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7 Dangerous Stock Market Assumptions

The stock market is one that has always been tempting to get involved in over the years. You turn on your television and see those experts trying to make some analysis, telling you where the millions are going to come from. At that point, you don’t want to know whether you lack the slightest knowledge or not on how the market works or operates as you just want to dive in to get your own share of the pie.

The earlier you understand the fact that the stock market has led to the death of many people all over the world, the better for you. It may even surprise you to know that some of these people are experts who claimed to know all about the market. Most of them made some dangerous assumptions which led to their downfalls and death eventually.

Are you planning on trading in the stock market? Do you know that there are some deadly assumptions which you need to avoid as a trader? Ignoring these will be at your peril as they can lead to something you never expected. There is no need to panic as this post is putting you through all of these assumptions. Just take note and ensure to avoid them wherever possible.

1 The Market Is a Win-Win

This assumption usually leads to poor planning on the part of most traders. The fact that you are hearing people making it big time from trading stock doesn’t mean it is always Eldorado because there are also people making losses daily. Forget about what the experts are saying as they are just trying to squeeze even the last penny out of you by trying to ensure you don’t see the other side of this market. The bottom line here is never to assume that you will always make a profit no matter what. Rather, ensure that you are always analyzing how a trade will turn out eventually before investing into it.

2 Things Can Change

Just as it is easy to count your profits in the stock market, it is also easy to count your losses. The problem is that most traders don‘t know when to leave their stocks and the right time to sell them off. It is true that there are lots of experts whose stocks weren’t performing well and eventually had things going their way. Never assume that things will improve for the better once you start experiencing loss. The best thing to do here is to sell off what you have and wait until when the signs are good to buy another set. It is always 50/50 at such a point, but the experts won’t tell you this.

3 Overconfidence  

It doesn’t matter what the experts have made you believe about trading; it is important you understand the fact that it is all about how lucky you are on a given day. You could put your hard-earned money today expecting some huge returns due to how the market has been analyzed to turn out. However, don’t forget that there is always the possibility of something going wrong which will defy all of your calculations. Never be too confident about the market going towards a particular direction that may favor you. Some newbies are guilty of this as they see the platform as one where they can make millions virtually overnight.

4 Understanding Every Stock

There is something that most desperate so-called stock experts are teaching others at the moment which is leading to traders counting their losses more than ever before. It has to do with making them develop the mentality that they understand all the stocks traded in the market. It is important that you understand that most of these self-acclaimed experts don’t trade stocks as they make their money by talking about stocks trying to convince people such as you that they are the real deal. There are stocks that you can’t plainly understand, and once you come across them, it is better you walk away with your money before the unimaginable happens.

5 Making Decisions Based on Emotions

If you are the trader that allows his emotions to get the better of him while trading, then you may have a problem getting the best out of your stock trading endeavors. Lots of people are guilty of this, and the end is always disastrous. Sometimes, your trading in a particular stock isn’t because you have properly analyzed the market and discovered that something good could come out of it. Rather, it could be that you have been hearing about such stock before and just want to be part of its buying and selling process.

You have just been emotional by doing this as there is no genuine basis for your investment. At such point, you will discover that you are always trying to convince yourself that such stock can bring in something tangible when it tends to be going towards the other direction.

6 Everything Will Fall into Place

Some traders in the stock market don’t care about making all the computations and analysis of stock before jumping onboard. This is suicidal as it can bring about your downfall faster than you can ever imagine. Don’t ever assume that things will sort themselves out in the stock market. Rather, ensure that you have figured out all the probabilities and known your chances. A good trader will always know risks when he sees them. Also, he will understand how to deal with them to ensure that losses aren’t incurred unnecessarily.

7 Assuming You Are 100% Ready

As explained by trading experts, it is the outcomes which you get from a trade that will determine whether you were prepared for it or not. Never make such an assumption unless you want to count your losses. It is important you get yourself fully prepared for what is ahead as sometimes you may be taken unawares by sudden changes. Read books if you have to to get in-depth knowledge about a particular stock.

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