Common Misconceptions About The Stock Market

By Shaun Rosenberg

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

Most people believe that in order for you to be successful trading the stock market you have to have an IQ in the 160+ range. That isn't true, there is very little in this world that the average man cannot accomplish.

IQ is not the major factor for success in this world. You can be a millionaire with a below average IQ and you can be a bum on the street with an above average IQ. The difference is vision and determination.

2. You Should Watch the News and Know Everything

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 lot of rumors and facts that are simply useless and will actually get in your way. There have been some very successful traders who like to stay away from the news because it harms their trading to watch it.

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

Ok, it sounds like a good idea to buy low and sell high. However it doesn't clarify what exactly low is and what exactly high is. It also fails to mention that stocks do tend to trend. If a stock drops from $80 to $60 is it low? What if it keeps dropping until it is at $30, low enough yet? Buy low simply does not clarify what low actually is.

You can also make money by buying stocks high and selling them higher, and in many cases that is the most profitable thing to do.

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