Trading is such a difficult and specific process that a lot of us have heard a lot of information that might not necessarily be true. A lot of people distribute information about it as they do not understand the process and they are making assumptions about it. But with a bunch of information it might be difficult to distinguish between truth and myths.
Here are some points that turned out to be trading myths.
1. It is hard to trade all by yourself.
2. The more indicators you use – the better.
3. Longing is easier.
4. What falls will eventually grow.
5. Trading without a stop loss is better.
6. Leverage is the worst.
7. Trading Is gambling.
1. It is hard to trade all by yourself.
A lot of traders grew to believe that trading all by yourself without a personal broker is so hard that it is nearly impossible to do. But that is in fact not true. Not totally, anyway. Of course at first you might find yourself in a pickle, but with time as you gain more and more confidence and more and more experience you are going to understand that being all by yourself without depending on anyone is so much better.
2. The more indicators you use – the better.
Of course a couple of indicators are practically a ‘must’ in day trading. But too much of them are only going to confuse you and make the picture less clear for you. Too many indicators may end up giving you wrong information as half of them is going to contradict the other half in most cases.
3. Longing is easier.
I would argue and say that when it comes to the choice between shorting and longing there is no such thing as easier. There are such things as patience, understanding and emotional stability on the other hand. These are the only things which are going to decide whether you are a shorting person or a longing one.
4. What falls will eventually grow.
As was proved by numerous occasions in the past, markets are not always as loyal to its assets. There are trades that have fallen and never got their groove back. And that can happen to every trade. It is actually a bad taste to always believe and think that a trade will eventually rebound. Remember – that is not always the case.
5. Trading without a stop loss is better.
NOPE. That is just nope. Trading without a stop loss is actually more dangerous and can bring more damage. It is better to be protected from the volatility and sudden drops, don’t you think? It is surprising how many traders believe that stop loss can actually work against them. It is a kind of trading protection that not a lot of instruments can give us.
6. Leverage is the worst.
This point is similar to the previous one. It is neither good nor bad. It is what it is. Trading using leverage needs to be implemented by a real pro. Leverage can be both – very useful and extremely dangerous. With leverage even the smallest loss can turn into wiped-out account. Again – it is not the worst it is just another trading tool.
7. Trading Is gambling.
If you look at things from that point of view everything is a gamble. Every job interview, every driving lesson and every marriage. You do not know what you are getting in the end and as a result. All of things in life require skill, dedication and experience for you to be successful at them. Of course there is high risk involved in trading but in the end of the day we take different-scale risks all the time. What is another one? Especially given the amount of reward you might be getting. Plus, what is the thing that differentiates trading from gambling? Skill. To be successful in trading – skill is all you need.
