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Myths & Misconceptions About The Stock Market

Since the inception of the capital markets in Amsterdam, people have had many misconceptions regarding how the financial markets work. Markets since the beginning had only one goal in mind, and that was to meet like-minded investors with companies who wanted to raise funds. But as we grew, economies around the world transformed and more and more complex financial activities started to take place. Such as the Chicago exchange opened, which was an essential place where people hedged themselves from commodity price swings. But as time passed by, hedging evolved, and then swing and intraday traders came and then better and faster methods of arbitrage trading came. Everything changed, but few things remained the same. And those were the misconceptions that people had in their minds. So, in today's article, we will focus on how the capital markets work and the most common misconceptions that people around the world have regarding the stock market.

Things we need to understand today

Misconception number 1:-

You need a huge amount of money to earn from the stock market

This statement is not at all true and let me tell you that opportunities as small as 50-100 rupees exist in the financial market! Yes, you read that right. This is because many times, new investors think that you need to have a lot of money to survive the losses and price swings in the market. Whereas the reality is, markets offer plenty of opportunities to traders and investors with a different type of risk appetite. You can invest in penny stocks that are less than 10 rupees and start your investing journey. The key is to find out those opportunities and capitalize the moves the right way.

Misconception number 2:-

Stock markets are the place where only the experts can survive

Time and time again, we have seen that some of the most successful investors and traders that have made billions from the market are not experts but people like you and me. What they did differently than most of the people was that they started early, had patience, took the correct decisions and didn't fall for any traps. Learn your way to the top when you start your journey in investing.

Misconception number 3:-

The stock market is just gambling money

This is the single most wrong statement that people have embedded in their minds. The stock market is not a place to gamble. We have seen during all these years that these stories essentially surface just because a bunch of people recklessly invested/traded and lost their hard-earned money. People need to understand that markets are a place where the very first thing you have to decide is your risk appetite. Don't fall into traps of penny stocks or the pump and dump schemes, or don't recklessly enter into a trade without knowing a head or tail about the market. The history of markets shows us how wealth creating the markets can be. And no amount of gamblers who lose money in markets on a day-to-day basis can change that.

Conclusion

Stocks markets were introduced to help like-minded people come together and help each other generate wealth. And for centuries, companies have listed themselves in the stock exchanges around the world, which have changed innumerable lives. One needs to understand that you have to invest wisely and do your due diligence before entering a position.


19-05-2022
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