Stock Trading

Myths and Misconceptions About Stocks Trading

There are some myths and misconceptions about investing in stocks. In order for you to have a better understanding of what it really means to be a stock investor, be sure that you know the truth behind the myths:

 

Investing in Stocks is Gambling

This is one of the reasons why people shy away from the stock market. However, this is not always true. Take note that the prices of stocks in the market depend on certain factors, such as the economy, business performance, consumer behavior, and technological developments, among others. The prices of stocks do not fluctuate randomly. There are always reasons behind every movement. This is unlike gambling in a casino where the outcome of a game depends on a shuffled deck of cards that nobody has any idea how each card is positioned on the deck.

Whether the stock market is gambling or not depends on how you approach it. Of course, if you simply pick the stocks at random and merely rely on pure luck to be successful, then you are gambling. As such, you can expect the same results as you would when you gamble in the casino. However, if you approach the stock market professionally where you put in enough time, effort, and research, in your every transaction, if you consider every act as an investment decision, then you are not gambling but investing. Gamblers rely on luck, while true investors know what they are doing and have an edge over the stock market.

 

Investing in Stocks will make you a Multi-Millionaire

Investing in stocks is just like any other business: You can make money; however, you can also lose money. Like any investment, there are risks involved. Indeed, there are people who are able to grow their money, but there are also many investors who lose their money. To be successful, you need to understand the stock market and apply certain strategies. Of course, a major part of success is to conduct serious research.

It is also worth noting that you will only earn a certain percentage of your investment. Of course, it is possible that you earn more than 100% or even 200% of your investment. However, do not expect it to happen overnight. Therefore, the more money you invest, the more profit you can make.

 

The Stock Market is ONLY for the Rich People

Some think that you can only invest in stocks if you belong to a particular exclusive group. This is not true. The stock market is open to everyone provided you are of legal age, and there are no other legal prohibitions applicable to you in your state. Especially today where you can invest in stocks by simply opening an account with an online broker, you can invest even with as little as $300, or even less.

 

You Need Connections to Succeed

With all the connections that Warren Buffet has, there is no wonder he can identify the right stocks to invest in. Well, if this is what you think, then you are wrong, absolutely wrong. Yes, having good connections can help you leverage and increase your chances of picking the right stocks and make a profit, but dealing with the stock market is much more than building connections. In fact, there are many investors who make a good amount of income even without any connection with anyone whatsoever. Thanks to Internet which literally makes our world smaller, you can easily access different sites and gather information from the comfort of your home. There are also many analyses and reviews shared by other investors that you can use as an additional reference. Here is the truth: You do not need connections. Period. What you need is to research and study the stock market and work on your winning strategies.

 

You need Extensive Financial Knowledge

This is another myth that needs to be busted. Of course, having financial knowledge is something that you need to help you choose the best stocks to invest in. This is true, especially if you use financial analysis — which is one of the most common investing strategies. However, there are other strategies that you can use without you having to look at any number. This, of course, does not mean that you should not bother developing your financial knowledge, but only shows that you can still invest and make money by investing in stocks even if you have a limited knowledge of business finance. It should be noted that you do not need to have an extensive knowledge. Learning the basics would be enough. In fact, you can develop your financial knowledge just by researching stuffs online.  The important part here is to analyze what you already know.

 

Quick Way to make Money

If you have a huge capital and can buy and sell millions of shares, then you can make money by investing in stocks quickly. However, only a few people have the blessing of having millions or billions of monies in their bank accounts. Also, if you are a beginner, the best way is to start small regardless of how much capital you have.

 

An Easy Way to make Money

Since you just have to pick stocks and invest in some money, wait for some time, and then sell to enjoy your profits, then making money with the stock market must be easy, right? I am afraid that is a No. Although you can do all these with just a few clicks of a mouse, investing in stocks is not as simple as it looks. The main problem lies in choosing the right stocks to invest in, as well as the proper timing. Now, for you to identify these two major points, you need to exert serious effort and time in research and analysis.