When you hear the word “trading” in the financial world, what comes to mind first? The stock markets? Bitcoin? Money? Stock bonds?
While many of those terms are relevant to trading, the main focus is on trial and error. Trading isn’t perfect, but it takes risks to be a good trader.
With that in mind, don’t let these 5 myths discourage you from becoming a trader, if you’re interested.
Table of Contents
1. Markets Are Rigged
This myth is terribly false! In fact, it makes no sense whatsoever!
The truth is, you are the only person controlling your own trading positions. In other words, look at what you believe is ‘rigged,’ and move in. So, buy when the market is ‘rigged’ to go up; or, sell when ‘rigged’ to go down.
Also, look at the possible factors that may be influencing the market – classify them as either forms of manipulation or as basic market conditions (Though, the latter perspective lets you be more accountable and conducive in your mindset). Ultimately, you’re learning to predict how the markets will fare in the future.
2. Trading Is The Same As Gambling
While trading may seem like a gamble at first, it actually isn’t.
Though, it’s understandable if you’re still new to the game. However, with plenty of experience, you’ll get the hang of it. Once you have experienced the highs and lows of trading, then you’ll see that trading is nowhere near gambling, as one might’ve guessed. Plus, it pays to follow the rules of trading, so that you don’t find yourself in trouble financially and or legally.
Will trading involve taking risks? Sure. But you must still take risks wisely by doing the following:
- Trading based on your own research (not what the news will tell you)
- Diversification, AND
- Following stop loss rules
3. Higher Leverage = Higher Profits
While that statement is true if the market turns in your favor, that also means higher losses if the market is NOT in your favor. In fact, many stockbrokers would advise against that notion by imposing rules like auto-square off and interest on margin shortage. So, it’s best to invest time and money in picking companies that are strong and are investable for a long time.
4. Trading Online Is Hard
While it’s normal to look for that reassurance about the market, that doesn’t mean that trading online is 100% difficult. All you have to do is trust in your own research. And, if necessary, speak to an experienced stockbroker on how to invest online. By getting a second option, and doing your research, you’ll play it safe when trading online.
5. You Can’t Be Both A Trader And A Job-Holder
While having a job may discourage you from trading, that’s not always the case for some people. You can still have a job, while being a trader, because trading is flexible, and the job is your safety net if anything changes in the market.
As you can see, this argument presents two parts of the equation:
- First, know your limitations, when it comes to your job and trading. Don’t force yourself to, say, look at the stocks before a meeting at work. Luckily, trading is flexible to where you can plan around your limitations, meaning that trading doesn’t have to be a full-time thing when your job is full-time.
- Second, you’re better off keeping your regular job, unless you’ve managed to become a successful trader to where you can trade full-time. The truth is, you’re not guaranteed a salary, if you’re a day trader. In the meantime, you can use your job to help you invest in trading. Just be patient and continue working towards your goal.
Conclusion
So, you see, trading isn’t as difficult and complicated as one might suspect. When you look past these myths discussed in today’s article, you’ll soon learn how to overcome any obstacles that might be in your way, when it comes to trading.
Again, do your research, know your limitations, and play it safe. Do those things, and you’ll soon be a successful trader. While you won’t be a successful, rich trader overnight, it’s still worth the experience, if you’re interested in learning more about the stock market.
But until then, stay patient, and good luck in your endeavors!
Christina Lee is a tech and business editor at Essay services company blog.
