The stock market is a fantastic place to grow your wealth over the long term
. But there are a lot of misconceptions out there about how to profit from it and what the best way to approach it is. Here are just a few of those misconceptions out there for you to avoid.
1.Traders Need to be a Genus
It is very common misconception that if you want to be a successful stock trader you have to be a genus of some sort. Actually you do not need to have a "super intelligent mind" in order to be successful in the market.
Anybody with a reasonable IQ can make money in the stock market. You do not have to be a genus, but rather you have to be determined to never give up until you accomplish your goals.
2.You Should Watch the News and Know Everything About a Company
One other misconception is that if you would like to be successful you will have to watch the news and learn as much as humanly possible about the specific company before getting into it. This is just not true. For starters it is not possible to know everything.
Second there are a ton of misguided rumors about the company that are not true, but still may make it around as facts. So one one end of the spectrum you have people running around in circles trying to make sense of all these rumors that they have heard and on the other you have people who make money in the market while ignoring 99% of all news and rumors that come out.
Traders that are successful tend to have their own systems and ways of determining if a stock is actually a good buy or if it is not.
3.Buy Low Sell High
Buy low sell high is an interesting concept. But it does not classify what is low and what is high. It also fails to mention that stocks tend to trend. So, if a $50 stock drops to $40 it may be low, but it will probably continue to drop until some major event turns it around. It may not turn around until it is at $15. Everyone who bought at $40 would have to wait years before they can even break even, and that is if they do break even.
On the other hand you can make money buy buying stocks high; you just need to sell them higher.