Prejudices about trading you need to get rid of before you start

By Margarita Herrera

Oct 4, 2022

Level: Beginner

Reading time: 3 min

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3:09

Any person can pick up prejudice from various sources during their life, whether they want it or not. Even ancient Greeks and Romans harbored cultural prejudices. Authors like Aristotle, Diodorus, Ovid, and Martial demonstrated that their societies held stereotyped beliefs.

But the brain is not “wired” for certain traits. It’s possible to unlearn and relearn. This article will help you unlearn what you think you know about trading and learn what is actually true.

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1. You need a business degree

Some people think that you need a degree in math, accounting, finance, banking, economics, or business. Most likely, they’ve looked at open positions at major investment firms, which require certain qualifications and training from candidates.

What’s the truth?

You don’t need to attend school to understand how financial markets work. All you need to become a retail trader is the ability to learn new things.

Before you put money in the market, study the concept of supply and demand, the purpose and meaning of financial statements, and other factors affecting the prices of your chosen assets.

2. You need a lot of money to start

The 80/20 rule of risk balance for first year traders

Perhaps you also believe that the market is built for the prosperous. It used to be true. Before the Internet, only a select few could access the financial market. You would have to call a stockbroker from one of the big financial companies and ask them to place your order over the phone. The cost was, at one point, $75 per transaction.

What’s the truth?

The Internet has removed the high cost involved in buying and selling stocks and other financial assets. Most platforms don’t even require a minimum balance. You can start trading online with as little as $50 and grow your portfolio over time.

7 golden rules of trading

Everyone has their own trading style, but some principles are critical for success. Make sure you’re following these basic rules of trading.

3. You need to be a math genius

In some people’s minds, traders must know stochastic calculus, linear algebra, and statistics. People with no trading experience look at numbers and charts and assume that you need to be a genius at math or know all the formulas.

What’s the truth?

Math is a useful tool you can use to improve your trading. You need basic math to understand and follow trading rules or triggers derived from technical analysis. But there is nothing too complex. Trading platforms handle all the calculations; you just need to know what they mean.

4. Trading is a man’s job

Again, this statement may have been true in the past. When English financier Thomas Gresham founded the London Stock Exchange, women weren’t allowed onto its famous trading floor. It took the exchange over 200 years to change this rule.

And even after that, there weren’t many female traders a century ago or even 20-30 years ago.

What’s the truth?

Trading is still commonly viewed as a profession undertaken by men. But there is nothing stopping women from entering this profession, too. Women can make great traders and break stereotypes. Just look at Ingeborg Mootz or Kathy Lien.

It’s easy to fall for limiting beliefs just because enough people are saying so. But most of them don’t even come from personal experiences—it’s something you heard or read. When you actually take your time to research certain trading “facts,” you quickly realize that there is little truth behind them.

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