How Not to Make Money in Stocks – That Stock Trading Robot Thing

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A robot has recently been unleashed on the public at large that, I believe, is still pretty much unaware of the danger it is facing. Not, it’s not a dish washing robot, silly. Those are easy to handle. Smashing one against a wall is all it takes to restore law and order in your household. Just don’t mention your robot handling methods to your spouse and all will be just fine from now on. At least with this kind of robots. But that’s not what we are talking about here.

This robot is much more dangerous. No, it does not look like Godzilla, but it can still do a lot of damage to your wealth if you don’t know what this thing is about.

The robot in question is a stock trading robot. And the Internet is really abuzz of it. Just as you would expect it to happen when all Internet marketers join their forces to sell you something totally bogus. Never heard of these people before? Well, while some of them are just fine, unfortunately too many of them would sell you their grandma as a virgin without blinking their eye. That’s how talented they are. And they really have to be that good in order to sell things like this robot.

Okay, now that I warned you about it and the people this danger is likely to arrive from, let me tell you why it is such a bad idea to buy this robot thing even if it’s only 50 bucks or so.

Let’s start from the beta coefficient, shall we? Don’t know what it is? Well, don’t feel bad. You are not alone. The people who created the stock trading robot most likely don’t know this either and if they do, they don’t have your best interest at heart.

Let me thus explain this in more detail. The beta coefficient is a popular measure of stock volatility. The bigger this number is in absolute terms, and it can be both positive and negative, the bigger the stock volatility. The broad market has its beta value set at one. Some highly volatile stocks can reach 3 or 4. Those are ones that only really skilled swing traders should go after, but not necessarily good for the rest of us. Certainly not good for ordinary mortals that don’t live for the excitement of wild stock fluctuations that more often than not end up in pain.

And here is a punchline: the stocks that the stock trading robot has a real penchant for are even more volatile. Sometimes even three or five times more, meaning their betas are 10 to 15. They can be even bigger. Now, what kind of crazy stocks are those? Good question. They are penny stocks. Yes, the stocks that your parents told you to avoid, don’t you remember? “Don’t talk to strangers and don’t ever buy penny stocks.” That’s what parents always tell their little kids. Well, at least mine did.

Yes, penny stocks are a very poor investment and a very poor trading vehicle too. Their volumes are usually low, which is why they can be swiftly moved and why they can be easily manipulated by rumors, especially readily spread online.

Trading stocks is gambling in part, whether you like it or not, but there are better and worse ways to do this.

Playing with penny stocks even with a robot is not just gambling, it’s plainly dumb gambling. There are much better, more reliable, more intelligent ways to make money in stocks. It’s absolutely inadvisable to start here as this may easily lead you to wrong ideas about how to trade stocks and what’s worse you may end up scared and scarred by them after an experience like that.

Don’t fall for the spiel of slick sales pages and bogus online reviews that you are likely to come across. Use common sense, get educated and you will do much better in the stock market than the peddlers of this stock trading robot ever had. Or ever will.

write by romeo santiago

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