Monday, April 28, 2008

Making a living by trading

Making a living by trading can be a great experience. Some see trading as far too dangerous. Others see trading as a great way to make money. And still others do not even know that it is possible to make a living by trading.

It is possible to make a great income from the stock market. There are many advantages to trading as opposed to other professions.

Trading will often give financial independence. Many traders have the ability to generate huge incomes from very little effort. Some traders may look at their portfolio for only half an hour a day. Giving them time to spend the rest of their day with their family or whatever else they want to do.

The major disadvantage to trading is that it is considered to be risky. Even though you can generate huge monthly incomes from time to time there are also times when you will lose money. Many traders will have losing months every now and then.

That is why investors will develop systems that will make money in the long run. Most traders will overlook the losses that they might encounter by knowing that overall their system is a money making system.

Because every trader will experience consecutive losses during times it is important for them to use proper risk management. Professionals will not risk more then 2-5% of their account on any 1 trade. That way they can still experience long sets of losses while making money in the long run.

Another thing they will tell you is you need to have excess profits. If you need $4,000 a month to live comfortably you don’t want to retire when you start making $4,000 a month, because unexpected losses will occur. A rule of thumb is you do not want to become a professional trader until you can make your desired 1 year income in 3 months or less.

For more information on how to trade the stock market visit

No comments: