So you want to start trading? You have read a few guides on the topic, looked into a few brokers you want to sign up with, and you’ve allocated some funds that you can use to start trading.
That’s great – trading is something millions of people enjoy on a regular basis and that many people even make a fair amount of money from. And if you’re in for the ride, trading can be a great hobby and an extra stream of income.
With that said, there are certain things you need to consider before getting started and below you’ll find five reasons why you shouldn’t start trading in the first place.
1. The Risk of Losing Money
Naturally, the number one reason anyone should consider not trading is the risk of losing money. According to industry experts, upwards of 85% of all traders end up losing money in the long run, and these numbers should not be ignored.
If you, for any reason, don’t have extra spending money to risk or if you don’t feel comfortable with the idea of losing large amounts of money, then trading isn’t for you. It’s really as simple as that.
2. High Levels of Stress
Due to the aforementioned risk of losing money, trading is often very stressful. In fact, one of the main traits that all successful traders share is that they are very resilient to stress. Some even claim that stress helps them perform better, and without the risk of losing money, they would perform worse.
Our point is that if you’re already stressed in life or if you’re prone to getting sick from stress, you should probably avoid trading altogether. In other words, don’t expect trading to be a calming past time or a slow-paced alternative to your everyday job.
3. Potentially Harmful Addiction
A part of trading that many seem to ignore has to do with addiction. You see, similar to a game addiction that people can experience when playing casino games, day trading can become addictive as well.
Naturally, being addicted to trading is never a good idea, and it tends to force people into making reckless decisions which only increases the risk.
In order to avoid this, you need to listen to yourself and look out for signs that might indicate an addiction such as an inability to stop thinking of trading, risking money that you can’t afford to lose, neglecting family and responsibilities, etc.
If you ever find yourself worried that you might be developing a trading addition, you need to stop immediately and seek professional help.
4. Time-Consuming
Learning how to day trade is not easy. It will take countless hours studying the art of trading, analyzing assets, trial and error as well as hours upon hours of actual trading.
Obviously, you can take it as seriously as you want and only trade once in a while. But if you actually want to become good at trading and start day trading professionally, you need to be prepared to sacrifice a lot of time.
Because of this, day trading is often not suitable for people with a lot of responsibilities, a time-consuming career, or young children.
5. Not Legal
Lastly, trading is still not legal everywhere in the world, and depending on what you want to trade, you might be limited. For example, CFDs are not legal in the United States and binary options were recently banned in Europe.
This means that you have to make sure that you are actually allowed to trade the instruments you want before you even get started.