There are so many concepts about the stock market that are taught in the classrooms, promoted throughout the media, and passed along from generation to generation but, unfortunately, most of them are FLAT OUT WRONG!
I decided to write a 5-part series (this is part 2 of 5) on the common misconceptions that really need to stop being promoted. Keep in mind, these are all my humble opinions, but after 16 years of trading and studying market history, one really begins to notice what works and what doesn’t.
Common Misconception #2 – Dollar Cost Averaging
Paul Tudor Jones is one of the greatest traders in market history. Why? Because he’s consistently profitable. The best “anything” in the world are the best because they perform at a consistent, superior level for long periods of time. Michael Jordan isn’t considered the best basketball player ever because he scored 30 points ONCE in a game. It’s because he averaged 30 points per game over his ENTIRE career. (more…)
When people trade the common misconception is that they are trading the market or taking money out of the market. They are not. They are trading OTHER TRADERS and taking money from OTHER TRADERS. In order for one trader to make money another trader or group of traders needs to lose money. This is how the market works and that is why it is a zero sum game. If you are losing money in the market the market is not taking your money, other traders are taking your money.
When people trade the common misconception is that they are trading the market or taking money out of the market. They are not. They are trading OTHER TRADERS and taking money from OTHER TRADERS. In order for one trader to make money another trader or group of traders needs to lose money. This is how the market works and that is why it is a zero sum game. If you are losing money in the market the market is not taking your money, other traders are taking your money.