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The Internet has taken stock trading out of the realm of the wealthy investor and put it in the reach of just about anyone with an Internet connection. The financial industry would have you believe that stock trading is risky. Although it definitely requires time and effort to become a successful stock trader, it’s a skill that anybody can learn.

Let’s start with the definition of what I mean by stock trading. I am talking about swing trading. Swing trading is similar to daytrading, but uses less leverage and holds positions longer. Typically, a swing trader will hold a position for days or a few weeks. Although daytrading requires more skill than swing trading, it is fundamentally quite similar.

Here are some common myths about stock trading:

Stock Trading Requires an MBA or other College Education
Listening to all the financial mumbo-jumbo on TV makes people think that they have to have an advanced degree in finances to know what’s going on. Nothing could be further from the truth. Typically, the more financial schooling the person has, the less effective they are as a trader. Why? Because traditional financial education does not teach people how to make money through trading. It teaches them to become a good employee.

So, what education is required? I think a fundamental education is useful. That means knowing what the major terms are, such as P/E ratio. And one learns what the technical indicators are, such as a moving average. This education can be learned from books, CDs, seminars and online courses. It does not require any formal college classes.

Stock Trading Requires you to Sit in Front of your Computer all Day Long
Although many traders do sit in front of their computer throughout the trading day, this is really not necessary. It uses up way too much of our time, and does not produce positive results. So, why do people do it? Perhaps they feel like they should be “working”. The interesting thing is that stock trading does not require a lot of work. It takes time, effort and diligence to become proficient, but the actual trading does not take a lot of time.

One of the problems with sitting in front of the computer all day is that it causes people to over-trade. This means that the more time a person spends at the computer, the more trading they tend to do. This trading happens because we get more bored and feel like we should do something. If we want to be successful traders, it’s important to make our decisions based on what’s going to make us the most money. And that means we must refrain from using stock trading to entertain us or make us feel like we are working hard.

Most successful traders control their trade executions without sitting in front of the computer. This is achieved through a special kind of order known as stoploss and limit orders. These orders are triggered when a stock hits a certain predetermined price. In this way, the computer executes the traders wishes, even if the trader is not present.

Stock Trading Requires Analytical Intelligence
Some people think that you have to be a mathematical expert to be a successful trader. Nothing could be further from the truth. It only requires elementary school math to understand the mathematical aspects of stock trading. The challenge is that many people who hate numbers are put off by stock charts and prices. Finding a good introductory resource to learn the basics will quickly overcome this challenge.

No discussion of stock trading would be complete without mentioning some of the common mistakes that traders make. Here’s a list of The Top 7 Mistakes New Traders Make.

This is the fourth post in a series entitled Secrets the Financial Industry doesn’t Want you to Know.

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Related posts:

1. The Trader’s Ego
2. What is the Difference Between an Investor and a Trader?
3. What are the Differences between Human Trading and Automated Trading?
4. A Volatile Economy is Great for Traders
5. Which is Safer? Automated Trading or Human Trading?

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