In recent times, social media has brought to light some of the most incredible rags-to-riches stories – more specifically the money-out-of-nothing stories. Musk-charged cryptocurrency fluctuations, forex trading geniuses, hot options and Reddit-fuelled community trades are all phenomenons we’re starting to see on our timelines, feeds and pages.

There are undoubtedly those that have profited handsomely from these types of trades. Social media and easy access to trading platforms have managed to glamourise successes but downplay losses. This creates the impression that everyone and their giddy aunt can be a stock trader with little or no risk, just so long as they’ve got an internet connection and have joined the correct Reddit community.

There should be a portion of your portfolio that is earmarked for alternate investment strategies.

But this is the portion of your portfolio which you understand has the potential to be doubled or diminished in a short space of time. In most portfolios this allocation is a small percentage of invested capital and should never be cash that you cannot afford to loose. The reason for approaching these alternative strategies with such caution is due to the limited historical data(like in cryptocurrencies), high level of complexity(like in forex) and combination of other underlying factors.

The fascinating thing is that human beings are wired to be intrigued by the anomalies, we then promptly fantasise about being/living that anomaly and before we know it we find ourselves jumping on the band wagon with all the other dreamers. Sadly we next come to the realisation that anomalies are just that – a deviation from the norm. The normal is not when every investor’s portfolio returns double in a year, that’s the anomaly, so don’t fall into the dreamers trap, it comes with a rude awakening.

It’s not all doom and gloom though, the truth is that everyone and their giddy-aunt(mentioned previously) can be a trader even though they shouldn’t be. We’re at a point where information about companies, news, forex commentary, governments releases and technical analysis guides are so freely available that the resources have never been this abundant for new traders to test the waters in their own demo trading accounts. If you’re successful in a demo account for a few months this will help you understand whether or not you have the money-managements skills, technical skill, multi-level understanding of numerous markets and consistent effort that is required to be a good forex, stock or crypto trader.

The next time you see another child prodigy on Instagram or TikTok showing you how you can go from a $10 account to $1000 in a week, ask yourself whether or not these results are consistently repeatable or not – most likely that it is not.

Like in most things, slow and steady wins the race.

Diversify your portfolio, rebalance periodically and take your opportunities where you can afford to.

– TN