The Truth About Trading

The truth and nothing but the truth about trading the share markets or any other markets for that matter: I was talking to a colleague earlier today about share trading. We discussed why prices go up and down, how traders make and lose money on the markets - especially how I’ve made money and lost money in the markets as well as share trading as gambling. Share trading is another opportunity out of so many out there to make money. To experienced traders, the money is there for the taking. For brokers, dealers and market makers it is a growth industry worth investing in, with market makers like CMC Markets and IG Markets expanding rapidly worldwide and banks like Macquarie starting to deal products like CFDs and rumours that ComSec may join in. But in our discussion we came to one interesting conclusion. That conclusion was that trading shares isn’t really productive. Trading shares doesn’t create anything useful: it is simply a transfer of ownership and funds from one party to another.

In the bigger scheme of things share trading is not a productive activity for the Australian economy. Sure you are making a profit. Your broker is making money whether or not you make money from your trades from interest and commission/brokerage charges. You pay tax on your earnings - tax which pays for education, health, defence and the general running of the country. Still it doesn’t really create any wealth for anyone besides yourself. Lawyers keep society in check (well theoretically - sometimes they get greedy too), doctors keep us healthy, politicians lead society for the better (or so we hope) and engineers create the real wealth of society (creating technology, making life more comfortable to live).

That is the truth about trading, it is a self consumed activity, based on money - the need for money to live, the want for money to do more and the greed for more money to hoard and accumulate wealth. The truth about share trading is an ugly one. What you choose to do with your profits and the time is totally up to you - but in my opinion, it is important to offset this one-sided venture with a little giving to charity or participation in a community event. This is definitely something I’m actively working on…