Is Active Trading The Answer?

One of the main reasons many of us get into investing is to become financially independent. Who isn't trying to amass a portfolio with enough income to ensure that we don't have to work when we should be playing golf or traveling the world. While there are several strategies to invest, is active trading one of the ways to become a millionaire?

For those investors who want to achieve that million dollar portfolio, you may want to read The Millionaire Next Door by Thomas Stanley and William Danko. While it wont help you identify great stock picks (but investorandtrader.com can help), it will help you to establish the difference between those who dream of having a million dollar net worth, and those who do it. You may be surprised at the answers.

While I won't give away all the secrets, I will share one of the surprising findings which impact investors over the long term.

95% owned stocks

9% of investors held for less than 1 year

1% held for a few days

1% held for a few weeks

7% held for a few months

Less than 10%, less than 1 in 10 people with net worth of $1 millionaire or more actively trade their portfolios. Most definitions of active traders would mean that 1 in 100 are active traders. 99% of millionaires do not actively trade their positions. They hold for long periods of time. They find good companies and let the companies make them money.

The biggest problem with active trading is the commission, and the taxes. Your brokerage gets paid whether you make money or not. Making the presumption that you're trading with a discount broker, you're paying $20 ($10 to buy, $10 to sell) each time you trade. If you do make money, you're paying taxes on that gain. At the end of the year, you get to keep a portion. Make 2 trades per week, and you will spend over $2000 a year in commission. If you lost money, add $2000 to your losses. If you made money, subtract tax, and then subtract $2000 more.

It takes a lot of successful trades to make money. While it can happen, sometimes, just finding a good quality stock and sticking to them, might just be your key to a million dollar portfolio.

That's just one guys opinion.

Trading Penny Stocks | investment strategies for penny stocks

1source4stocks.com provides penny stock traders with online trading and investment tips, online trading strategies and penny stock picks.

In The News:

Dumped mutual funds? It’s a bad idea  The New Indian Express

Laws and Efficiencies and Theories of Diminishing Returns

The basis of diminishing return discussions surround such simple notions;... Read More

Eternal Sunshine

There is a current movie entitled "Eternal Sunshine of the... Read More

Top 25 Growth Funds

On Monday, November 25, 2000 Investor's Business Daily listed on... Read More

Inertia

One of the basic laws of physics is that a... Read More

Size Counts!

What the heck am I talking about?It is often said... Read More

Box Of Chocolates

Ever have one of those sample boxes of candy? Each... Read More

How Covered Calls Turned a Trader Around

Sidney felt sick as she looked at her latest OptionsXpress... Read More

How To Buy And Hold

One of the most believed bits of conventional wisdom from... Read More

Whitewater Stock Market

Ever done any whitewater rafting or canoeing? Long periods of... Read More

Market Globalization

Just 30 years ago the stock market was a shadow... Read More

Alfred E. Newman

What! Me worry?Many of you remember the cover of MAD... Read More

Stocks Options Trading

Let's assume that you want to make some serious money... Read More

Making Outsized Returns in the Stock Market - Using the Dow Theory

The Dow TheoryCharles H. Dow... Read More

A Common Misconception about Stock Prices

I cringe every time I hear a novice investor tell... Read More

The POWER of a Proven Stock Investment Plan

When you invest in the stock market for ever-increasing cash... Read More

Investment Capital Gains

Have you bought any mutual funds this year or late... Read More

How to Short Stocks? How to Make Money when Your Stocks Go Down by Shorting

The stock market can present you with a lot of... Read More

Stuff

I continually hear from economists, talking heads, other market letter... Read More

Nest Eggs and Omelets

Do you have a nest egg? You know, a place... Read More

Option Spread Trading

Spread trading is a technique that can be used to... Read More

High Price/Earnings Ratios and the Stock Market: a Personal Odyssey

After some forty years of banking and investments, I retired... Read More

So, What is This Stock Market Thing Anyway?

We've all heard of the stock market and probably have... Read More

How to Make Big Money Safely in Stock Market

(1) Stock Market is Tough Place to Make Any Money... Read More

What Are You Waiting For?

Do you own any mutual funds? In an IRA or... Read More

Market Psychology

Today we are inundated with tons of information about the... Read More