The world of forex is swirling with myths and misconceptions. It doesn’t matter if you are an amateur or an experienced trader. These forex trading myths often affect how traders decide their transactions. It is very important to know these various myths and misconceptions. Having knowledge about these can help a trader minimize unnecessary risks, stress, and frustrations.
Forex trading is attractive to many traders. Numerous people trade in forex but many of them fail because of wrong judgments that leads to bad decisions. Hence, it is important to figure out why traders fail and make a backup plan that will help you succeed in trading forex.
Here are some common forex trading myths and misconceptions:
- Instant Fortune
With the help of the internet, the popularity of the forex trading has rapidly increased. Numerous forex retail markets emerged from extensive online advertisements. This, in turn, brought many people to think that forex trading can be a good tool in effortlessly acquiring cash. But in reality, this rarely happens. Forex trading is not a tool for the instant money. It requires patience and consistency. Keep in mind that Forex trading platforms are not gambling tools. It requires tremendous discipline, practice, experience, and knowledge.
- More trades, More Cash
People often believe in the saying “the more, the merrier”. This is another forex trading myth. For some situations this may be true but it is not effective when it comes to trading. The main point here is that over-trading is bad for your account. Unless you are already an experienced trader. It is important to trade with fewer currency pairs. Stay focused and have fewer pairs to trade. This will result in more focus and attention that will give more profit in your trades. The key factor here is being patient. Do not be too excited in earning fast, it may cause a lot of trouble. Wait for the best opportunities and stay focused no matter how little a profit is. Allot a significant amount of time in preparing your strategies, contemplate your decisions.
- Forex Market is Rigged
Oftentimes, large and well-known institutions have theories about conspiracies and manipulations. The Forex market is not an exemption. When traders lose in the forex market, they blame the market. They complain that the forex market is manipulated. Their allegations are wrong. The Foreign Exchange market is, by far, the largest market in the world. Every day, thousands and thousands of transactions happen in the forex market. If a newcomer is just gambling and not treating his/her account like a business, it is more likely that those with much more experience will easily notice and take advantage of them. Resulting in unexpected losses.