Myths and facts about stock trading that every new trader and investor should know

Everyone is slightly sceptical about investing in the stock market for the first time. It is, however, no more a secret that investments in the stock market can help people increase their wealth exponentially if done right. From the population of 1.3 billion, the number of people who invest in the stock market is approximately 18 million only. There are also several facts about the stock market that most people are not aware of. Consequently, many potential investors have been blinded by the myths and miss out on an excellent opportunity to improve their finances. 

Common Myths That Need To Be Busted 

Trading Is All About Making Fast Money: This is undeniably one of the most common myths that most potential investors fall prey to. Most people think that stock marketing is synonymous with gambling. Since most people believe that investors have little knowledge about the subject matter, they consider that stock trading is entirely about making fast money. However, any person who closely observes how the stock markets works will figure out that making money here takes effort, knowledge, and a lot of time. 

Investors Need A Huge Amount Of Capital To Make Money From The Market: Another widespread myth that discourages many new traders from indulging in the stock market business is that people can only make a lot of money if they invest a lot of money. It might come as a surprise, but you can start investing in the stock market with as little as rupees 1500. 

Stock Market Is All About Incurring Losses: Before you consider investing in the stock market, you must know that stock markets are pretty risky and unpredictable. However, if investors execute a well-planned investment and apply the correct strategies, then the chances of incurring losses are cut down to zero. Be a little patient, educate yourself about the current market scenario, and be assured to bring some money home. 

Stock Market Facts That You Need To Know About 

Psychology Plays A Massive Role In Determining Behavior In The Stock Market: Psychology is an immense part of the stock market investment. If investors have a sound understanding of how market psychology works and how it affects behaviour, then they can use it to their advantage. 

An investor’s psychology can determine whether they will be successful or fail in their money venture. 

Technical Analysis Is Important In Stock Market: Like in every other field, investors also have to keep up with the changing trends of the market. Proper technical analysis will help investors capture the momentum of the market. Consequently, they will be able to chalk out more effective strategies to cope with the evolving dynamics of the market. 

There Is No Such Thing As An Expensive Or A Cheap Stock: A ₹1600 stock is not expensive, and a ₹30 stock is not cheap. A single share's price cannot be the correct indicator of whether a stock is good or not. It will not be wise to buy stocks just by looking at their prices. Do not commit the mistake of hoarding stocks worth ₹1600, only thinking that it will benefit you. This is not your local grocery shop where a more expensive product is an indication of better quality. 

To summarize it all, many potential investors are still reluctant to invest in the stock market due to a lack of awareness and proper knowledge. So, debunking the myths and learning more about the facts of the market is essential to be successful in this risky endeavour. 

Author: Anish Singh Thakur, CEO, Booming Bulls Academy 

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)