Tuesday, March 9, 2010

Should We All Trade Online?

"A good trader is really just a couple of things: those who are willing to work hard at this business - the entrepreneurship of trading - and those who are willing to be disciplined and manage risks." -- online trading instructor Kyle Hibbard.

In the class Kyle Hibbard teaches at the Vienna, Virginia, Online Trading Academy, the students range from stay-at-home moms and recent college graduates still looking for employment to successful entrepreneurs.

They’ve all come to master a skill they believe might open doors to both a new professional challenge and a potentially lucrative new source of income. Online trading involves using an Internet-connected computer to put your own money and investment savvy to work trading in stocks, bonds, currencies, commodities, and other financial instruments. These days, investors can trade these instruments at all hours, from anywhere in the world, thanks to the Internet.

Many critics say online trading is an especially risky form of gambling, particularly when novice investors get involved, with the potential for sudden financial gain as well as devastating losses only a mouse-click away.

But teachers like Hibbard say their careful methods of using software and their experience looking at market indicators can help student traders to avoid some of these dangers, and reap consistent income.

Online Trading Academy president Chris Koomey says the Wall Street investment community likes to promote the idea that the average investor needs the services of brokerage firms, mutual-fund managers, financial consultants or other middlemen, in order to earn money on the stock market. But Koomey says that's wrong. He believes the business of managing money for others is a business like any other, and middlemen are in it for their own interests, and not for those of investors.

Unlike other businesses, though, online trading is open to virtually everyone, Koomey says. And markets do not always need to go up for an online investor to make money. Shorting stocks, which involves selling in anticipation of a price decline, is one example of how this can happen.

Koomey says when the market crashed in 2009, he was able to earn lots of money, and avoided losing most of his retirement savings the way many other Americans did. He believes earning a living by trading online is also a way to reclaim more time for leisure, which he says has become the rarest of commodities for many who live increasingly hectic, schedule-driven lives.