Cheap Stock Trading - Why Options Are More En Vogue

Author: Steve Wise

Author: Steve Wise

Many novices who try cheap stock trading fail to realize they have much more to lose than gain by playing in the stock market. Long time investors have known for some time that investing in the equities market is a woefully inefficient means of deploying capital. Suffice to say day traders no longer have the free reign they once had over the equities markets.

Day Traders Not Fooled by the Media Hype

What we see in the capital markets today is a preponderance of the individual day traders' activity is concentrated in more leveraged forms of investing such as options and forex. People new to the market may be attracted to the cheap stock trading ads seen on the media, television, etc., but the real action and money is being made elsewhere.

Why Cheap Stock Trading Is Out and Options Are In

It may seem like a great idea to take a little bit of the family nest egg to dabble in the equities market but what small timers quickly find out is that they have too little capital to invest. Having to little money to begin with makes earning a decent return on investment in the equities market difficult for the long term investor, and all but impossible for the day trader.

Why option and forex traders fare better is because those markets allow the amplification of gains via leverage. Basically a person with only a thousand dollars to work with can invest as though they had $10,000 or even $100,000 or more to invest. A 3% gain becomes 30% or 300% accordingly. The downside is that losses are equally amplified (max out at 100% for most small timers though).About the Author:

Traders with capital and are prevented from getting access to standard options instead use the low capital binary options venue instead.

See more about both types of options at our free options trading tutorial.

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