Page 80 - THE MARKET WHISPERER

78 PART 2 - Day Trading And How To Get Star ted

Summing up, I note the interesting fact that CFD trading is legal,
accepted, and supervised by the regulatory authorities in most countries
in the world except the USA. If CFD trading is so good for traders, why is it
blocked to USA traders? Simply, as I explained above, a CFD doesn’t trade
the stock itself. If all market activity focused on CFDs instead of trading
in stock, the stock exchange would lose its main raison d’etre: recruiting
capital for companies.

In short, if you live outside of the USA, you might prefer to open a CFD
account after checking with your broker that they offer real market spread,
a reasonable commission and a broad supply of stock. If you live in the USA,
the only way to trade in CFD is by joining a group of proprietary traders
operating outside America, who may be looking for traders, including
Americans, to broaden their trading base.

A Word of Warning

For good reason, the United States has set day trade regulations requiring
a minimum of $25,000. In the past, when this standard was determined,
commissions were far higher. When the minimum commission stood at
tens of dollars per transaction, the trader had no choice but to operate
in large amounts of money to offset the impact of these commissions. If
a trader did not have a serious deposit in the account, the commissions
would gobble up all the trader’s profits. Now, with commissions far lower
and the minimum currently at about $1.50, the trader can buy and sell
small quantities without lessening his or her chances of success. In some
countries where Tradenet is active, such as areas of Eastern Europe, the
monthly profit target is $1000, which equates to twice the average monthly
salary. In short: America is not the whole world, nor is the entire world
American.

Nonetheless, relative to the profit levels and your cost of living, years of
experience have taught me that the higher the initial deposit, the greater
your survivability and reaching success.

Are You Personally Acquainted with Your Broker?

It’s completely natural to be wary over depositing your money into the
bank account of a broker you don’t know. If you want to sleep better at
night, knowing your money is safe, check whether the broker you’ve
chosen operates within the framework of regulations. This means your
money, like that of others, is supervised, separated from the broker’s own
ongoing activities, and insured. The insurance provided should not be