

With high frequency trading super-computers using advanced algorithms it's a mugs game. Of course there are bright

people who do solid research and make wise trades but as they say with poker " it's a hard way to make an easy living."

[cosmosis]

David48, on 24 Jun 2014 - 18:01, said:

Define 'Rich'

...the only valid definition of Rich is "To live off the interest of the interest"

[JacChang]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

Sounds like a troll. Why hasn't the OP replied. Looks as though he sets up a question all on trading but not hear anything after that?

Any way the short answer is get some education. Other than that send me the money and I will pray for you to win Lotto? alt=thumbsup.gif>

The OP opened a farm and decided to trade coconuts, he did not expect these replies. It overwhelmed him. Completely speechless.

You mean like trading stocks? Yes but difficult for many reasons. I see someone has said you have to be lucky. This is not true. Luck can help anyone for sure. But those who just "get lucky" almost invariably lose it all back.

Difficult, I know what types of people say those words.

Lucky, same person.

Have you noticed, less successful people depend on luck. They don't ever want control of their life, they just want to go with the flow.
People with Luck = "Hope tomorrow has no rain! Wish me LUCK!"

Successful people = Takes out his barometer, writes notes, collects humidity levels, temperature, calculates percentage of rainfall tomorrow. Then decides if he needs an umbrella when he goes out.

Have you guys heard about the RICHEST WORKER in the world? LOL

Or is it the top 1000 richest living animals on this planet are investors?

[Naam]

David48, on 24 Jun 2014 - 18:01, said:

Define 'Rich'

...the only valid definition of Rich is "To live off the interest of the interest"

[Naam]

"Is it really possible to become rich from trading?"

Just take a look at Dubai....that should answer one side of the question anyway.

The Dubai market went down by about 30% today....just a coincidence...fears of a real estate bubble bursting.....no way even a professional trader can anticipate that....this is truly a Black Swan event.

for the record: Dubai stock market did not go down 30% but less than 7%

The benchmark Dubai Financial Market general index fell 6.68 per cent on Tuesday...

http://www.ft.com/intl/cms/s/0/2eed05c4-fb89-11e3-aa19-00144feab7de.html

[catweazle]

Same as in any other gambling scheme: The bank always wins!

Watch the move "The Wolf of Wall Street" - could be very educational to you.

Edited June 25, 2014 by catweazle