Can you really make money with online trading?

If you are a finance blogger then you have already heard different stories about people claiming to have made significant amounts of money from online trading. However, every such claim should be treated with caution.

In this article I’ll be looking into the truth behind online trading. Can you really make money by trading online or is it just a scam?

How does it work?

Online financial trading comes in many shapes and forms. The most popular form of online trading is forex trading. Here, you will have to predict the future development of various currency conversion rates. In forex trading you will be required to purchase a certain amount of currency then sell it later on when the price is favorable.

There is nothing wrong with this and it’s a major international business generating billions of dollars of trading volumes annually. The problem is that some websites and trading brokers make it believe that anyone can do this successfully. The reality is that normal people will almost never achieve success in this business.

Not surprisingly, the only people who are successful in forex trading are real investors who do this as a profession and have large multinational agencies with legions of specialists and analysts at their disposal. If you think you can do the same alone from your living room with a laptop then you are mistaken.

Another form of online trading is binary options trading. Here, you aren’t even required to purchase any assets at all. All you have to do is to predict if the value of an asset will go up or go down during a certain period of time. So, basically you’re actually betting (i.e. gambling) rather than investing.

Here, your winning chances (if you’re just a regular person) are even smaller than in the case of forex trading. If you are going to win anything at all, then this will only be due to random luck and chance and not actual skill. You might as well just go to a casino instead and “invest” your money in Roulette.

Who is actually making money?

But someone from these schemes does still have to make money; otherwise they would not exist.

The trading sites themselves.

Obviously, the people who will always be making money are the companies that offer these kinds of services. Wether it’s forex trading or binary options, the companies that provide these services will always make money no matter what.

They do this by either charging a commission on the trades you make or by flat out cashing in the money you lose… like a casino does. In case of forex trading, the company offering forex trading services will charge a commission on any trade you make regardless of the outcome. The company will not care if you win or lose.

In case of binary options it’s even worse. The company will simply take all the money you lose and keep it for itself. This is exactly how a casino works, so that’s why I told you above that instead of binary options you should just go to a real casino instead because it’s the same thing.

Affiliate sites

There are many websites that advertise binary options brokers or forex companies. These websites will publish various articles claiming how much money you can make by participating in these things. They will usually give you a link that will send you to such a trading website. Once you sign up, the affiliate website will be paid money by the trading company for sending them people who sign up and deposit money.

These websites also don’t care if you win or lose, they are only interested in getting the advertisement commission paid to them by the trading companies for every person these websites convince to sign up at a trading company.

So it’s definitely a scam?

Online trading isn’t a scam in itself, considering that financial trading in itself is not a scam. However, it’s definitely shady considering that trading companies advertise their services to regular people claiming that they can also become super rich like the pros just by spending a few minutes every day trading online.

Like explained above, it’s almost impossible to regular people to successfully trade online. These people are basically being fooled with fake promises. This is why I believe regular people should be spending their time with more productive online money making methods than trading.