5 Most Common Misconceptions About Stocks

1. 5 Most Common Misconceptions About Stocks When you are considering investing in the stock market, it is normal that you think twice before you actually do it. The truth is that investing can bring risks but the rewards are interesting and can be a great aid when you retire. One of the things that you should keep in mind before you invest is that there are many misconceptions about stocks and the stock market itself. Here are the 5 most common ones: #1: You Never Lose Money: When you are investing in the stock market, you need to understand that you re playing a probability game. The truth is that no one can predict the future. So, you have no way to say with 100% certainty that a specific stock will go up or down in a specific period of time no matter how much stock market research you do. Nevertheless, there are stocks that present as better investments than others at specific times.

2. The main idea to retain is that you will always have losing investments. Your goal is to ensure that your losses are always inferior to your wins. #2: Market Forecasts Are 100% Reliable: As we just mentioned above, no one can predict the future. Even if you are on top of the latest financial news and do your own stock market analysis, you can never be 100% sure. You are playing a probability game. So, take the time to learn how the stock market works, the stocks you should invest in and make a good stock market news & analysis to the stocks you are considering adding to your own portfolio. #3: If Your Stock Is Falling, You Just Need To Wait Until It Rebounds To Make Money: Before you make an investment, you need to have your own plan defined. You should have done a good stock market analysis and determine the best entry point. However, you should also have defined your target profit as well as a

3. stop loss. This way, you are making sure that you won't be running into severe losses in case your investment goes wrong. When you have this kind of plan and you actually implement it, you may have losses but they will be under control. Sometimes, a stock starts heading down without any apparent reason and it will continue to hit new lows. Instead of simply let it fall, you should consider either selling it at your stop loss or, if you still believe in it, you can take the opportunity to buy more shares and lower your entry price. #4: It's Easy To Set Winners And Losers Apart: When you are just beginning, a common misconception is that it's not hard to distinguish between winners and losers. However, this is not true. A losing and a winning company may be incredibly similar. They may be in the same industry and they may even be launching appealing press releases. They can even have a similar valuation. However, you are ignoring the market sentiment as well as their price momentum. And these are two crucial aspects to consider when you are investing in the stock market. #5: Trading Is Like Gambling: The only thing that trading and gambling share is that they are based on odds. Nevertheless, when you are trading or investing, you need to understand that you need to educate yourself. The more you learn, the more you understand how the stock market works and how you can capitalize it to your favor, the more chances you have to be a good investor. While no one can predict what will happen tomorrow in the stock market, you know that it is based on the market conditions, never on luck.