In the last few years, I have had many conversations with many different people. In the process, I have encountered the same misconceptions about stock trading again and again. But these were not new to me. I have also had these misconceptions for years and have avoided shares. This is also the reason why I want to highlight the four most common misconceptions about stock trading in this article. In doing so, I will give you the chance to avoid making the same mistakes as I did and save a lot of money and time.
Misconception #1
You have to trade all day to be successful.
As a full-time trader, you have to trade all day. That's exactly what I used to think in the beginning. The fact is: this is not the case. I am a full-time trader because it is my job, but I usually only trade for two hours or less per day.
Since the U.S. market is a huge market, I have to trade all day.
Because the U.S. market is open from 3:30 p.m. to 10:00 p.m. In German time, almost any professional will find a time slot in which to trade. Whether you believe me or not, initially I had to force myself not to trade. Earn more than others in significantly less time? It took me a long time to internalise that.
Misconception #2
The trader has to adapt vs. a system, which gives you the perfect template.
Most strategies sold in the market require the user to adapt to the parameters of the strategies. Why? Because this strategy has been tested exclusively with these parameters and only works with them (if at all). I used to buy many of these strategies that did not fit my personal daily life. Therefore, failure was inevitable. Trading an open-range breakout strategy in the DAX when you actually have to work at the time, how is that supposed to work?
A system should be designed in such a way that it can be adapted to the individual needs and everyday life of each person. This is the only way to achieve sustainable long-term success. It is also possible to adapt the system independently to changing market conditions. That is why I have developed the Multi-Timeframe System for three different trader types. Everyone can decide for themselves whether they want to trade more intensively after work for 1–2 hours, as a day trader or manage longer-term positions as a position trader in 10–20 minutes per day. Learn more about the Multi-Timeframe System in the online seminar.
Misconception #3
Successful traders have no other job!
This notion also clings stubbornly to the minds of many. However, we can also overturn this false belief regarding our 500+ WMT students. More than 90% of our students started as part-time students. The first milestone was always the same: building up a side income with trading. Some reduce their hours with their employer to have more time with their family or to do more of what they really enjoy.
The fact is, everyone can determine for themselves what they want to achieve with trading. From a side income to a main income. From a side job to a main job. Everything is possible, and the classic 9-to-5 job can come to an end.
Misconception #4
You need external funds.
In the past, when I was still in the situation, this misconception was not as prevalent as it is nowadays. "You absolutely need outside capital to trade stocks" was a common statement. I, too, was stuck on this one. The easiest way to trade with outside capital was prop firms. If you prove yourself to be a constant trader, you get outside capital.
I a) believed that I would need this capital in any case and thus reach my goal faster, and b) I expected a lot from the training. Both turned out to be misconceptions.
I had to teach myself the system, and could have built up the capital just as quickly myself. There, too, you only risk what you spend beforehand as so-called “training costs”. This is a new, nice model to attract fresh traders, but the focus is unfortunately not always on the education.
You can recognise good prop firms by the fact that they don't charge you a cent for capital or training. But for that, you have to apply normally.