Online trading has always been a subject of controversy. Some see it merely as a trap for naïve investors, a financial sinkhole where only the so-called ‘gurus’ make a profit. Others claim, on the contrary, that it is a legitimate profession in its own right, offering the opportunity to generate regular income, provided you have the right training and a disciplined mindset. So whom should we believe?
In this article, I aim to provide honest and balanced insights. Drawing on my own experience, shaped by failures and hard lessons, I hope to show you that while trading itself is not a scam, it can certainly become one if people expect miracles without putting in the effort needed to succeed.
The illusions fuelling the idea of a scam
The main issue with trading is not the practice itself, but rather the false promises that abound on the Internet. A simple search for “How to make money in the stock market” often leads you to adverts promising daily profits of hundreds (or even thousands) of pounds at the click of a button.
Such claims suggest there is some kind of “magic recipe”: a foolproof indicator, a secret software tool, or a self-proclaimed coach offering to “train” you—for a hefty price. Unfortunately, many beginners fall for this magic recipe, invest all their savings before very quickly finding their account wiped out. They then conclude that trading is a huge con. Yet the actual con lies in the promise of quick, effortless success.
“Trading is not a scam, but it can be portrayed as such by those who are selling you a dream.”
Stop chasing the ‘perfect strategy’
For a long time, I searched high and low for that ideal formula, the ultimate indicator, or the “magic” pattern that would guarantee me consistent profits. Time after time, I would pursue new techniques advocated by an “expert”: Ichimoku, Bollinger Bands, harmonic patterns, high-frequency scalping, and so on. The result? I never truly mastered any of them in depth and gave up on each and every strategy at the very first setback.
With hindsight, I realised that the market is too unpredictable to be “tamed” by any single approach. The best strategies all have their flaws and their slumps, and we need to accept those difficult periods as part for the course. More importantly, a trading plan should suit the personality of the person following it. If you're not a fan of emotional rollercoasters, ultra-fast scalping will most likely not be your cup of tea. If you struggle to keep your impatience in check, holding positions for several weeks in swing trading might prove just too painful to keep up.
This realisation often surfaces in testimonials from traders who, after failing with countless methods, finally succeed once they adopt a style that suits their temperament. So the best advice is to stick to one approach (equities, Forex, futures, options, short term or longer term, etc.) and study it seriously across hundreds of trades, so that you fully understand all its nuances.
Manage risk to preserve your gains
You might have a half-decent or even a good strategy and still lose everything if you fail to manage risk properly. This often happens to day traders who rack up a series of small wins, only to blow up their account on one bad trade.
I'll admit, I've been on that train more than once: I would make a few consecutive wins, get carried away by euphoria, massively completely exposed to a market flip. It’s like being at a casino—“the house always wins” if you let adrenaline or greed take over, you will lose.
To avoid failling prey to this scenario, it is vital to establish a clear stop-loss before entering a trade and, equally as important, to never move that stop-loss. Likewise, you should adapt your position sizes to your overall capital, so that a loss has a minimal impact. One principle, often repeated in the trading community, sums it up nicely: “Cut your losses short, let your profits run.”
Easier said than done, of course, but that’s precisely where discipline comes into play—the very same discipline repeatedly highlighted by many trading accounts:
“No matter what your strategy, if you don’t follow a strict money management plan, you’ll blow up your account sooner or later.”
Also read: What is money management?
Psychology: the big challenge
Another often overlooked aspect is psychology. In most traders’ experiences, they stress the importance of managing their emotions: the fear of losing, the urge to “make it back” after a failed trade, or the feeling of invincibility after a few wins.
Until you recognise that these emotions can push you outside your trading plan, leading you to overtrade or take reckless risks, you are sitting on a ticking time bomb. Conversely, a beginner who keeps a trading journal (to record every trade and the emotions felt) tends to make faster progress. By looking back through their journal, they often see that their biggest errors come not from the market but from their own unchecked reactions.
Some even suggest taking “time-outs” if negative emotions become overwhelming. “When everything seems to be going wrong, it’s better to shut down the trading platform and go get some air.” This simple but powerful piece of advice helps to avoid “revenge trades” or rash decisions that can prove extremely costly.
Also read: Trader psychology.
Typical mistakes traders often make
- “Strategy hopping”: switching methods as soon as you incur a loss. The result is that you never dig deep enough to learn why the strategy failed or how to improve it.
- Too big, too soon: investing all your savings after a few successful trades. If the market turns sharply, your account can be wiped out.
- Refusing to cut a loss: hoping the price will go back up to “recover”, only to see the loss spiral until it wipes out previous gains.
- Overtrading: constantly placing orders, even when there is no clear signal or when the market is flat.
Many traders recount these exact mistakes, often made in their first or second year of trading. More often than not, the turning point comes when they acknowledge their own psychological bias, accept that losses are inevitable and start structuring their approach more thoroughly.
So, is trading a scam?
The most honest answer is: no, if you treat trading as genuine work, requiring proper training, strict risk management and constant self-reflection. On the other hand, yes, it can become a scam if you fall for those dream-sellers and fail to learn how the markets actually operate. There are plenty of “illusions”:
- Guaranteed profits
- 90% success rates
- “Magic” software supposedly doing all the work for you
- Coaches or trainers unwilling to disclose their own results
In reality, most beginners traders end up losing money because they lack knowledge and control in these core foundations: discipline, psychology and money management. Those who do succeed invariably highlight the effort required to overcome that difficult initial phase. It’s not about luck or finding some “golden system”; it’s about a challenging learning curve.
Conclusion
Ultimately, asking whether online trading is a scam is a bit like asking if entrepreneurship or launching a start-up is a scam. The failure rate is high, many people get burned, and some use dubious tactics to sell training courses. Yet no one claims that “entrepreneurship is one big scam”: we simply accept that it’s a risky world requiring in-depth knowledge, a certain mindset and much preparation.
The same applies to trading: it requires time, effort and the resolve to avoid the pitfalls lurking everywhere. I once read a piece of advice that helped me immensely:
“If you want to speed up your progress, focus less on maximising gains and more on limiting losses.”
This perfectly sums up the mindset needed to succeed in the markets: learn how to gain little by little, protect your capital, learn from your setbacks and, above all, don’t go into trading thinking you’ll become a millionaire overnight. Like any profession, trading primarily requires time, persistence and constant self-evaluation. If you’re prepared to put in the work, you’ll discover that trading itself is absolutely not a scam… but that it’s certainly not a golden road open to anyone on a whim, either.
