On your daily basis, you may read or hear any trading proverb. Those proverbs may be stuck with you, thus you think that is reasonable and you believe in it forever. Regardless of where you get it, we have a lot of trading myths in this world.
Below we discuss three trading myths that can lead you into the wrong paths.
1. The Holy Grail Strategy
Holy grail trading strategy is a strategy that, people believe, will never experience loses. Many people do not admit that they always try to find that strategy, yet the truth is they do.
Winning traders profit around 30% to 70% from their trades. Their average winning is a little below 50%. What makes winner traders different from other traders is they make more winning trades than losing trades.
Thus, you will never meet a trader who can win all of his or her trades. You will never find a holy grail strategy. You do not need to win all of your trades and always pick the exact turning point. Remember, you just need to always be right 55% and have slightly more winning trades than losing trades.
2. The Mont Important Part of a Trade is the Entry
Many traders usually discuss the importance of the way to get into a trade. Consequently, they spend most of their time researching the time to find the perfect entry.
The entry to trade is indeed important, yet your exit point is also equally important. Other than those, the position size and money management also play a big role in your trading.
Without those two, your best entry and exit will mean nothing. The point is, every part of a trade is important, you should not get too hung up on one specifying trading aspect.
3. Complex Strategies are better than the Simple Ones
You have to know that there is a difference between a simple researched strategy and a simple unresearched strategy. This myth has trapped many traders.
A simple strategy usually is good at a specific market condition or at a certain time of the day. Through research and practice, you may find that a simple strategy can also work best for your trading.
A complex strategy can prevent you to enter or exit a trade, even if it sounds great. The financial market, especially when you day trade, move at a quick pace. Thus, you also need strategies that let you decide quickly.
