Myths about Stock Market Trading

Throughout history there have been scandals, bankruptcies, and a depression within the stock market. This can make trading appear scary and investors may wonder if investing is worth the trouble. Traders need to keep these problems in perspective to protect them from losing their investments.  There are also a few myths regarding the stock market.

Investing is a Gamble

The average person will stay away from the stock market because they feel that they are gambling with their money. Stocks are different than gambling because a share is actually an ownership in the company. It gives the person that owns a share a fraction of the profits.  Prices fluctuate because investors frequently asses what profits will be left for the shareholders. Gambling is a game where the winner receives money from the loser. Investing, on the other hand, increases the wealth of the economy. Companies increase productivity and develop new products to stay competitive.

Stocks are for Brokers and the Wealthy

Advisors and prognosticators are often wrong when predicting the stock market. The internet has had an impact on the stock market making it easy for individuals to get involved. Individual people actually have an advantage over the stock market because they can be oriented long term. Money managers are more caught up with getting high returns.  This causes them to not be able to invest in opportunities that will take a lot of time to develop.

Stocks will Always Rise Again

One of the biggest rookie moves is thinking that a stock that has been low for almost a year is a good investment. Stocks that are done do not have anywhere to go but up. They can remain where they are or the company can possibly go bankrupt.  Price is only one small part of determining a good investment.

What Goes up Must Come Down

Just because a set of stocks hits a peak does not mean that it will drop. It is possible for stocks to go up and down but continue to rise while it fluctuates. By selling every time a set of stocks start to rise investors may not get to see all the advantages from it. Good investors will keep a trading journal spreadsheet to track when stocks rise and drop to determine what is working and what is not working.

Knowledge Trumps Beginners Luck

Some people believe that being successful in the stock market is just a matter of luck.  Understanding the stock market will definitely benefit an investor. To be successful an investor must do their homework to understand what they are doing with their money.

MyTradeAnalyzer offers brokers a sample analyzer complete with trade data already processed to give consumers an understanding for how the analyzer breaks down their unique trading log spreadsheet.

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