Myths of Day Trading

There are a lot of conflicting accounts out there about penny stock trading. Some say that you can become a millionaire in mere weeks; others say the entire enterprise is a scam. How is a new trader to separate what is fact and what is fiction?

In Episode 23, hosts Tim Bohen and Stephen Johnson are setting out to address and possibly debunk some of the common myths about day trading. Will they dispel the false rumors? Or will they reveal that what people are saying is actually true?

Why do day trading myths matter?

The point of the entire podcast is to present ways to approach trading from a slow but steady and sustainable way. They want traders to succeed and think it’s important to address common misconceptions so that people can push past the BS and find real success. Or as Stephen said, he wants to “put ‘em to rights”.

The biggest day trading myths

Let’s just get this out of the way: there is a realistic methodology to trading with consistent profits. However, most people have unrealistic expectations, which can lead to mistakes and ultimately, to failure. It’s this toxic cycle of new traders wanting too much too fast and then being disappointed that helps perpetuate day trading myths. To address the most common ones, Stephen scoured YouTube and found clips of traders who offer great examples of myths about penny stocks, and then he and Tim discuss how valid they are. You may be surprised by the results!

Myths of Day Trading 1: all penny stocks are scams. In the first video, an impassioned YouTuber bemoans penny stocks as total and absolute scams. He claims that the companies are shells, and it’s just a scheme wherein an investor will hype up a stock, suggesting that people jump on it, to drive up the cost, only to make a getaway with people’s money.  

Unfortunately, he’s oversimplified things a bit. The video does bring up a very real phenomenon: the pump and dump scheme. However, he’s speaking in absolutes; this does not apply to every single penny stock out there. Additionally, he fails to mention how even if a stock isn’t actually a great company, there are still opportunities to profit via short selling. So yes, while scams do exist, it’s a bit too broad to say that penny stocks at large are a scam.

True or false? Find out Tim and Stephen’s final verdict in the episode!

Myths of Day Trading 2: there’s no risk in penny stocks. In the second video, a trader with seemingly little experience has invested $10k that he just borrowed in penny stocks. He feels certain that he’ll make a killing; everything he’s read online has basically promised him as much. “I hope you’re ready to watch me get rich,” he says confidently. But then things quickly devolve and his trade goes sour: what this man thought was the golden ticket has rapidly depleted his funds. He literally seems confounded that he is losing money: this wasn’t supposed to be risky!

Sadly, this video illustrates an all-too-common phenomenon: a new trader is so convinced that he or she is going to make money that they jump in without learning the basics of trading or doing their own research.

True or false? Find out Tim and Stephen’s final verdict in the episode!

Myths of Day Trading 3: you can make thousands of dollars in minutes. In this video, a thinner, younger, more vibrant Stephen Johnson talks about how he’s pretty sure that he’s going to make thousands of dollars in minutes by trading penny stocks. After all, he saw a few of those Timothy Sykes videos; he’s pretty sure he’s going to be a thousandaire in the next half hour or so.

Of course, the Stephen of today is able to admit that perhaps his bravado was unfounded. After all, he hadn’t really taken the time to study, learn market mechanics, or had much practice trading penny stocks. But now, coming from a place of experience, he is able to explain how realistic his expectations actually were.

True or false? Find out Tim and Stephen’s final verdict in the episode! This response might surprise you!

Myths of Day Trading 4: You can learn to trade in a week! In this video clip, a confident fellow reveals that he downloaded a trading app a week ago, and now he’s an expert. And guess what? You can be too! As it turns out, everyone else is just trying to take your money with their “teachings” and tiresome “slow but steady” approach.

So, does mean that Tim and Stephen, who have been at it for way longer than a week, are hacks? Why didn’t they become pro traders in a week? This leads to much discussion on what it really takes to become a pro trader.

True or false? Find out Tim and Stephen’s final verdict in the episode!

Thanks for tuning in to the new, serial format for the Steady Trade Podcast! Stay tuned for weekly episodes covering every aspect of how to be a steady trader with long-term, reliable success!

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