With the daily increase in popularity of the forex market, it is bound to attract some false rumors. As the old saying goes – No smoke without fire, most of these false rumors hold some truth but are incomplete and half of a whole is not good enough. Amongst the population of traders on the forex market, newbie traders are the ones that fall victim to the negative repercussions of these myths of trading. As a new trader on the forex market, it will be in your best interest to get the right information about forex trading before it is too late for you. Because you have the most to lose especially when you start losing money. The ridiculousness of these rumors warrants precise and educative information and this article is dedicated to doing that.
Discussed below are some of these myths and the accurate way of viewing trading on the forex market. This article will equip you with the right information so that in case you decide to trade, it will be for the right reasons. Forex trading
Forex trading is all about making quick-cash
This is probably one of the most common myth out there and as such, most newbie traders get into forex trading with the mindset of making as much money as possible within short period of time. Trading on the forex market is more about not losing money than it is about making money.Because If you want to succeed in the market, you need to trrat trading like a serious business. You need to bid your time carefully and patiently even in the face of temptation.in order to make big moves. And this can take some time depending on your trading goals.
Forex trading requires unparalled intelligence
This cannot be any further from the truth because there is absolutely no correlation between trading on the forex market and intelligence quotient (IQ). Thanks to the work of retail brokers, anyone regardless of race, social status or intellectual prowess can trade on the forex platform. What you need is not a degree or a boost in IQ but to find a good broker first of all. Secondly, learn how to trade forex, set goals and a plan to execute them. Finally, you need to grow in analytical trading skill which will happen over time. Experience they say is the best teacher. To succeed in the market, you need to be a master of your own actions. In other words, be disciplined in all aspects. That is what it takes to trade on the forex market so never let anyone tell you otherwise.
Timing makes it all
This is another lie that is being circulated. You do not need to pick a perfect time to make trades. You need to read the market chart from left to right and understand it. You then look for price action signals. Then you make your trade if you are predominantly a technical analyst. You will have to study the news, the economic factors and other micro elements that affect the tradeable instrument you might be interested in before making any trading decision.
Forex trading requires hefty capitals
This is often the belief of traders. But it is simply not true. A larger trading account will allow you to make money faster. Sure. But it is not the factor that determines your success on the foreing exchange market in the first place. You can as well easily lose the huge capital in your trading account. You can easily lose or make a profit from a smaller account as well. So the size of your account doesn’t automatically determine your success. The mental attitude, strategies, and skills will also work on both account types whether big or small. So it is always advisable to start small then increase the account size organically and not with greater deposits.
You need to know what will happen next in the market in order to make a profit
This couldn’t be further from the truth. Part of trading in the forex market is that there is always a 50/50 chance of either making a profit or losing your money on any particular trade you make. No one knows what will truly happen next on the market. You have to understand that regardless of what you believe about a certain trade, your beliefs do not affect the market. So after you have made all your analysis and executed all your strategies and you are 70% sure of making a profit off a trade, there is always a 50/50 chance that things will either go in your favor or not. Factors like interest rate, supply and demand, fundamental events and market manipulation are what affect the market and these factors cannot be controlled by any single individual. All we as traders can do is to make educated predictions based on the information currently at hand, for instance, the market trend of the price action of a security.
Forex traders who rely on trading robots are more successful
Have you ever wondered that if these robots could actually do what they say they do, why aren’t the inventors of these machines making billions off the forex market daily? Well, I do. What these machines really do is make millions for the inventors from those who purchase them. The computer algorithms in these robots cannot predict the future to know what will happen in the market next. And frankly, I think traders who use these robots are at a disadvantage because unlike robots the human brain can adapt to any changes that will occur on the market. Yes, you will make few profits a couple of times but putting too much reliacne on automated trading systems is definitely nit the way how you should approch this.
Forex Trading is like gambling
This by far is the biggest myth out there. This is a broad generalization that people out there who haven’t tried trading hold in their minds. Trading can be a gamble if you want it to be. But unlike gambling, trading decisions are born out of proper trading education. There is no way to make educational guesses on the casino table because that is a game of pure luck. Even the cardholder does not know what will happen next.A skilled trader can make a full time living by making 70% wins and 30% losses on his trades. So it all depends on you. Find for yourself a forex training course. This way, you can either learn the skills in trading on the forex market and develop it so that this game of probability will become one that has nothing to do with luck for you or you can gamble on your trades like some traders do.
The forex market is rigged
Many traders apportion blames to the market or their brokers when they lose a trade especially when there are huge sums of money involved. While the non-businesslike approach to trading on the part of the broker is possible, the forex market itself is not a scam. How do brokers make money? They make money from the commissions they charge you for every trade you make and some types of brokers like the market makers make extra money by taking opposing stands on the trades you make. So be sure to check and be certain of your broker before doing business with them. The forex market is by far the largest market in the world with daily inputs in the hundreds of thousands.
Complex strategies are better than the simple ones
Most traders usually begin with a simple strategy and get small returns. Due to this, they assume that they will make bigger returns by adding some variables to their strategy ad this makes things complicated. Instead of focusing on simple variables like the price action they attempt to determine exact reversal points and make more trades. And this can easily blow back to them. If a system works, stick to it and do not change it.
Following and copying other traders brings results
Traders will always give you opinions on what they think is either the best strategy or the best security to trade in. Everybody has got an opinion on when to trade and when not to. But you have to understand that though they give the advice with the best intention, it ultimately comes down to the fact that it is your money and not theirs. If you lose it, it will be your loss. So every advice must be carefully scrutinized before considering the next course of action. Also regardless of their opinions, no one knows what will happen next in the market. And as such, it is important that to have your own opinion. Your decisions should be based on your own prior decisions with advice from fellow traders buttressing it. Not the other way around.
Discipline is all a trader needs
There is no denying the fact that discipline is a very important attribute to have as a trader who aims to be successful in the forex market but it is not the only thing that a trader needs. You can be very disciplined and still find yourself on the losing end most times. There are other factors as well like strategy, plan etc that a trader needs to have to be able to make successful trades. So if you are not lacking in discipline, that’s good for you but you need to combine it with other factors that are required to make your trading experience a truly successful venture
Lessons can be learned from many forex traders who blew up their accounts and lost their money. These guys were not necessarily undisciplined. It could be different factors like using a bad or untested strategy or not putting in enough time and effort in figuring out what trading styles were good for them.
Hard work brings results in Forex
Hard work is an admirable quality to have. But it does not apply to the forex market. The trader who watches the market 24/7 or gives up on his social life or makes the most trades is not automatically set and guaranteed to be successful in the forex market. It is unfair but that is life. Its good to work hard but it’s better to work smart. Putting this much pressure on yourself and giving up your social life in the process is just taking things too far. There are several market indicators and strategies out there to use. You might not win every time but you will definitely win most times if you trade smartly. Trading smart means developing your skills and staying disciplined.Working on things you can control and leaving what you cant. That is how the forex market works. Even the most skilled traders lose some trades. So there is no need to overwork ourselves in search for success in the forex market.
Only the professionals can make money
The playing field on the forex market is even for all. It’s even for the poor, rich, professional and the amateur alike. There are lots of forex traders with success stories and you are not different from them. If you are not making it, then it means you are not invested in the trade as you should be. With little education on strategies, trading style etc you will begin to see some changes. Make an effort to invest your time and energy into the trade. That is if you are serious about making a profit from it. Ths myth holds no water because no one controls which direction the market will take at any point in time. Not even the professional trader. The difference between you two is that he is invested in his success.
Managing money means to place a stop
Money management is one of the most important factors that will determine your success as a forex trader once you have sharpened your skills. But money management does not include simply placing a stop order on a trade, it also includes how much of your total account will be used for each trade. It also takes into account the number of trades that can be opened at a single time.Money management is a very crucial factor to consider in your forex career. Without it, your success is doomed.
Conclusion
It is always best to be informed. All the above-mentioned myths are misleading information that traders and non-traders alike are having at the back of their minds. These myths go a long way to suppress the potential of many traders. Now that you know about them, hopefully, it makes a difference in your trading style in future. Wish you all the best in your forex career.