Should I Have a Trading Account to Speculate and Invest?
Ever since the 1990’s dot com era boom, day trading stocks has been seen as a way to enormous wealth and profits with only a home office, a high speed internet connection, charts/graphs, multiple computer monitors, and a television with CNBC running on the wall above.
However, many who foray into this area soon learn they may not have the patience or risk appetite to learn their way to a profitable trading career, and statistics indicate that an alarming number give up or quit after taking some hard earned losses and well before becoming long term profitable traders.
Trading can still be a lucrative profession, but it is complicated, takes skill/risk appetite, tremendous emotional control, confidence, etc. In other sections of this site you have read about investments including mutual funds, ETF’s, tax preferred retirement accounts as a preferred method of investing and growing wealth.
However, there are many who would like to pick stocks, speculate as to what investments they believe will do well over time for both the entertainment value, and the hopes that they will pick the stock that runs up and gives them a 10 bagger making them feel wealthy. The hope is then that this performance can be repeated with other investments.
Additionally, there are many sophisticated individual investors with subscriptions to investment newsletters such as Investor’s Business Daily (a premier investment publication focusing on growth stocks) or Value Line (a premier investment newsletter focused on value investments). Each individual must decide whether to open a trading or brokerage account to invest or speculate on individual stocks and companies. However, in this author’s opinion there is something to be said for following your gut and investing in companies you like or believe in, or those you feel are solid investments based upon their earnings track record and stellar new products, etc.
The best advice when it comes to opening a trading account is to make this a minimal portion of an overall portfolio to ensure your overall portfolio is not subjected to your investing on a whim, and is properly diversified. There are many great brokerage firms out there for those who want to open an individual brokerage account including MerrillEdge, TradeStation, and TD Ameritrade.