There are many myths about the stock trading. One of the biggest myths is that stock trading is just gambling. And there is nothing more than gambling in the stock market. It keeps investors at bay from approaching stock market. This notion persists with investors or the common man who have no knowledge regarding the difference between gambling and the stock market. Gambling is pure luck game. Luck can favor you sometimes but cannot favor you all the time. A stock market is about speculation. Speculation is an investment in real estate or stocks or in commodity, in the hope of gain but with a risk of loss. Your ability to purchase/sell right stocks at right time and at the right price so as to profit or loss from it. Luck has virtually no role to play. One can also minimize risk to an extent by taking into consideration certain points. One can take calculated and timely decisions so that risk of loss is less and gain from profit is more.
However, this would be not wrong to say that there are stories of rags to riches and also stories of riches to rags in the stock market. It was not because of being unlucky, but because of greed and over expectations. Similarly, it is also true that there are rags to riches story in the stock market. It was not because of being lucky, but because of patience, calculated and timely decisions.
Apart from this, there is one more myth about the stock trading and that is high price shares will fall and low price shares will always rise. This is also one of the widespread myths that share price which is high today will one day fall and share prices which are low today will one day rise. Actually, that share which is overpriced/underpriced because of rumors, misjudgment, and other things, will on correction of the market will fall/rise. But if a company is potentially strong its price will not fall and those company which is weak, its prices will never rise.
Many factors and ratios are considered while evaluating company’s share price. There were moments when Sensex was at 8000 pts and people said the bubble will burst. But you know where it is today.