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:


pen paper and inkwell


cat break through


Smart Day Trading Strategies to Help You Make Money in the Stock Market

Stock trading can be a very profitable activity. You can... Read More

Protect Your 401K

Checked your 401K lately? Going back to about a year... Read More

Buy and Hold: How to Perpetuate Your Investment Losses

A recent cartoon in my daily newspaper showed two guys... Read More

Mindset

In 1960 an engineer working for a watch company in... Read More

Shorting Stocks ? The Basics, Part I of II

What does it mean to short a stock?This means that... Read More

Big Buildings Can Mean Big Economic Disaster

AS BUILDERS BEGIN WORK ON THE FREEDOM TOWER in New... Read More

An Old Proverb for Investing

"If you don't know where you are going, any road... Read More

Political Investing

We have two candidates for president that have really different... Read More

Pension Plans

If you have a pension plan at work you will... Read More

E-mini Day Trading - Day Trading for Beginners - Stock Market Timing Software

I mean it when I say that. While plastic silverware... Read More

Attitude Is [Almost] Everything

I often play a little game with myself when I... Read More

Dividend Reinvestment Plans: Investing on Automatic Pilot

If you're like many investors who squander those small dividend... Read More

How to Evaluate Load vs. No Load Mutual Funds

If you have been dealing with mutual funds for any... Read More

Buy and Hold Investment Strategy

"Buy and hold" is one of the most heralded investment... Read More

Complacency Indicator

If you haven't heard of the technical indicator with the... Read More

Time Out

Are you paying any attention to your retirement savings? Do... Read More

Stock Investment Advice

Stock investment advice is easy to find. Do you get... Read More

Market Timing

Every broker and financial planner will tell you that you... Read More

Adding Funds

Someday you may want to retire and continue to live... Read More

Direction

It is difficult to make money in a bull market,... Read More

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

The Dow TheoryCharles H. Dow... Read More

Outsourcing

It's about time someone spoke the truth concerning outsourcing. The... Read More

Who Knows?

The Shadow knows. Remember him? It seems a shadow has... Read More

One Way Street

Ever turn down a street, get half way and suddenly... Read More

The 10 Commandments

Wall Street has been preaching for years and years to... Read More

Wall Street Paradigm

In 1960 an engineer working for a watch company in... Read More

Advisory News Letters

Several times each month I am solicited by various market... Read More

What Does it Take to be a Stock Trader?

It takes a total mental commitment to the task. It... Read More

Pamplona, the Wild Investment Bulls

You remember (they show it on TV every year) the... Read More

Inertia

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

Dont Lose All Your Money

That sounds like good advice doesn't it? Don't lose all... Read More

Enronization

Even if you don't own any of their stock or... Read More

Shadow Bull

As one of my regular readers you know I have... Read More