Top 5 day trading myths & why you should ignore them
We’ll take a look at the top 5-day trading myths that surround it, including what people think of it and what they do not.
Throughout this article, we will take a look at what exactly day trading is, what defines it, as well as how it came about. We will also explore some of the largest myths that surround day trading, and reasons as to why they should be ignored.
First of all, let’s explore how day trading came about, and what it is. Many years ago when trading was not as common nor as advanced as it is now, not everyone was able to just simply purchase and trade stocks and shares. In these times, it was only those people that worked under the employment of major financial institutions or stockbrokers that were able to purchase and sell stocks.
However, the establishment of the online world and the possibilities that it brought changed the concept of trading and how it was done forever. Now, stockbrokers exist online in great volumes, and the market is extremely accessible compared to what it used to say thirty years ago. All of this means that it is far easier for the normal citizen to try their hand at trading.
Day trading is defined as the act of both buying and selling a stock within the same day, hence, ‘day trading.’ Day trading is a common term that can apply to a vast amount of marketplaces but is implemented largely in the stock and exchange markets. Day trading can be a great way to make money online and can form the basis or indeed the entirety of a very respectable income.
In order to execute day trading as well as possible, however, it is essential that the investor has a good plan in place. Those that practice day trading often do so with a good backing of funds, since they take advantage of small price fluctuations that can allow them to buy and resell for a profit.
Throughout the rest of this article, we will take a look at the top 5-day trading myths that surround it, including what people think of it and what they do not, and what is really true!
Massive capital required to start
A huge myth that surrounds day trading is that of people being under the impression that one requires a huge amount of money to start day trading and to become even anywhere near successful at it. This thought is simply not true – one can start day trading with just a few hundred dollars. Of course, this statement has not always been true, as it used to be the case that one would have to have a considerably large amount of capital available in order to start successfully.
However, a large number of brokers have their services available for much smaller amounts of money than they used to and have therefore helped day trading to become much more accessible. However, one should be aware that due to the nature of day trading, it is more advisable to trade with larger sums of money in order to reduce the risk of losing your investment altogether.
The main thing to take from this point is that a large amount of money is not a requirement to start, but instead the knowledge on how to use what you have sensibly in order to transform your investment into something much larger.
It is easy
Becoming a day trader is not a get rich quick scheme. It is not merely as simple as purchasing one stock and selling that stock on that day for more than you paid for it! To become a successful day trader, one is required to have a large amount of knowledge on the steps that must be taken in order to make the best purchases and sales as possible.
It is essential before you become a day trader that you inform yourself thoroughly of the workings of the stock market. It is also essential that you know how to use stockbrokers properly, and which trades are good and which are not so good. The most common reason that people do not get to where they want to be with trading is that they will disregard one of the aforementioned in an attempt to make money as fast as possible – it does not work!
It will make you instantly rich
Entering the world of day trading is not a replacement for hard work over a period of time. As previously mentioned, it is not a method to become rich fast without any prior work or knowledge. It is important that as a new trader or potential new trader that you do not enter the market with a view of instant wealth. No type of trading will normally lead you to instant wealth – it requires years of learning and failure to eventually see success.
It’s like gambling
It is the view of many people that trading is like gambling. People think that simply choosing a stock and hoping for the best is gambling – it quite possibly would be! However, this is not the practices that proper day trading entails. If you partake properly in day trading, you will soon come to see how it can make for a viable career, whereas gambling would most likely not.
Proper day trading requires market research and a proper understanding of the stock markets, one, of course, could simply choose a stock and purchase it without knowing anything – not advisable. Those that are properly informed know what trends in the market to look for, and have the understanding that good decisions are based upon knowledge and not just luck.
A massive volume of trades
This is a big myth surrounding day trading. To be a successful day trader, it is not required that you buy and sell loads of stocks. It is in fact wiser not to place your funds in a large number of stocks, as this increases the potential for how much you have to lose should some or all of your investments not go to plan. A lot of investors prefer to focus on one area and better their abilities in trading those stocks by expanding their knowledge on the field itself.
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