The High Cost of “Free”

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Who knew that “free” really meant “expensive”? That may seem like a contradiction, but day traders can easily find themselves in a situation where it turns out to be true.

I teach a number of strategies that require software that displays tick charts. However I often have students who tell me that they use such-and-such piece of software that will not display them. But they refuse to change because the software they are using was free.

Since many people try day trading as a supplement to their regular income, they do not often want to invest in it before showing a profit. But there is a problem with this line of thinking. Why does it seem so unreasonable for people to spend around $100 on a piece of decent charting software when they hope to make thousands of dollars from it each month?

On the one hand, this attitude is wrong because the software you use is not simply a tool. It is an investment which should pay for itself multiple times over.

But there is a larger problem with this attitude of not wanting to invest in a commitment to day trading. You might have heard the saying, “Trading is a zero-sum game.” If you want to buy a stock, a commodity or a currency, then somebody else has to sell it to you. In some markets this might be a market maker, but most of the times it’s another trader.

What this means is that you are in competition with someone else. If you buy and prices are going up and you win, then the trader who took the other side of your trade loses. Admittedly, he could be trading in a different timeframe, and while you are taking profits he might still be in the trade and just experiencing a drawdown. But for simplicity’s sake, let’s say that if you win, the person who took the other side of your trade loses and vice versa. In other words with every trade, someone either makes money or loses money. You cannot participate in the market “for free” and with zero risk. Someone has to lose for someone else to gain. Someone who comes into day trading with the attitude that they can succeed without putting themselves on the line, even if that means dropping $100 on a piece of good software, is not cut out for day trading.

We play what they call “the game of games,” and we play it to win. When you trade, you are going up against the brightest minds in the industry, equipped with the best software and hardware, using multiple monitors, $800 chairs, ergonomic desks and lighting so that they never get tired, a blazing fast internet and data connection. If you think you can magically reap the rewards of a system dominated by these high powered figures with free charting software that cannot even display tick charts, then you are outclassed from the beginning.

Inexperienced and “casual” day traders can profit. But they can’t do it without an investment in time, research, experience, and, at the very least, the right tools for the job. Otherwise, they may think that they are playing the markets for “free” when, in fact, they

are setting themselves up for a very expensive prospect of losing time and again to those willing to invest in their endeavors.

Markus Heitkoetter is the author of the internation bestseller Day trading ( and a professional day trading coach. For more free information on day trading visit his website

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