There’s plenty of about day trading on various media channels, but the many different voices and opinions can make it hard to separate day trading myths from reality so it’s time I cut through the BS out there because I want more millionairestudents and in order to achieve that, you need to have accurate information!
One podcast might talk about how trading is a great way to make millions, whereas another YouTuber will bemoan the entire enterprise as fraudulent. So for you, as a budding trader, how is it possible to figure out what is true and what is false? Here, I’ll address some of the top day trading myths and offer honest thoughts about their validity.
1. Day trading is a scam. One of the biggest day trading myths is that the entire enterprise is one big, elaborate scam, dreamed up by stock promoters to drive up the prices of stocks so that the chosen few can get rich off of unsuspecting new traders’ naivety.
Truthfully, there are indeed schemes wherein self serving stock promoters will drive up the stock price only to sell and leave many buyers in the lurch. This is called a pump and dump scheme. However, while many naysayers choose to latch onto this myth as being true, the trouble is that it oversimplifies things way too much. The pump and dump scheme is one small phenomenon that takes place within day trading: it doesn’t describe the entire enterprise at large. To say that this makes day trading a scam is way too black and white.
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The main problem is that 90% of traders lose money so they lash out and claim it’s day trading’s fault, when in fact it’s just due to their lack of planning and preparation…don’t make that mistake, learn to plan using this free guide
2. Day trading will make you rich. This is a little bit of a trick statement. It is true that day trading can make you rich just like my top Millionaire millionaire habits? Are you humble enough to face your shortcomings?students and I. But whether or not it will make you rich is really up to you. Are you ready to devote yourself to learning everything that you possibly can about trading? Are you prepared to cultivate
Becoming successful as a day trader requires time, energy, and plenty of commitment. With these things, you can become quite wealthy and successful as a day trader. However, by simply moving around money in a brokerage account, it doesn’t instantly mean that you will become rich.
3. You don’t need any training. It’s one of the most common day trading myths that anyone can become a day trader, no training necessary. While technically you don’t need a certificate to get started as a day trader, to assume you don’t need an education is not only foolish, it can be dangerous, financially speaking.
To become good and effective at anything, you need practice. The best way to gain expertise is by seeking out proper training. The Tim Sykes Millionaire Challenge was designed to offer the exact training that new traders need to find success. Anyone can find out the basics of day trading online, but this program takes it further, offering a real life education on how to actually find success as a trader, including identifying patterns, finding a system that works for you, and learning how to create effective trading plans.
Ultimately, to assume that you don’t need training to become a trader is a myth, because while you can enter the world of trading, it’s unlikely that you’ll be a good or effective trader.
4. You’ll be profitable right away. Once you open your account and pick a few stocks, you’re on the freeway toward financial success. Right? Not necessarily.
Sure, there are some outliers in the trading world who find incredible success in a record amount of time. Unfortunately, this is far from the wide-reaching truth. Most traders, myself included, will experience plenty of ups and downs early in their career. They’ll win some, they’ll lose some. However, with time and by learning from their mistakes, ultimately they begin to make reliable and steady profits.
Honestly, this is a better way to build a career. A trader who earns too much too fast is in danger of becoming cocky and not managing risk in the most appropriate way. It’s far better to approach things slow but steady and let the profits come as your trading prowess improves. This is one of the top lessons that I try to impart to members of the Tim Sykes Millionaire Challenge team.
5. You can make thousands of dollars in a single trade. OK, so this is true. You can make thousands of dollars in a single trade. But once again, to make a broad statement like this implies that it’s something that happens all the time…and when you’re starting with a small account it’s impossible to make that much right away…you MUST START SMALL and only over time can you make that much.
Instead of assuming you’ll make that much on every trade, you need to focus on crafting a great trading strategy that will be reliable. Don’t be too risky in your trades, because the opposite is also true: you can lose thousands of dollars in a single trade, as well. So it’s important to have a trading plan and study very hard to do all of your leg work to make sure you’re making as wise an investment as you possibly can.
Ultimately, you can make a lot of money in a single trade. But to assume that you will make money in a single trade is ridiculous. Be respectful of the risk, and always do your homework.
6. Once you learn the basics, you’ll always make money. Studying is one of the key habits that I try to make part of my students’ routine. Studying will always serve you well as a trader as it will expand your knowledge base and help you make better investments…but you’ll always have to adapt to the market and try to utilize strategies and patterns that are working in the moment as the market is always changing so you must always be studying/adapting.
This isn’t a matter of studying the basics once and then calling it good for the rest of your trading career. Trust me, the market WILL change, and you NEED to be able to change with it. Knowledge is the key to being nimble as a trader, start with this free guide to stock trading. If you don’t keep up with your trading education, you’ll eventually become obsolete. You’ll stop making money. So this is truly a myth: to keep your success going, you need to always keep learning…you can never get lazy and if you do, you simply won’t be profitable anymore….try it if you don’t believe me.
These are just a few of the many myths surrounding day trading, I could literally write an entire book about it…hmmmm, maybe I should…but separating day trading myths from reality is key to your success in this . However, by reviewing some of the myths and my supporting “evidence” from this post, hopefully you’ll have a more expanded view about what is true and what is false. By looking at trading from a common sense point of view, you’ll learn that most of the broad statements about trading will often be more complex than a single sound byte!
Which trading myth surprised you the most? Leave a comment below and let me know if you promise to treat this as a marathon not a print and focus on learning the game/making good trades before worrying about how much money you can potentially make later on.