10 Myths About Trading
Ah yes, 10 myths about trading, I could list about 100 but well, I would like to keep your attention and not bore you too much. Over the last few years of my trading journey, people have always made assumptions, both positive and negative about what this line of work entails. Here are some of the most common myths debunked. Maybe you too may have believed this or still do !
- 'I have to save lots of money to get started in trading' - It depends on your definition of 'a lot' of money. Some brokers will accept accounts as little as $500. Most American brokers allow you to trade for $2,500 ( restricted with PDT)
- 'Trading is super easy' - You might be surprised to learn that some people think trading is easy because, quite frankly, it's sold to them online that way. If you have any doubts about how hard it is, I suggest you read my story which should shed light on how tough it was for me.
- 'I need to be smart or in particular good at maths to trade' - This is probably the most common myth I hear. Not many successful traders consider themselves to be smart or good at maths at all. I mean this with the greatest of respect, some people who made millions would openly admit they aren't the smartest person so don't let that deter you. Also, may people who attempted to trade from higher power jobs ultimately failed so never let intellect deter you from achieving your goals.
- 'You need to born with a natural talent to trade'- I'm sorry but what ? This is another common belief. How can someone be born a natural talent to trade ? Maybe, there are definitely personality traits that helps one person over another but if you have a basic IQ, you can get on the road to map out your journey for success. Just look at the list here, Mark in particular believes you don't need to be born with super talents to get started. If that wasn't enough, read way of the turtles which totally debunks this myth.
- ' Trading is nothing more than gambling' - This one can be tough myth to debunk. It can also be hurtful to the trader. Afterall, the last thing a trader wants to hear is they are a gambler. If you aren't prepared or have any rules, yes, you are gambling. But we are traders. We are disciplined, rule following machines so we are not gambling. Our money is carefully placed in higher probable situations and over time we come out on top.
- 'You need the ability to predict the market' - You don't need to know what the market is going to do next. You just need to focus on what your edge suggests will happen over a long period of trades. Follow your plan. It's your carefully crafted plan that you poured your blood, sweat and tears into. Trust the process. All the top traders in Market Wizards know you don't need to predict markets next move.
- 'I need to win a lot to make money' - Absolute nonsense. Most of the greatest traders in the world have wins rates of 25-50%. How can they make money you are wondering ? Because, when they lose, they lose small and when the win, the win 2,3,4 even 5-10 times what their losses would be.
- 'I need to risk a lot to be profitable' - Not at all, this couldn't be further from the truth. In fact, risking less has proven to be a consistent way to grow your account. I almost blew up trading way too big size for my account when I started. When I lowered it, in the long run I was actually more profitable and consistent.
- 'My broker is out to get me' - While it may feel like that sometimes with the fees some charge, (trust me I get that) they aren't out to get you. The markets are too big for an individual broker to hunt your stops. Now, stock brokers that call you up an tell you to buy X stock, they might have alternative motives but thats another story.
- 'You need to watch the markets 24 hours a day'- No you do not. Swing traders, some hugely profitable, don't watch the markets an awful lot. In fact, most actively encourage you to follow your plan, enter your trades and stops etc and go about other things like journalling etc as being emotionally attached to your positions is not good.
I hope this helps debunk some of the most common myths out there today.
Best of luck trading.