The real cost of short term trading

Ever thought about the short term trading or Forex trading?

In the last 7 years, I have read more than 200 books, thousands of articles and visited all of the best seminars on the topic of investing. I invested more than $100,000 just for the seminars.

At first, when I still did not have a lot of knowledge about investing, I believed every word the “trading experts” at these seminars told me.

But as the years went by and my financial education went up, I started to realize that most of the “experts” were just salesmen. They cared about one thing only: how to sell their product. And that product was usually a financial catastrophe for the customers.

Short term trading, Forex trading: let me help you to part with your money!

Let me give you an example: at one of the seminars, the speaker was recommending short-term trading with financial instruments like stocks and currencies (Forex trading). And he charged almost $5,000 for the Forex trading course.

What he failed to mention was that in order to execute his strategies, you would need an additional $450 per month for software and other services, you would also need to sit in front of the computer screen for hours every day watching boring charts (and go nuts during every swing in price) and that most of all that 95% of his clients lose all of their money (as you would find out later when you talk with the participants in your group).

There are some people who have some gains, but they can barely cover the costs of running their “amazingly profitable trading business” with them. And they have not even accounted for the lost time in the process.

Time equals money.

If you need 10 hours per week to make and manage your investments, this is your cost.

Let’s say that John’s income is $50,000 per year. In the US, on average, people work 1,788 hours per year, and in the UK this number is 1,669 hours. This means that the value of one hour of John’s time is around $30.

Why don’t you do the calculation for yourself?

Just divide your annual income by 1,700 hours. And you get the value of one hour of your time: ________.

Spending 10 hours per week for investing amounts to 520 hours per year. In John’s case, this is $15,600 per year. Let’s now add the monthly costs of additional services he needs: $450 x 12 = $5,400 per year.

John would need to make $21,000 per year with this strategy, just to break even!!!

But in reality, he doesn’t make a single cent. He most likely loses all that plus his investment. So the total cost of going to this seminar was probably more than $40,000.

Think about that for a second. If he just invested this money in the right, low-cost financial products, he would end up with $186,438 in 20 years (8% annual market growth).

Instead of that, he just got ripped off, his wife left him and his goldfish died because he was so stressed out, he forgot to feed it.