Myths about forex trading
Maybe you are just learning forex, or you have been adventuring in this industry through discussions in forex forums or reading articles about forex, have found some myths about forex trading.
The myth is often a misconception of forex and can even mislead traders. So before you start believing in a myth that states about the Holy Grail system. It is better if you recognize the myths about forex trading. Not everything that becomes a statement is true but only a myth.
So, it is important for you to understand and distinguish between myths and facts about forex trading, which is one of the largest types of transactions on the world’s financial markets.
Well, I will start to review one by one several myths in forex trading.
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Forex trading is easy
The first is the truth. It is easy to start Forex trading and easy to buy and sell online currency. But succeeding and making money is something that is not easy. It takes education, time, and practice. Of course, there are talented traders who learn very quickly, but in general, beginning traders have to dedicate some of their time to educate themselves, practicing, and developing strategies.
Forex is a gamble
This is a myth and often hears about all forms of trading; whether it is stocks, bonds, futures, options, etc. In fact, Forex is the epitome of macroeconomics in its purest form, even more than any other type of market trading because it deals solely with the performance, structure, and behavior of national or regional economies as a whole, and their relationship to each other. If this is true, then all the best national economic administrators, advisers, consultants, and student gamblers in the world. Instead, we are all students of economics, technical analysis, fundamental analysis, and psychology.
Forex is a scam
Forex got some bad images after high-income Investment (HYIP) programs started claiming that they earn money on Forex. Indeed, many people use forex as a way to fraudulent High Yield Investment Program sites. They offer high returns and guaranteed profits, but that is just fake information, most HYIPs are Ponzi schemes or money games.
Actually, Forex is a real currency market where everyone can trade for themselves and be responsible for their own decisions, so this is not a fraud.
Only rich people can trade Forex
This is less relevant today. Now with the rapid development of high bandwidth in a common internet connection, coupled with financial support from the world’s largest financial institution, Forex is now open to everyone. There are few brokers offer a minimum deposit of only $1. although this is not sufficient capital to start. In another broker offer a minimum deposit of $10.
Forex is completely random
Although the short-run fluctuations of the Forex market may seem spontaneous and random, this is a myth. When you place a trade order, there must be a price in liquidity available to you. There is nothing random about it. The long-term movement of the pair is far from a random pattern. There are certain probabilities, but not random and predictable, controlled and influenced by global, regional, and national economies.
There is a “Holy Grail” in Forex
Some choose to believe that they can find some strategies that will earn millions and work forever. Successful traders always change their strategy and adapt it to current market conditions. Strategy in Forex is something that is not a fixed set of rules, the strategy must be flexible and adjust to market conditions so as to be truly profitable.
A very inspiring story about a Filipino housewife. He opened a Forex trading account with a capital of only $ 25 and made it up to US $ 2.6 million in a period of 3 years. He is a phenomenal trader, by the way, he learns, practices, learns, and constantly plans and executes his trading strategy perfectly.
Brokers trading against their clients
In a nutshell, this is wrong. Remember, Forex brokers earn their profits from differences in pairs (spreads) and commissions.
Forex trading is risky. THIS IS NOT MYTH – THIS IS THE TRUTH. Just as in any form of trading or investment, there is no guarantee and you can lose all the money you invest. While practicing healthy risk management techniques prevents this, it can happen. If you open an account with $ 500, make sure it’s not $ 500 from your budget to feed the child.
Forex Only For Economists
One interesting fact of forex trading is that even a number of professional forex practitioners do not even have a degree and education related to forex trading (forex) that they are currently involved in.
Therefore, forex trading is one field that can be mastered by anyone and with any background without the need to have a degree in economics and finance.
Time and Opportunities are Difficult to Predicted
This statement mostly arises from certain parties who have their own interests and are targeting novice traders. The aim is to sell products related to the target forex trading activities.
It is true that time is important in forex trading because the opportunities that exist in forex trading do not always appear at the same time as before. This makes a lot of products appear that are sold at a certain price as a solution to these time constraints.
Like for example, trading robots that can make trading transactions automatically without worrying about missing out on trading opportunities. It doesn’t hurt if you want to use a forex robot. But with the note that you understand how to use and the most important thing is you know and be prepared with the risks.
Brokers Get profits from customer money
Actually this depends on the forex broker itself. There are broker type Dealing desk and no dealing desk. When a trade transaction is executed on the forex market, then there should be another party that takes the trade contract on time.
Some brokers will place orders with other parties, however, if other brokers are not available to balance the trade, then the broker where you make the transaction will most likely take the other side and offset their subsequent risk with the other party to minimize their exposure.
So to choose a broker, it is advisable to choose a forex broker that does have clear regulations.
You easily get profit from trading news
Often we find opinions when there will be high impact news such as NFP. In the mind of the trader, it will be tempting to capture profits on this occasion. Though this kind of assumption is not always true. Even a trader feels trapped in an incorrect position even though economic data provides support.
Sometimes after the news is released but the price changes are still very little changed as if the same. Indeed traders can open a position before the news released. But this must go through proper screening and analysis so that news is not dragged after the news is released.
More trades with multiple pairs is better
There is an assumption that the more trades in multiple pairs the more profitable the results will be. It turns out that this assumption is only a myth and it is not always the case. Total transactions with multiple pairs actually make it difficult to conduct an evaluation when several pairs end in loss.
It would be better and easier for example someone with scalping focus on one pair will provide convenience in making trading plans and evaluating trading.
Predicting the Market Is a Way to Make Money
This is one of the myths that could be the downfall of a trader. A trader must act as a changing market, have rational thoughts about market changes. And must be nimble to do what is needed. Making predictions often will only blind us.
Because it causes psychological bias towards a position and can interfere with our rational judgment.
Complex strategies are better for traders.
And again this is just one of the myths in forex trading. The trader starts with a simple strategy and sees small results. This causes them to assume that if they consider a few more variables, this will increase profits. But the fact is usually not the case.
Only professionals can make a profit
Although there are many forex traders who have success stories of forex trading that are widely shared in various media. This myth reappears because of the fact that tends to show that a number of people who jumped into the world of forex trading lose money or run out of capital.
In fact, so famous this myth, there is a statement stating that 90% of forex traders fail while 10% of them actually succeed and succeed in making money from forex trading.
The real facts are not the numbers and the percentage, rather the problem lies with the expertise of each trader.
More scams than profits
Among the myths about unfounded forex trading that you may often hear is that forex trading is a fraud with a business and investment mask that promises to double the profits of each prospective customer.
This is further aggravated by the existence of a number of elements that try to take advantage of the ignorance of others against this forex business.
Although it has been operating as one of the largest financial markets in the world for years until now the forex market is still getting a negative view because of the bankruptcy of several brokerage companies (forex brokers) so that it is detrimental to its customers.
In addition, there are a number of individuals who are also dishonest about the High Yield Investment Program which claims that they can generate large profits up to many times the capital used by forex trading.
In fact, the investment has nothing to do with forex trading and is just a type of Ponzi investment scheme.
A trader should do his own research to better understand the real forex trading. In this case, it is very important that money management be a serious concern for every forex trader.
Maybe there are some myths that you believe and make your motivation decrease. But that is actually not one reason that makes you leave forex.
Every business there is a gap of success, only to each trader who determines it.
Are you ready to start trading?
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