Many of you wonder if you should invest in the stock market. During your research you may stumble upon some articles with not very accurate information, or you may have some false beliefs altogether. So let us scatter some of them.
Stock Trading Myths
- You can get rich quick in Forex This is a financial market, and you can make money on it. If you do not chase the dream of becoming a millionaire, then it is quite possible to earn an extra 20% of your monthly income.
- Analysts are the best traders The analyst`s task is to describe the situation on the chart, the readings of various indicators, show support and resistance levels, and, based on this information, suggest where the price will go. But no experienced trader will take the analyst`s instructions as a reason to open a trade. The trader`s task is to wait for a signal to trade from his trading system. Open a trade, set a stop loss and take profit, and then wait to see what happens. Because he cannot know exactly where the price will go - to a stop or to profit.
- News trading Often, traders say that they trade on fundamental analysis, while simply referring to the news on the economic calendar. The news is green - buy, red - sell, and then complain: the market went against the fundamental analysis! No, the market went where the deals of the players are directed.
- The more you trade, the more profit you make Transactions in trading can carry not only profit, but also loss. And frequent transactions are, most likely, signals of dubious quality. As a result, the trader "works" tirelessly, but loses account after account. An experienced trader tries to open as few trades as possible, waiting only for the best moments for them. Let it even be one transaction per month, but for sure. You need to understand that a good trading system simply cannot give frequent trade signals - too many factors must coincide.
- Good trading bot is expensive A good system doesn`t cost a lot - it just doesn`t sell. It`s like someone wants to sell a money printing machine - why, if you can just print the right amount on it
To sum up
If you know very little, you will follow the crowd like a lemming, yet successful investing requires hard work and effort.
As in any profession, knowing something partially is fraught with a rapidly growing snowball flying at you - imagine a dentist that is not quite sure which tooth to remove.
The best way to bust a myth is to learn and practice!