The Right Approach to Trading That Everyone Seems to Be Ignoring

When it comes to trading, the idea of turning a measly $10 into $1,000 is extremely enticing. But realistically, how many people will ever see that kind of growth in their stocks? Trading isn’t a get-rich-quick scheme and never has been. To see it that way is akin to treating the stock market as a glorified casino. To some people that’s fine. A lot of people do see trading as a gamble, but the reality is that there are a lot of things that affect trading prices. If you invest in a company, you’re essentially putting your money into their hands because you believe in them.

And that’s kind of the essence of trading. Unless you’re a day trader that tries to make money off small gains every day, then investing means you’re putting your trust into a company. Unfortunately, that’s a piece of trading advice that a lot of people seem to ignore because they’re blinded by the prospect of making a quick dollar.

Source: (CC0)

So what is the best approach to trading?

It’s really simple; to invest in a company you believe in.

Far too many people avoid this simple piece of advice. If you invest in a company expecting short-term gains, then you either have insider information or you’re following a trend much like the GME stock. Unfortunately, this can cause a lot of people to panic, especially when they see a massive drop in the share price. This leads people to sell early, potentially giving away their profits.

The difference with investing in a company such as NET or another up-and-coming company is that you can hold the stock and not feel bad about seeing the price fluctuate. As long as you believe in the brand and support it, there’s a good chance that it will eventually increase. This was the situation for Tesla, Inc (TSLA) which started off at just 32.52 USD in 2016 and is currently sitting at 872.79 USD. People believed in the future of self-driving vehicles and other technologies that Tesla could bring, and so they profited.

There’s a real fear of missing out in the trading world

If you’ve shown even a bit of interest in trading in the past, then you’ve probably come across the GameStop stock situation. In short, a subreddit known as WallStreetBets took advantage of a hedge fund that was trying to short a stock. They drove up the price of a certain stock and forced hedge funds to buy the stock back at a ridiculously high price, essentially bankrupting them for trying to manipulate the stock.

While many people made money from this short trading period, the price of GME has plummeted down to just 90.00 USD down from a peak of around 469.42 USD. This likely means that a lot of people have lost money, all because they were trying to cash in on the latest trading trend that has made a lot of people a large sum of money. Sadly, this fear of missing out and buying in late will end up costing a lot of people money, and this isn’t the last time we’ll see a situation like this.