Myths about Trading

There are a lot of fake traders on social media, and the most negative thing that results in is that people who want to learn to trade or invest in the markets are exposed to a lot of myths. People want to make easy money and fake screenshots and videos play right into that mindset, which makes you think that it is an easily achievable thing, a get-rich-quick scheme even.

So let’s talk about some very prevalent myths that people and maybe you too have about trading and investing in the markets.

• “You need to trade every day.” Daily screenshots or tips on social media are the main reason for someone thinking this. These pages/traders show themselves making money every day or most days and anyone looking from the outside would be attracted to that. And since these people are “trading every day”, maybe that is the way. The most seasoned people in the markets trade only and only when their edge presents itself to them. They don’t chase trades and in turn, money comes to them.

• “You need qualifications to be good with the financial markets.” While education is needed to succeed in most fields, and you might be inclined to think qualifications like CA or CFA would help you trade well, but there is no direct correlation here. You can get employment from banks or brokerage houses, but your own trading journey may not get ahead at all with these courses/degrees.

• “You need a big amount of capital to start trading or investing.” You need to understand, that out of all the best traders and investors out there, most would have started with whatever amount they had saved up. Moreover, it is better to make mistakes when your capital is small. Because make no mistake, every person who starts in the markets makes mistakes. As your income grows, you can easily increase the scale at which you interact with the markets.

• “Indicators alone will make me money.” Don’t get me wrong, indicators are important, they can be very useful tools to supplement your trading decisions. But indicators alone should never be used to make decisions. You can read more here, but the jist of it is, most of them are lagging so it doesn’t make sense to depend solely on them anyways.

• “There is a holy grail to the markets.” The traders you see out there, the real ones, not the fake ones I mentioned earlier, don’t have some secret sauce that they abide by. Everyone has some form of the same strategies, but they tweak those according to their own styles. And the goal of every person is to increase their probability on the markets. It can’t possibly be 100%, but you have to try to get as close as possible.

• “You need a big setup to make good money.” It looks cool to have a number of screens to show different information fields. But the number of screens is not a direct indicator of how good a trader is or how much money they make. A person could be making millions with their phone and laptop only.

• “Trading is easy.” Nope. Simple, for sure, but not easy. You have to overcome a lot of challenges, from the markets and from within yourself, to succeed in financial markets. You’ll have to keep learning, because every trade, every investment and every decision presents new kinds of problems. But no worries, for how demanding and challenging this is, it rewards well when you do it right.

You might have some more ideas about how the markets, some of which might be true, some false, but you’ll only know by making mistakes yourself. I hope I could help a bit. And while that’s it for this article, you can read all my articles here. And do let me know if you want a specific topic covered! Subscribe for free to receive new posts and support my work.