Is it possible to obtain wealth from trading options?
Wednesday, November 13, 2013
, Posted by Ryanita at 6:59 AM
daughterzi
Such as call and put options. Also does anyone know about forex trading? What tax benefits or pitfalls might one incur trading options?
Answer
Theoretically yes.
However MOST people accumulate wealth by investing. Trading options or forex is speculating, not investing. In other words, it is gambling. You can be well skilled and educated and still lose your behind very,very quickly.
Such trading is at the top of the risk charts, so yes, potential returns can be impressive but they come with a very sharp potential for a complete loss.
When you invest in stocks, bonds or mutual funds, you still have a risk of loss, but the odds of a total loss are slim, and you usually have time to get out before suffering a huge loss (unless you are also speculating with high volatility stocks).
Investing is not speculating. Investing combines an educated guess (no one really can guarantee a profit) with a moderation of risk. A lot of research shows that most investors do not do better by taking on higher than average risks. In other words, slower and steady wins the race.
As to tax issues. There are no benefits to short-term trading of any security. In fact all profits are taxed at your highest marginal rate. This is one more reason why trading rarely results in huge profits. By the time you subtract ticket charges and taxes you have to have a really big profit for you to end up with a better after tax return.
There are conservative strategies for options when combined with stocks you own. These strategies can add income to your portfolio without being significantly speculative.
People build genuine wealth by staying out of debt, by spending less than they earn, and by investing the difference wisely. If you start this as young as possible and routinely increase the amount you are saving and investing, you will build significant wealth.
However, just as with playing in Vegas, speculating is gambling and while a few walk away long term winners, it is ONLY a few that do win. In the short term, anyone can have a measure of luck, but in the long run, it is pretty rare.
The traders that survive on options and forex are big boys, with big wells of cash and years of training (and losing) behind them. They survive as much off the thrill as the wins.
But understand this, any wealthy trader is never playing with his full pot. He still has most of his assets in more secure investments. In fact, studies have shown that those that take the biggest risks with some of their money, have most their money in ultra-conservative investments. This is how they balance the high risk choices they make.
But if you're still determined, start reading, take a class and paper trade (trading simulation) for several months so you can establish techniques and indicators that work for you. Until you have both skill and discipline, you might as well just take a lighter to your money.
Theoretically yes.
However MOST people accumulate wealth by investing. Trading options or forex is speculating, not investing. In other words, it is gambling. You can be well skilled and educated and still lose your behind very,very quickly.
Such trading is at the top of the risk charts, so yes, potential returns can be impressive but they come with a very sharp potential for a complete loss.
When you invest in stocks, bonds or mutual funds, you still have a risk of loss, but the odds of a total loss are slim, and you usually have time to get out before suffering a huge loss (unless you are also speculating with high volatility stocks).
Investing is not speculating. Investing combines an educated guess (no one really can guarantee a profit) with a moderation of risk. A lot of research shows that most investors do not do better by taking on higher than average risks. In other words, slower and steady wins the race.
As to tax issues. There are no benefits to short-term trading of any security. In fact all profits are taxed at your highest marginal rate. This is one more reason why trading rarely results in huge profits. By the time you subtract ticket charges and taxes you have to have a really big profit for you to end up with a better after tax return.
There are conservative strategies for options when combined with stocks you own. These strategies can add income to your portfolio without being significantly speculative.
People build genuine wealth by staying out of debt, by spending less than they earn, and by investing the difference wisely. If you start this as young as possible and routinely increase the amount you are saving and investing, you will build significant wealth.
However, just as with playing in Vegas, speculating is gambling and while a few walk away long term winners, it is ONLY a few that do win. In the short term, anyone can have a measure of luck, but in the long run, it is pretty rare.
The traders that survive on options and forex are big boys, with big wells of cash and years of training (and losing) behind them. They survive as much off the thrill as the wins.
But understand this, any wealthy trader is never playing with his full pot. He still has most of his assets in more secure investments. In fact, studies have shown that those that take the biggest risks with some of their money, have most their money in ultra-conservative investments. This is how they balance the high risk choices they make.
But if you're still determined, start reading, take a class and paper trade (trading simulation) for several months so you can establish techniques and indicators that work for you. Until you have both skill and discipline, you might as well just take a lighter to your money.
Automated Forex Trading Robot is a Scam?
jessicabut
I'm a novice forex trader who just started trading forex a week ago. I was wondering if anyone had heard or tried the automated forex trading robot like this one http://forextrading.wellexplained.info/ I'm so much attracted to it and planning to get one and try it myself. I read some reviews on it and all of them were positive.
Have you tried it before? Worth buying? Should I give it a go?
Answer
I've been trading forex for almost 8 years now, I believe in proper Forex education than anything. If you really wanna make profits from Forex, learn it and trade it yourself. Experience makes you a better and successful trader. And no, I've never tried that piece of script that promises so much of gains in a month. But one of my friends did. Yeah, he did make a profit of about 80% in one trade, but he lost almost 90% of his investment in the other 6 trades. Script is still a script, it's written by human based on historical data. More info, refer to http://www.squidoo.com/forex-robot-trading-system-scam/
Therefore, if you really wanna do well trading Forex, learn what Forex is, how Forex works, learn the charts, study the markets, and be brave to trade, remember high risk high return. You should get a proper Forex education like this http://www.squidoo.com/the-forex-kingdom-review/ rather than counting on a trading robot.
Good luck in pursuing your forex riches.
I've been trading forex for almost 8 years now, I believe in proper Forex education than anything. If you really wanna make profits from Forex, learn it and trade it yourself. Experience makes you a better and successful trader. And no, I've never tried that piece of script that promises so much of gains in a month. But one of my friends did. Yeah, he did make a profit of about 80% in one trade, but he lost almost 90% of his investment in the other 6 trades. Script is still a script, it's written by human based on historical data. More info, refer to http://www.squidoo.com/forex-robot-trading-system-scam/
Therefore, if you really wanna do well trading Forex, learn what Forex is, how Forex works, learn the charts, study the markets, and be brave to trade, remember high risk high return. You should get a proper Forex education like this http://www.squidoo.com/the-forex-kingdom-review/ rather than counting on a trading robot.
Good luck in pursuing your forex riches.
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