We have all heard of them. We have laughed them off but secretly have wondered whether they are true or not. Like any other profession, the stock market also has developed quite a lot of myths. While some may be true most of them are not. These are just random stories made up by people who have suffered a loss in the market. Listed below are the top 5 stock market myths which are not true:
5. Stock trading is like gambling– This has to be the most common myth among the general mass. Those who haven’t had the experience of working in the stock market tend to believe that gambling and stock trading is basically the same thing. While it is true that there is a bit of luck involved in stock trading, just like in gambling, it is not totally gambling. In gambling you are never sure of what is going to happen. In stock market you have a set of rules and guidelines. If you follow them and do all your research perfectly you will not suffer any loss.
4. The stock market is for rich people– Another common misconception by most people. Just because it deals with huge sum of money everyday does not mean it is for the affluent only. Being rich helps your cause in battling the heavy losses but that does not restrict the market for the less affluent people. With the access of online stock trading, stock market has become open to people of all classes. You don’t have to be super rich to do stock trading. You can start off with an investment as low as $3.
3. Fallen stock will rise again– While some stocks do rise in price, they are not all like the phoenix. They won’t magically rise up from the ashes and becomes the top money maker again. There is a reason why that particular stock has been on the low point for several weeks now. If you invest in it thinking that it will reach the top again, then you are heavily mistaken.
2. Top stock will fall- If you really think that the top stock will fall someday and you are waiting for that time to buy it, then you shouldn’t be in the stock trading business. Like the previous point, there is a reason as to why this particular stock has reached the top. It will not fall back to the ground, unless there is a huge calamity in the company. Top stocks will keep on going up, so you better invest now.
1. Knowledge is power- This is the case with almost every aspect of life. Knowing something, no matter how little, is better than not knowing at all. In case of stock trading, having sufficient information regarding the current market and the stock you are investing into will help you greatly. You need to do your research before you jump into the investment. The more information you have, the better you will fare.