Whether you are new to Forex market or a seasoned Forex trader, the allegory about it will always spin around you.
For sure, these allegory or shall we say myths has the potential to affect trader, it does not matter what level of expertise you are in trading.
By simply knowing these myths or the major allegories, Forex traders can stay away from these preventable disappointments.
While it is in fact based on the records, there are many myths in trading, but we will focus on ten of the most common that can affect the development of your trading, from the reason that involved in developing strategies on Forex, deciding choices in the market for them to trade and other factors that need to be considered for them to get the right choice.
01. The Shortcut to getting Rich Extra Fast
Advertising as one of the information vehicle rapidly expanded Forex retail market. It has bough countless people in the arena with common goals “getting rich extra fast with less effort”, and people with opposite perception seems to be rare.
Trading requires patience and no finishing destination. For sure, traders don’t just make money and leave. But instead, they do trading after trading, even if the gap of the time is between.
This means that trading requires consistency, not just gambling in which throw in all at couple trade based on initial perception.
02. Forex Is for Short term Traders
With the high influence, these made the popularity of short term trading in Forex, but to tell you frankly, this is not a good idea or it should not be. The long term trends in currency are normally driven by essential factors, and long term Forex trends are surely tradable.
A trader on long term focuses on larger trend and not concerned by day to day gyrations.
We can say that it is far from certain that long term frame becomes beneficial to traders as it reduces the spreads paid or the commission equivalent, meaning experienced trader avoid short term trade impulses. Remember that currency can be used as investment in order to diversify portfolios.
03. The Marketplace Is Rigged
Traders who used to be losing have many reasons, it can be due to rigged market or a corrupt broker that becomes a reason trader loses.
While those are just easy assumptions that can be created, for sure Forex is not designed for scamming, meaning it is not a scam.
Forex market is the largest activity worldwide, swayed not just by hundreds but thousands of transactions and inputs each day.
The point here is that, if an individual takes a non business like trading approach, it might be noticed quickly by savvy participants.
For the record, scams in Forex has become common, so it is way better for you to determine those negative signs before finally throwing your hard earned cash.
04. You can be what you are any time
In Forex, losses can happen any time, and attempting a sound strategy making things on the go.
In times of losing things potentially happens, either the trader will be abandoned or it creates new optimized methods that will have new conditions.
So accepting losses usually happens and finding methods enables the traders with edge in the market in which in the long run it will bring positive returns.
05. Making Easy Money on Trading News
In the perception after the fact, seeing a currency move after the news announcement report can make traders salivate ideas for them to get instant money. Well, to tell you, this is somewhat far from the reality as what news event says.
For sure, trading real time is extremely difficult.
The reference chart does not show in an instant, and there’s no liquidity on the right move it take in the next seconds after the recent announcement, this clearly means that traders still cannot get the favorable move for them to select, or even losing a trade after the announcement.
Though the possibilities of setting up trade before the announcement is being made, this critical execution requires expert analysis based on the statistics for them to effectively determine the possible effect in the market. The analysis should be done immediately as competing traders are also having similar market indicators.
Therefore, making traders based on news is a meticulous trading strategy, and the consistency of getting easy profit is rarely to be found.
06. More Trades With Pairs the Better
If the concept is you get money in one trading each day, therefore trading ten times a day is equivalent to more money, but this is not the right scenario. Focusing on currency pairs and less trading that a trader truly understands is beneficial.
Not unless a trader is much skilled and possesses extra ordinary strategies it they can do as they please. But based from record, being patient is beneficial to many traders, waiting for something they already know and waiting for the right opportunity that pops in.
07. Make Money by Predicting Market
Trying to predict something in the market can become reason of a trader downfall, thought generally this is the common attempt done by novice. Remember that trying to predict make us blind, it can cause psychological foregone conclusion towards a certain position and disrupt traders rational judgment.
Market Traders should be quick and lively, you need to trade based from the system so you can trade losing trade with winning trades. Always remember that market is constantly moving and this dictates the market trading decisions.
Therefore, if prediction was made, trader should wait for a certain movement of currency for it to confirm that prediction is correct.
08. The Complex the Trading Strategy the Better the result
A market trader frequently begins with simple trading strategy and of course gets small returns. Most of them assume if they somewhat continue doing it while tweaking the system they have, taking into fact that few and even more variables also moves as it increases returns.
But this is not the thing that is happening, instead of focusing on simple things like the price movement (this is the overall indication if you are making profit) or if market is ranging or even trending. Market trader strategically attempts to indentify the possible reversal points for it to make more trading.
The profits in trading are acquired thru margin, in fact even experienced traders win slightly than the amount they lose. So therefore, if the system makes money, you need to stick into it and don’t change any, you need to focus now on your money management.
09. Management in Money Means Stop
Your management in money or MM is the most significant factor in achieving success, once a trader has successfully developed skill in achieving consistent market trading returns.
Money management is not just by simply placing stop order on trade, rather encompasses the overall account that will be risked during each trade, and it should be not more than one percent.
Trader should look the number of potential trade that will open at single time, and in the case of multiple positions are then open. You can do the hedge on each opening.
By simple focusing on your money management, the trader takes trading actions to the next level, and by ignoring MM this will result to immanent failure, considering that you have the best trading strategy applied.
10. You can do what others do
There are countless advice that you can learn based on how trading is done, the things to be trade and the right time of trading. Yet it is the trader’s money, and for sure they are the recipient of those losses and profits after trading has been done.
Therefore, since its market traders money, so they are attempting to develop own skill and have their own sound conclusion instead of relying on advice to what others did.
Experienced traders can aid new market traders, but data should be examined and analyzed before executing it.
Traders understanding currency market that involves trading and careful research is significant for every individual who want to enter trading, some might be develop along the way as trader experiences the actual process.
Not just that, money management plays a role also and this will be achieved by self discipline and educating self.
The market in currency has countless waiting to be unveiled, it can even harm success rate of traders or becomes a downfall.
Therefore the need of solid plan in trading based from experiences is one of the key items for success. At the same time this affects myths that will be discarded or diminished altogether.
Table of Contents
- 1 01. The Shortcut to getting Rich Extra Fast
- 2 02. Forex Is for Short term Traders
- 3 03. The Marketplace Is Rigged
- 4 04. You can be what you are any time
- 5 05. Making Easy Money on Trading News
- 6 06. More Trades With Pairs the Better
- 7 07. Make Money by Predicting Market
- 8 08. The Complex the Trading Strategy the Better the result
- 9 09. Management in Money Means Stop
- 10 10. You can do what others do
- 11 Bottom line