3 Popular Trading Myths You Need to Stop Believing Now Published on Mar 8, 2020
If you are a newbie trader and you want to learn the truth about trading, one of the first things you need to have is an accurate understanding of what trading involves rather than blindly accepting common myths. By knowing some of the most prevalent myths, you can avoid unnecessary frustrations. While there are many trading myths out there, we’ll look at 3 popular myths that can affect every stage of development- from why people get involved in trading to developing a trading system.
1. Trading is Easy
Among the most common trading myths that many novice traders believe is that trading in the financial market is easy. Just follow a trading plan, wait for some time and then make a profit. The fact is: trading may be simple but not easy. Trading successfully in the financial markets can be a challenging endeavor to undertake professionally.
Opening and downloading the trading software to start trading is quite simple, however, succeeding and making money consistently in the market is another matter entirely.
What beginner traders usually do is jump into the financial markets without knowing much about it and end up with a disappointment. Therefore, it is important to dedicate a good amount of time and effort into practicing and developing a trading plan to implement once they have tested it in a demo account.
INGOT Brokers offers the perfect learning environment for beginner traders. If you are eager to start trading in a risk-free environment, then it only takes a few minutes to open a demo trading account.
2. The Holy Grail Strategy
Traders have always dreamed of secret formulas or Holy Grails that can consistently generate huge profits in the market. Pursuing Holy Grails, whether it’s a system, strategy, setup and/or indicator, can only end in failure.
Novice traders make the mistake of searching for the perfect trading strategy with the perfect entry and exit points that work all the time. They tend to believe there is a great system that will bring them continuous success. Unfortunately, there is no such thing as a Holy Grail trading system.
The fact is: the markets change constantly. No trading signal is profitable in every market environment, as circumstances change over time. Most professional traders gain success by managing the risk. Maintaining the risk under a certain level at all times is what separates successful traders from others.
3. More Trading Means More Profit
Every financial asset is an art to be mastered. Although it’s true that you should diversify your investment portfolio and not put all your eggs in one basket, getting into many investments at once hardly increases potential returns, but increases your risk exposure.
All investments carry some degree of risk. Therefore, one of the challenges for traders is to manage risk in their portfolios. It is important that you follow a goal-based investment approach and diversify your portfolio with the right mix of asset classes.
But when you attempt to overtrade, you will settle for less accurate setups and make irrational trading decisions. Instead, focus on the quality of your analysis rather than the number of trades.
Final words
It is crucial for traders to do their research and understand what trading involves; some of this will come from experience, which is why risk management is so important, and some of it will come from education and diligent practice.
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