Cash Trading - Conservative Investing Approach

Cash Trading Overview

Cash trading is a term used to describe a speculator that only trades with the cash on hand and does not use any margin.  Cash trading today sounds like something out of an ancient manuscript.  As more people have become active participants in the market, so has the increased need for more money and power.  Traders are no longer content with making single digit returns on their investment activities.  Traders nowadays look to make double digit returns and look to margin buying power to achieve this goal. 

Benefits of Cash Trading

While cash trading is unpopular these days, it still has a number of benefits. For starters, if you go on a losing streak, your losses are not compounded by overleveraging your account.  Another benefit is the trader will be able to sleep peacefully at night, since odds are in your favor that you will only lose what you have put up.  Lastly cash trading creates discipline methods for investing.  For to often traders get ahead of themselves and become more concerned about making fast cash, than learning sound trading principles.

Negatives of Cash Trading

If used properly leverage can take you from an ordinary trader to an extraordinary.  Especially when it comes to day trading where the leverage is 4 to 1 and also forex where the leverage can go as high as 200 to 1.  This leverage if used properly allows a trader to compound their money at an extremely fast pace.


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