It is no secret that investing in the stock market is often the most appealing method of earning money. After all, much of the public still holds onto popular misconceptions regarding stocks — the biggest being that such investments will garner short-term results, making them millionaires overnight.
No matter how many experts come forth and deny such falsehoods, first-time and experienced investors alike tend to disregard this sage advice, as they are convinced they can beat the market with one of their many brilliant plans. Therefore, it may be beneficial to stop warning against mismanaging money or setting high expectations and allow individuals to learn from their own financial blunders.
With that in mind, let us explore the best methods of losing all of your money in the stock market.
There are all kinds of advertisements pushing the earning potential of penny stocks, with some claiming investors can make up to a 500 percent return. Although it is possible to get lucky with such stocks, such an event is extremely rare. After all, with a trading price of $0.0001 per share, it should come as no surprise that companies recommend them in order to pump and dump their own stocks.
Day trading holds a certain allure — one that convinces participants that they could, in fact, make a living off of buying and selling stocks alone. However, statistics have proven that these individuals can easily destroy their portfolios in a day, as approximately 90 percent of day traders lose profits while others break even.
This is because day trading is wrought with volatility. Although the fluctuations of the stock market could very well earn you a negligible profit, that money and more could all be gone in the blink of an eye.
Options are defined as financial derivatives that give their holders the right to buy or sell a specific asset by a specific time at a given price. Meanwhile, speculation requires a trader to take a position in the market, anticipating whether the price of an asset will increase or decrease.
Traders often opt to speculate options with the goal of making a large amount of money in a short period of time. However, seeing as investing is a zero-sum scenario, many who attempt to implement this strategy lose everything and gain nothing.
Evidently, investing in the stock market is not a game. Instead, it requires patience, skill, and often consultation from professionals who truly do make a living from managing assets. Hopefully, the public will grasp this concept sooner rather than later.