Top 12 Trading Myths Busted! TRADING MYTHBUSTERSIt’s time we cut through the BS and noise and shed some light on the TRUE and REAL world of financial trading.
I can’t believe the misconceptions and false ideas of trading are still making appearances.
It’s time to educate yourself before you eradicate your account.
So let’s debunk some common and dangerous trading myths.
Myth 1: It’s a Get-Rich-Quick Scheme
Trading has long been shrouded in the myth of transforming anyone into an overnight millionaire.
But it’s an illusion. It’s what drives newbies and amateurs into the trading world.
And then a few months later, when they realise what it actually takes to grow an account.
They move to the next “best” thing.
Trading is a forever life-style that requires ongoing discipline and patience through strategic planning, knowledge and presteen execution.
And not to mention, it also involves periods of losses.
There are no shortcuts to wealth in trading, it’s a journey, not a sprint!
Myth 2: It’s Just High-Stakes Gambling
Trading is a form of gambling.
But strategic gambling.
It’s not like pulling the slots machine and having a chance of being right or wrong.
Or flipping a coin.
No, trading has an element of risk and reward control.
And it is based on nothing more than probabilities and comprehensive understanding of market trends, money management and analytical skills.
Unlike gambling, which is based largely on luck.
You have an element of control with the outcome. That’s through trading journals, back and forward testing and making stringent decisions.
Myth 3: More Risk, More Reward
Yes! If you risk more you’ll gain more.
But when you risk more, you can also LOSE way more.
With trading derivatives and leverage, you’re exposed to more than what you put in.
Sometimes 10 times, sometimes 50 and other times 500.
So, this alone should tell you how dangerous trading is.
When your portfolio goes to 0 – due to high risk – That’s it.
And many traders full port their accounts. And majority become the 98% losing stat of trading.
Stick to low risk, low return.
Keep consistent and the return will start adding up and you’ll reap the rewards in time.
Myth 4: Only the Rich Can Trade
The myth that trading is a club exclusive to the wealthy is just that, a myth.
Decades a go, you would have needed thousands to start trading and investing.
But no longer is that the case.
Some brokerages don’t even have a minimum with trading. You can start off with a demo or practice account.
As long as the competition and innovation picks up, trading will be cheaper, faster and more accessible.
Myth 5: Trading is Only About Buy low – sell high
Although this seems like a logical strategy.
It’s not the only way to profit.
Trading techniques like short selling allow traders to profit from falling markets.
Not only can you buy low and sell high.
You can also sell high and buy low.
Myth 6: More Trades Equal More Profit
Trading isn’t a game of ping pong.
You don’t just play as many times as you can in a day, to profit.
First, Overtrading can lead to rushed decisions, increased transaction costs, and significant stress. Patience often plays a crucial role in a trader’s success.
And second, it all depends on the market environments.
If the market is not trending, you can go long or short and still lose every bet.
Rember you still have to let the market move up or down a bit to make up for the trading costs!
And so you’re already at a disadvantage when you take a trade.
Sometimes the best move is to sit on your hands.
Neutral is also a position and a powerful position during certain periods.
Myth 7: Successful Trading Means Winning Every Trade
Even the most successful traders get knocked down by losses.
It’s the nature of the trading game.
What matters is the net outcome over a period of time.
Your job is to make sure the losses are small and the gains are bigger.
That way, even with a 50% win rate you’ll win and the profits will outweigh the losses in the long run.
Myth 8: Complicated Strategies Yield Better Results
You’ve heard of analysis paralysis right?
When you literally plant so many indicators on your chart it looks like a Jackson Pollocks Christmas Tree painting.
Complication does not equate to success.
You’ll learn that:
Too many indicators will conflict with each other.
You’ll struggle to back test a system.
You’ll struggle to find high probability trades.
You’re making it more complex than it needs to be.
And most important… You need to learn to KISS (Keep It Simple Stupid).
Often, the best trading strategies are the simplest.
What’s essential is understanding your strategy thoroughly and executing it consistently.
Myth 9: You Need to Monitor the Market 24/7
Thanks to stop-loss orders and other automated tools, you do not need to be glued to your screens all day.
The most important attention you’ll need to apply is trading layout, setup and execution.
Once you’re done and the trading levels are in place.
Go live, do something else.
Don’t be a nerd.
Enjoy life.
Trading requires attention, indeed, but a healthy balance is crucial to maintain clear-headed decisions.
Myth 10: Markets Are Always Rational
Markets, unfortunately, aren’t always rational.
Just like you learn in school. There is ideal and real ways of the world.
Sometimes, the market is one clusterfreak of confusion.
Correlations don’t work according to the book.
Trends don’t match up the micro and macro analyses of companies.
Good news doesn’t mean strong uptrends.
Markets are run by many, many, many other factors.
They can be swayed by demand, supply, algorithms, Smart Money, greed, panic, emotion, rumor, and corruption and manipulation.
This will lead to price distortions.
There is a famous quote attributed to Great Depression-era economist John Maynard Keynes –
“Markets can remain irrational longer than you can remain solvent”.
Myth 11: Brokers Want You to Lose Money
Yes there are a ton of brokers who make money when you lose.
But reputable, credible and top regulated brokers – do NOT want you to lose.
They make their money from brokerages, spread and from trading volumes.
They want you to succeed and grow. Because if you blow your account, they lose a client.
Hence, when brokers approach me I always tell them the importance of education, guidance and helping them SUCCEED.
Myth 12: Once a Successful Trader, Always a Successful Trader
Market conditions, strategies, and personal circumstances change.
If you want to be a successful trader and remain one it requires constant learning, adaptation, and diligent risk management.
This includes me!
Despite how long I’ve been in the markets, I treat each day independently. I follow my system, risk management rules. I look for future opportunities and prospects to improve my trading, platform, journals and even testing.
This is forever an alive game that requires action. We are always learning, growing, improving and adapting.
Like they say, past success doesn’t guarantee future profits.
Let’s sum up the 12 common Trading Myths:
Myth 1: It’s a Get-Rich-Quick Scheme
Myth 2: It’s Just High-Stakes Gambling
Myth 3: More Risk, More Reward
Myth 4: Only the Rich Can Trade
Myth 5: Trading is Only About Buy low – sell high
Myth 6: More Trades Equal More Profit
Myth 7: Successful Trading Means Winning Every Trade
Myth 8: Complicated Strategies Yield Better Results
Myth 9: You Need to Monitor the Market 24/7
Myth 10: Markets Are Always Rational
Myth 11: Brokers Want You to Lose Money
Myth 12: Once a Successful Trader, Always a Successful Trader
If this was helpful let me know in the comments!
Myths
😎MYTHS ABOUT TRADING BUSTED😎
⚛️The world of trading is full of myths and misconceptions. We often hear stories of overnight successes and devastating losses. It can be difficult to separate truth from fiction when it comes to trading. In this article, we will debunk some of the most common trading myths and provide the facts to help you make better investment decisions.
❌Myth: Trading is Gambling
✅Fact: Trading involves analyzing market trends, researching companies and industries, and making informed decisions based on data. Successful traders do not simply rely on luck; they systematically evaluate risk and reward before making trades.
❌Myth: You Need to be a Financial Expert to Trade
✅Fact: While a basic understanding of the market is important, you do not need a degree in finance to be a successful trader. There are numerous resources available to help beginners learn the basics of trading, including online courses, tutorials, and mentorship programs.
❌Myth: Day Trading is the Best Way to Make Money Quickly
✅Fact: Day trading involves buying and selling assets within a single trading day in order to profit on short-term price movements. While it can be lucrative, it is also risky and requires significant time and effort. Many successful traders prefer to take a long-term approach, focusing on investments that will appreciate over time.
❌Myth: You Need a Lot of Money to Start Trading
✅Fact: While having a larger investment portfolio can certainly provide more opportunities for profit, you do not need a huge amount of money to start trading. Many online brokers offer low minimum account balances, making it easier for beginners to start investing.
❌Myth: Trading is Only for the Wealthy
✅Fact: Trading is accessible to anyone with an internet connection and a willingness to learn. While high net worth individuals may have more resources to invest, anyone can start trading with a little bit of research and a willingness to take calculated risks.
❌Myth: Technical Analysis is the Only Way to Predict Market Trends
✅Fact: Technical analysis involves analyzing charts and data to predict future market trends. While it can be a valuable tool, it is not the only way to make informed trading decisions. Fundamental analysis, which involves evaluating a company's financial health and growth potential, is equally important.
❌Myth: Trading is a Solo Endeavor
✅Fact: Trading can be a solitary activity, but it is important to take advantage of opportunities to learn from and collaborate with other traders. Online forums like Tradingview, mentorship programs, and networking events can all provide valuable insights and support.
✳️In conclusion, there are many myths surrounding trading that can prevent individuals from taking advantage of its potential benefits. By separating fact from fiction, traders can make informed decisions and increase their chances of success. Whether you are a seasoned investor or a beginner, knowledge and education are essential to achieving your financial goals.
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8 MYTHS ABOUT TECHNICAL ANALYSISThere are many people and many opinions in the market.
There are those who criticize technical analysis, calling it superficial and even useless.
There are those who consider technical analysis (TA) the holy grail that can bring huge profits.
Today we will try to debunk 8 myths about technical analysis.
myths
1. TA is for short-term trading or day trading only.
Many people think that TA is only suitable for short-term and computer-driven trading, such as day trading and high frequency trades.
The history of TA actually goes back long before computers were invented, and many famous and profitable traders use it for long-term trading.
Technical analysis is used by traders on all timeframes, from minutes to weeks and months.
2. Only individual traders use technical analysis.
In fact, investment banks have dedicated trading teams that use technical analysis.
High-frequency trading, which covers a significant portion of the trading volume of stock exchanges, relies heavily on technical concepts.
3. TA has a low success rate.
To debunk this myth, all you have to do is read Masters of the Market: Interviews with Top Traders by Jack D. Schwager, which quotes many traders who profit solely from technical analysis.
Traders with many years of experience have been making profits using technical analysis for more than a century.
4. Technical analysis is fast and easy.
Novice traders open trades based on a simple TA, but this is not enough to be profitable at a distance.
Success depends on continued study, practice, good money management and discipline.
Technical analysis is just a tool, just one piece of the puzzle.
5. Ready-made technical analysis software can help traders make money easily.
There are a lot of advertisements on the Internet that promise to give you a program for a small amount that will do everything for you and bring you profit - in fact, this is a scam.
There are programs and indicators that can help you trade, but no program will give you guaranteed profits.
6. Technical indicators can be applied to all markets.
Most often, yes, TA can be applied in all markets, but there are exceptions.
Different asset classes move in their own way, with their own characteristics, and a trader must be able to adjust his TA for a particular asset.
Don't make the mistake of applying technical indicators designed for one asset class to another.
7. Technical analysis can give very accurate price predictions.
Beginning traders expect to see 100% accurate signals and accurate profit prices, reversals and so on from TA.
This is simply impossible.
Most often, TA helps to find the zone where the price can go, where it can reverse from and this is not a specific point, this is a zone and experienced traders understand this.
8. The winning percentage in technical analysis should be higher.
If the first trader out of 5 made 4 profitable trades, and the second trader out of 5 made 1, who is more successful?
You need to get more information to give an answer, it may be that the first trader earned $ 10 in 4 trades, but at the same time he lost $ 80 in one and then he will be in the red, and the second trader lost $ 40 in 4 trades , while in one transaction he earned $ 100.
The right trading structure ensures profitability even with a small number of winners.
It is not necessary to have many profitable trades, it is enough that the profit covers losses and something else remains, and sometimes one trade is enough for this.
essence
Technical analysis is not the holy grail, it will not give you 100% profit.
It does not suit everyone and you need to study it before you understand whether it suits you or not.
You need to gain enough experience to learn how to use technical analysis correctly.
When used correctly, TA can give you a real opportunity for trading success.
Good luck!
TRADING MYTHSHello traders!
There is a lot of information about trading on the Internet and it is sometimes difficult to understand what is true and what is fiction.
Today we will try to sort out the most popular myths and understand what is really true and what is not.
Work without rest
You have to work hard, but don't overdo it.
If you watch charts 24/7 or study hundreds of systems, you will simply go crazy.
There will be a mess in your head, and most importantly, you will be tired.
Improve your skills and discipline, keep a trading journal and analyze trades, and don't forget to rest.
It's a matter of discipline
Discipline is a very important skill for a trader.
Through discipline, you can control your emotions and follow the rules.
But do not think that one discipline is enough to be a profitable trader.
If you are losing money over and over again, it may be because of your trading strategy.
Analyze your trading and find your style.
Point of entry
The entry point is very important when making a new trade.
The better the entry point, the less the price will go against you if you have analyzed everything correctly.
However, there are other factors that play an important role in trading: position size, stop loss, trade management, etc.
The entry point is just a part of the whole work.
Did you know that even with random entry points, you can still be profitable if you think about stop losses, position size, and trade management?
Profitability
Trading is not a one day job.
And do not expect that you will take a huge profit in an hour.
The main task is to be profitable at a distance.
Don't run for quick profits.
Remember that the more positions you open, the more likely you are to lose.
Engage in consistent profits that are different for different trading styles.
For scalpers, consistent returns mean making a profit every quarter. For traders who trade daily charts, consistent returns will mean making a year's worth of profits.
Determine the value of constant return for yourself and follow the plan.
Trading is a risk
Every day carries a variety of risks.
You run the risk of being hit by a car or having an accident.
But after a few driving lessons, the risk of getting into an accident decreases.
It's the same with trading.
Over time, you will become more experienced and will become better versed in trading, thereby reducing the risks.
Everything in life comes with some risk, and your job is to keep all possible risks to a minimum.
Leverage
There are a lot of advertisements on the Internet for brokers who offer crazy leverage.
Brokers say that you can make 100% profit from one position, but they don't say that you can lose everything.
Leverage in inexperienced hands will result in the loss of the entire account.
Always remember that leverage is a double-edged sword. It can increase both your gains and your losses.
Grail
Everyone wants to find it!
But he is not.
The Grail does not exist, and professional traders do not have any secret.
To be profitable you must have experience, knowledge and discipline.
This is what distinguishes professionals from beginners.
You can make $100,000 out of $1000
You often see ads that say you can make $100,000 out of $1,000.
It is unlikely that there will be at least one newcomer who is able to do this.
Seeing such an advertisement, beginners think that it is possible to do it in one transaction.
In trading, you need to have a lot of money to earn a lot. If you have a small initial capital, then you will not be able to earn a million dollars in the short term.
In the early stages, think about how not to lose capital, and only when you learn this, you will understand how to make a profit consistently.
Where will the market go?
In the beginning, every trader wants to know exactly where the price will go.
Essentially, it means knowing the future, which is impossible.
No need to try to predict the future, in trading you will earn thanks to probabilities.
You should study this topic and understand that you don't have to be right on every trade.
You can be wrong more than half the time in determining future price action and still be profitable.
It is enough not to lose more than you earn.
Cut your losses and let your profits run.
Conclusion
The world is full of trading myths.
There are gigabytes of information around and it is very difficult to understand what is true and what is fiction, what is really useful and what is not.
Study the market, but don't believe everything you read.
Listen to the best, but don't forget to think with your own head .
How Much Can You Make Trading Forex?Mark Twain once said: “There are lies, damn lies and statistics”. People lie, numbers usually don’t, unless manipulated by liars. If you ask somebody trying to sell you a course or some other products related to the market, they’ll promise you 3x of your money in a week and convince you can start in couple days. Sounds too good to be true? Because it is.
One way to return to reality in the industry where everybody is showing off their gains and concealing loses is to look at other financial aspects of life (not in a self-diminishing way, but rather self-awaking).
Average General Doctors make 41.000$/year in UK. What makes you think you can make that much in a month with even a 100.000$ account?
Banks deposit interests are currently at low of 0.1-0.25%/year. This is self-explanatory as banks are perceived as one of the most conservative ways of keeping your money.
S&P500 averages around 9.4%/year. 47% of Americans have invested one way or another (pension funds and 401k’s) into S&P500 as a good balance between security and profitability. What do you think is the risk should be to make 25x of that in a year? Answer: 3.5-5% per trade.
Most of the market participants don't risk more than 1%/trade. Why wouldn’t they risk 5% per trade for more gains? Answer: you’ll get wiped out in couple trades :/
Becoming a lawyer takes 7 years on average. Why would somebody think that watching 2 videos on YouTube or reading 7 articles is enough to place a trade? Answer: Here, unfortunately, some brokers and traders try to convince newbies, in order to take advantage of them quickly. However, trust us, trading is no different than other full-time skills you have to acquire over long periods of time.
Leading investment funds experience ROI drops every 3.4 months. Would you still think profitability 12/12 months a year is realistic? Answer: It is not.
Bottom Line: Trading Forex is an interesting and rewarding way of making money, but the truth is even the best traders don’t usually make more than 5-15% a month on average. On the other hand, %s don’t matter. What matters is your personal demands! If you need to make 1000$ as a side income to add more comfortability to your life a 10.000-20.000$ account with a proper trading plan should do the job. If you’re trying to become financially independent do the math accordingly 😊
Oh and also, if somebody tries to tell you something marked red in the Myths section, respectfully, stay away from them! (RUN!)
Fundamental techniques or technical fundamentals of analysis?Division of analysis into two subcategories (fundamental and technical) seems to be a concept that has not profound base under it. If you find standard definitions of these and compare them, you'll find that major difference is the subset of data which analysis rely on. For technical analysis - subset contains historic prices and volume data, for fundamental - financial reports data, various macroeconomic factors (e.g. GDP, balance of trade). When you hear "support line" of "head and shoulders pattern" I guess you associate these terms with technical analysis. But why? Because it's "common knowledge" for trader/investor? What if I build a chart of unemployment (or any other quantified item from "fundamental" subset) over time and draw some support/resistance lines? What kind of analysis should it be?
Personally, I prefer another division. There are scientific analysis and non-scientific analysis. Scientific analysis based on creation of hypotheses about market data and testing validity of them. If hypothesis is valid, it can be used for future predictions and making trading decisions. Scientific analysis implies strict formalism and do not use concepts that cannot be accurately described. Before use of e.g "support lines" it needs full list of rules how to draw them and where points should be and what hypothetic influence should be on price near this line (also it drives to describing nearness). And after that - testing. Any other analysis that can't afford that formalism is non-scientific. I do not say that "support lines" does not work. But I don't see cases when this term at least described strictly - thus it's not scientific analysis. (leave in comments link to robust definition of this term if you disagree). If other people draw them and somehow use them - it does not make this type of analysis scientific. If mentioned people like drawing lines, triangles etc. without understanding what for - why don't they become artists (maybe suprematists)?
to be continued