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Myths about stock trading.

 

Many people are unnecessarily discouraged from investing in the stock market due to the perceived complexity and misinformation. A common myth about investing is that it is expensive, and gains are often lost to brokerage commissions. This article will help to dispel those myths. With just a little research, the average person can collect enough information to get started, and get beyond the initial fear of the markets. This is a valuable step toward long-term security and diversity of your assets.

Rather than the challenging process of evaluating financial performance, and pouring over mathematical formulas with chart analysis of individual companies, investors should consider trading ETF funds. Many ETF funds are also commission-free, enabling the investor to keep more of their profits for continued capital growth. These funds allow you to hold diversified positions in multiple companies, often based on an industry sector or a stock index. This is far simpler and provides the safety that comes from diversity.

For a detailed explanation of ETFs, read the SEC definitions of ETF intruments. Investing in ETF funds are a great way to start gaining some experience in the stocks markets. Spreading your capital over several companies via an ETF reduces the investor’s exposure to the performance of any one company, since the investment is diversified over several entities. Also, the trader can between business sectors, emphasizing those that are poise to rise with an economic recovery, or perhaps those with a strong asset base. For example an investor concerned with the potential of inflation, could select ETF funds which are invested in precious metals, or mining.

In summary, new stock traders should consider ETFs, both as a long-term holding, as well as an entry to active stock trading, to take control of their finances.

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