DISCLAIMER — Not financial advice. Educational content only, not an offer or solicitation to buy or sell any security. Biotech and small/mid-cap stocks are highly speculative and volatile and can result in a partial or total loss of capital. Do your own research and consult a licensed advisor where appropriate. / Contenuti a solo scopo informativo e didattico, non costituiscono consulenza finanziaria né offerta o sollecitazione al pubblico risparmio ai sensi delle normative CONSOB e SEC. Le azioni biotech e le small/mid cap sono strumenti altamente speculativi e volatili e possono comportare la perdita parziale o totale del capitale investito. Si raccomanda di effettuare sempre le proprie ricerche e, se necessario, di rivolgersi a un consulente abilitato.
Merlintrader Trading Pub
Biotech catalyst news and analysis. FDA PDUFA tracker
Merlintrader Trading Pub
Biotech catalyst news and analysis. FDA PDUFA tracker
Encyclopedia of Social Trader Myths – Second Edition
Encyclopedia of Social Trader Myths – Vol. 2
“Things We Are Not Supposed To Say Out Loud”
The slightly less polite, more cynical and more honest companion to the original Encyclopedia of Social Trader Myths. Same dark humour, more uncomfortable truths about how traders really behave on Stocktwits, Reddit, X and Discord.
This volume mixes comedy with realities that are rarely written down explicitly because they sit
uncomfortably close to how the game actually works. Nothing here tells you what to buy or sell; it
just tries to describe the ecosystem the way traders talk about it off the record.
New here?
Volume 2 works as a stand-alone read, but it was designed as a darker, more sarcastic companion to
the original encyclopedia. If you have not read the first part yet, you can find it here:
Act I – The feed, the crowd, the illusions
When “trending” means you are late to the party
There is the polite version of trading education: neutral wording, balanced viewpoints and lawyers nodding in approval. And then there is the version traders actually share in DMs, late-night Discord calls and “do not screenshot this” chats.
This second volume lives as close as possible to that second version without stepping over any regulatory lines. It is the companion piece to Volume 1: same myths, same social platforms, but now we zoom in on the small details everybody notices and almost nobody says directly.
Myth 1 – “If it is trending, I am early”
FOMO logic
Myth
“The ticker is trending on Stocktwits and climbing on Reddit. If I jump in now I will catch the
big move before the crowd.”
Reality
If you discover a ticker because everyone is shouting about it, in many cases several things have already happened:
- Somebody bought much lower while it was still completely boring.
- They are now happily unloading to people screaming “to-da-moon”.
- The long “research thread” was written after the move to justify an existing position.
By the time you feel a powerful urge to post rockets, you are usually closer to the exit than to the launchpad. The burden of proof is on the idea, not on your fear of missing out.
Myth 2 – “The crowd is dumb, I am the contrarian genius”
Ego comfort
Myth
“Everyone else in this thread is clueless. I see what they do not. I am the contrarian here.”
Reality
On social platforms almost everybody thinks they are the contrarian:
- The permabull believes the crowd “does not get the story”.
- The permabear believes the crowd is “drunk on hopium”.
- The bagholder believes the crowd is “paper-handing the opportunity”.
- The scalper believes the crowd is “too emotional for this tape”.
Statistically, most of these people are the crowd. Real contrarian thinking starts with “I might be the one who does not understand”, not with assuming everyone else is blind.
Myth 3 – “This time the run-up is safe, we all know the catalyst”
Catalyst folklore
Myth
“There is a PDUFA or Phase 3 date on the calendar. The stock always runs into it, so this time
it is safe to buy the pre-catalyst move.”
Reality
The unspoken mechanics of most “run-up” trades look more like this:
- Early hands accumulate when nobody cares and risk feels mispriced.
- As the story spreads, they quietly sell into improving liquidity.
- Late buyers enter when the social media narrative is at peak confidence.
Pre-catalyst patterns are transfer mechanisms, not charity. Risk flows from people who studied early to those who discovered the story after the third YouTube video.
The polite version of this section would say “do your own research and be aware that past patterns do not guarantee future performance”. The impolite but more useful version is: if everyone has the same calendar and the same plan, somebody will end up holding the bag.
Act II – Gurus, signals and other adult fairy tales
Why copy-trading rarely ends the way you imagine
Volume 1 talked about myths in general. Volume 2 zooms in on the human part: the gurus, the screenshots, the private rooms and the silent assumptions behind “I will just follow someone who knows what they are doing”.
Myth 4 – “Copying a guru is like having a free hedge fund”
Signal addiction
Myth
“This trader has thousands of followers and posts his entries live. If I mirror his trades, I will
make money and learn for free.”
Reality
You never see the full picture:
- You do not know his real size, risk limits or time horizon.
- You do not see trades opened and closed off-stream.
- Your execution is always later and worse than his.
In the best case you play a laggy, diluted version of his strategy. In the worst case he trades differently from what he posts. That is not “learning”, it is outsourcing decisions to someone you cannot audit.
Myth 5 – “If someone posts big P/L screenshots, they must know”
Highlight bias
Myth
“Those five-figure green days look impressive. Anyone posting that kind of performance must have
a robust, repeatable edge.”
Reality
Screenshots are the Instagram of trading:
- You get the highlight reel, not the decade-long equity curve.
- You never see the real max drawdown or the blown accounts along the way.
- You rarely see how much stress, leverage or luck produced those numbers.
Even when the P/L is genuine, it might come from a risk profile you want nothing to do with. Past screenshots guarantee exactly nothing about your future.
Myth 6 – “Influencers are here to help retail win”
Attention economics
Myth
“If a large account spends time posting long threads and trade ideas, it must be mainly to help
smaller traders.”
Reality
There are excellent educators out there. But attention is a currency:
- Some accounts push names they already hold and plan to exit into strength.
- Some get paid, directly or indirectly, to “raise awareness” for specific companies.
- Some simply need engagement to sell courses, rooms or premium subscriptions later.
The safest way to follow anyone is to focus on their process, not their tickers. A process scales. A hot pick blasted to fifty thousand followers usually does not.
Act III – Newbies, comfort myths and revenge
Habits that feel harmless when the account is small
Nobody writes the following lines in official education material, but you can hear them in any private chat where experienced traders try to warn newcomers. The numbers change; the behaviours rarely do.
Myth 7 – “I will be reckless now, serious later”
Future-self fantasy
Myth
“I am just experimenting. Once my account is bigger I will start using proper risk management.”
Reality
You are training your brain right now:
- Whatever feels normal at 2,000 will feel normal at 20,000 and 200,000.
- All-in trades today become the default button press tomorrow.
- Calling disasters “experiments” makes it harder to treat losses as feedback.
Your first account is not just capital; it is a behavioural blueprint. If you practice chaos at small size, you are rehearsing for chaos at large size.
Myth 8 – “It is just a small account, I can reload”
Reload illusion
Myth
“If I blow this one up it is not a big deal. I will fund another account next month and try again.”
Reality
While you are “reloading”, a few invisible things accumulate:
- Worse habits that feel increasingly normal.
- Frustration and emotional fatigue that cloud judgment.
- A story in your head where the only way out is a heroic home-run trade.
By the time a real opportunity shows up, you have trained yourself to swing at everything and to size up when angry. That is how traders manage to be right on the idea and wrong on the outcome.
Myth 9 – “I will make it back in one trade”
Revenge mode
Myth
“I am down badly, but if I double size here and it bounces, I will recover everything in one shot.
After that I will be disciplined again.”
Reality
“I will be disciplined later” is one of the oldest lies in trading. Revenge trades:
- Combine maximum emotional stress with maximum position size.
- Are taken exactly when your read of the market is most distorted.
- Turn a bad day into a blown account faster than anything else.
If your comeback plan fits in a single sentence that starts with “if this one works…”, it is not a plan, it is a scratch card.
Act IV – Things we whisper, not shout
Echo chambers, villains and the “rigged” excuse
Myth 10 – “Everyone who criticises my favourite stock is evil”
Cult dynamics
Myth
“Anyone posting risks or red flags about the stock I like must be a paid shorter, a basher or part
of some hidden agenda.”
Reality
In many rooms the fastest way to become unpopular is to post:
- the actual cash runway and the dilution history;
- a realistic probability range for the catalyst, not the fantasy one;
- a simple “here is how this can fail” paragraph.
When every critical voice is labelled as “FUD”, you do not have a community, you have a fan club. Ironically, that is the environment where real short sellers feel most comfortable.
Myth 11 – “If I am losing, the system is rigged against me”
Convenient fatalism
Myth
“It is all algos, hedge funds and market makers anyway. If I lose, it is because the game is
rigged, not because of my decisions.”
Reality
Markets are not perfectly fair. Information, fees and tools are not evenly distributed. But there is a big difference between:
- acknowledging you are playing a tough game, and
- using “it is all rigged” as a blanket explanation for every loss.
You do not have to believe the game is fair. You do have to believe your decisions matter; otherwise there is no reason to improve them, and no reason to keep reading anything about trading.
Volume 1 politely reminded you that myths are expensive. Volume 2 simply points out that some of the most expensive ones are emotionally comfortable. That is why they survive every cycle.
Act V – How to use Vol. 2 without becoming bitter
A short checklist for when the noise gets loud
This second edition walks a fine line between humour and cynicism. The purpose is not to make you hate social media, gurus or other traders. The purpose is to remove the romantic filter that marketing will never remove for you.
A few ways to put this into practice:
- When a ticker explodes into your feed, ask first who is using the hype to exit, not who you can follow to enter.
- When you feel the magnetic pull of a guru, ask: “If this account vanished tomorrow, what would I actually know how to do on my own?”
- When you want to swing big after a loss, ask: “If this trade goes wrong, am I still in the game?” If the honest answer is “barely”, the size is wrong.
- When a room attacks every critical comment as treason, consider whether you are in a discussion or in a shrine.
Social platforms can be an excellent radar for ideas and sentiment. They become dangerous when they stop feeding your process and start replacing it.
This article is not investment advice and does not recommend any security, strategy or trade. It simply tries to map some of the behavioural traps that appear every day in social trading spaces, so that the next time you recognise one of them you can at least smile and, with a bit of luck, stand aside.
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