By Sarah Potter
Day trading ETF’s, Stocks and Futures have become more accessible and mainstream as investment options. Many banks and investment firms have created choices for individual investors to take hold of their finances and invest on their own. Even though these opportunities are gaining in popularity, there are still some myths about trading that need to be exposed.
Myth #1: All trading happens on a trading floor with people screaming at each other
While it is true that there are some trading floors still in existence, a computer and an internet connection is how most trades are executed today. The ability to trade remotely from anywhere using the internet has made trading more accessible. In fact, trading can occur almost 24 hours a day depending on the market. You can pretend you are on a trading floor and scream at the computer screen, but it won’t help to enter or exit a trade.
Myth #2: All traders are men in suits
The trading world is certainly dominated by men, but this doesn’t mean that women are less adept at trading successfully. Trading is like any other skill that has to be learned and mastered to trade successfully. With a good trading plan, anyone can learn to trade. Surprisingly enough, it doesn’t matter what clothes you wear. Suits look nice, but they don’t help you become a better trader. Since trading can occur from the comfort of your home, the dress code is at your discretion.
Myth #3: You have to have a PhD in economics or other accreditations to trade
Like other investment strategies, trading is a skill that can be learned and can be profitable. You don’t need a special degree to trade. Just like any other investment, there are risks involved. But just like other investment options, there are high risk and lower risk trades that can be made. The key is to have a clear trading plan, and to trade within your risk parameters. There are an abundance of ways to access information about trading various markets. Some strategies are complicated, and some are straight forward. Just remember that trading and gambling are not the same thing.
Myth #4: You need to watch the news all day to understand what is going on in the markets
This might be shocking to some of you, but I trade all day and choose not to watch some of the large news broadcasters. With the abundance of information that is available online, when the news hits, it often means the move in the market has already happened. News broadcasts and financial reporters can provide some information to help support your trading plan but it should not be your only source. While it is important to balance a broad view of the markets, analysing charts from multiple time frames or listening to independent market analysis can be very valuable.
Myth #5: You have to sit in front of a computer screen and be focused on the markets all day to trade
There are many styles of trading. Some trading plans buy or sell positions and hold over days or weeks, while other trading plans focus on entering and exiting a trade within a few minutes. Different markets and strategies have different personalities. It’s important to find a trading style and personality that suits you. Spend some time researching various markets that fit your trading style and match the time you can invest to trade.