5 false beliefs on the stock market
I have always loved films with traders. We see them raising colossal sums and living a dream life.
Deep down, the stock market has always interested me. I envied the traders you see in the movies. I did some google research on “ How to invest in the stock market ” but I immediately felt overwhelmed. I did not understand the vocabulary, I did not know what a broker was, I did not know how I could trade my capital myself. I also believed that trading was a full-time job. I had convinced myself that I could never find the time to do this. Because of all these unanswered beliefs and questions, I stood idly by for a very long time.
Some time ago, I decided that I wanted to understand how the stock market works and more specifically trading. So I bought a book on the subject for beginners.
To my surprise, I discovered that investing in the stock market was not that complicated and that the fears I had were unfounded. It was the fear of all those who know nothing about it.
In this article, I will try to deny 5 false beliefs on the stock market.
1. On the stock market, you can lose everything
In itself, this statement is true. When you invest in the stock market without any knowledge, and you are attracted by the lure of gain, you generally forget to practice good management of your portfolio.
By wanting to earn a lot, you place too large a percentage of your portfolio, or even all of your capital, in one and the same action. If this action collapses, you will have lost everything.
However, with a minimum of training (big news, this is the goal of this blog Winking smile) and common sense, it becomes much more unlikely to lose everything. Indeed, for example, by reducing each investment to a small percentage of your portfolio, you will necessarily reduce your gains but you will considerably limit losses.
In addition, all good brokers allow you to place a stop loss. That is to say that if the capital you have invested drops below a certain threshold that you have indicated (example: if you lose 10% of the capital invested), the position is automatically closed and you will not lose the amount total.
2. You have to be an expert to invest in the stock market
This statement is false. You don’t have to have a high education to learn to read a graph and some indicators. You will need to spend a little time training, reading books or searching the internet.
But if you are interested in the subject, it will not take you months to understand the basics and start trading.
3. To invest in the stock market, you need to have a lot of money
This statement is also false. Most brokers allow you to start with small sums like € 200. Besides, if you want to start in the markets, I recommend that you do not put more. It’s enough capital to start getting your hands on it.
The gains will obviously be proportional to your capital, but you can get an idea of how your capital is developing. Brokers also generally offer fictitious capital. This can also allow you to train without spending money before jumping into the deep end.
4. Investing in the stock market takes time
This statement is once again incorrect. We imagine all the film traders who spend their day behind charts. However, it is not necessary to spend as much time behind the screen.
Markets such as the forex (currency market) are open around the clock except for weekends. The euro/dollar is also an excellent market to start with. You can, therefore, spend an hour trading on the way home from work.
5. Trading is complicated
That’s exactly what I said to myself at the start. When you start to be interested in trading, you hear about levers, spreads, pips, long or short positions, sell or buy, indices, and so on …
In reality, the stock market is a game rope with 2 teams. Each team pulls on one side of the rope to gain ground. These two teams are those who buy against those who sell.
You may also read understanding investing and the stock market by the balance.com
The goal is to get it right. If you understood that, you understood the principle of the stock market. The rest is only technical vocabulary which is learned relatively quickly.
The purpose of this blog is to show those who are interested that the stock market and trading is not that complicated. As the articles appear, I will teach you the vocabulary of the stock market.
I will try to explain techniques to read the graphs and know whether to buy or sell. I will also try to teach you how to use indicators to know more precisely when to buy or sell. We will take it to step by step to become profitable traders.
I invite you to ask me your questions in the comments. I will answer it with great pleasure. Thank you for reading this article!