You’ve probably heard about many different ways to get into the trading game, right? We’re talking here the likes of online trading platforms that even entice you with something like a signup bonus. You’re said to be able to trade stocks, which in reality would be buying contracts for differences (CFDs) instead of outright ownership of publically listed stocks. In the case of not having enough money to buy the stocks of the highest valued listed companies, you’re said to be able to purchase fractions of those stocks, or effectively bet on the movement of those share prices with any small amount of money.
All of this just so that you can “be in on the action…”
As wonderful as all of that may sound, there are some disturbing facts you may not be fully aware of about low-entry public trading platforms. It might all be reduced to a victimless crime, perhaps not even being classified as a crime at all, but what it comes down to is basically rigging the game to have you ultimately coming away with a net loss as opposed to a net gain.
You’re honestly much better off taking a punt on online betting platforms that offer sports betting or casino games, because at least on those platforms you know exactly what it is that equates to you winning or losing money.
Perhaps the most disturbing fact about low-entry public trading platforms is the underlying engagement in high-frequency trading. It’s not against the law, but it’s just proof that sometimes just because something is within the confines of the law, that doesn’t necessarily make it right.
So what is high-frequency trading? Basically if you have tens of thousands micro-traders on a certain platform, the fulfilment of their orders on the market can make a significant impact on the movement of the share prices involved. So very powerful and fast computers are used to take up positions in the market, fractions of a second quicker than the wave of orders fulfilled by the traders on a specific platform. The high-frequency trades effectively then profit from the anticipated movements, so you effectively have the same broker completing two different trades – one for their users and the other for themselves. Guess which one is more profitable?
Essentially you’re just a market-moving cog on these platforms!
Biased market regulation
Brokers operating trading platforms can always say that there was some technical glitch, as a result of which your winning trade position could not be fulfilled. Usually they’ll do this having actually fulfilled the order, but they’re essentially hijacking it in this way and claiming the profits for themselves.
It gets very boring, very quickly
Online trading is often compared with online betting on casinos or sports bookies, with the latter making for a better bet. While you can enjoy free online slots for a bit of fun away from betting with real money on online casinos, you can get bored very quickly playing the CFDs trading game.
If you’re going to take a punt on any platform, at least make it an enjoyable experience.