The FX market is also the largest financial marketplace in the world by trading volume. According to statistics, over $10 trillion is traded daily, and this is why this financial marketplace remains attractive for both traders and investors.
As a professional trader or maybe a novice, creating and nurturing a winning strategy to trade Forex with minimal losses can be challenging. This is because, in the world of forex trading, there are many myths and misconceptions constantly circulating in the space, which incites either fear, greed, or doubt amongst traders.
These misconceptions tend to affect traders who run with them instead of digging deep to know whether there’s some truth to it or not. This is why, in this article, we will discuss various myths and misconceptions that have plagued traders in the Forex space and what you should know about them.
This is a common mindset among novice traders or those who don't know how the FX market works.
The Forex market is vast, and there's no doubt that those who earn huge profits are institutions, government bodies, or whales who invest large sums of money in the Forex market.
However, the Forex market is open to all to trade:whether you have $10,000 to trade or $100 to trade, you can get started with trading.
As a trader with a $100 trading account, you can use Leverage to your advantage. Leveraging can help you take large positions with the $100 capital to trade, allowing you to make really good profits after trading successfully.
However, it is essential to know that leverage trading is risky. As much as it amplifies your profits, it also amplifies your losses. This is why understanding and developing a risk management strategy is crucial.
This is a Forex trading myth that gets most seasoned traders in the Forex market either laughing or full of rage.
While it is easy to assume that all you need to do as a Forex trader is monitoring the green and red candlesticks all day, trading Forex is way more technical than that.
Forex trading is a type of trading that involves patience, analytical thinking, critical thinking, risk management and mathematical skills. This is why professional traders in the FX market go through years of learning & failing before they can come up with a winning strategy.
As a successful trader in the Forex market, you need to understand the way charts work, and how/when to implement technical and fundamental analysis.
You also need to know when and how to trade, trading without emotions, and so on - and this is why trading is more than just staring into the computer and placing trades.
This is a very risky misconception among novice traders and those who don't know how to trade Forex. Millions of individuals with this mindset have entered the Forex market to trade but left the market broke and worse off than they came in.
The Forex market is not a place where this mindset works, because you are dealing with an unpredictable market. Unexpected shifts and market movements can result in losses at any time. Worst-case scenario, if you are trading with leverage, your losses will be doubled.
The reality of Forex trading is that there is no shortcut to overnight wealth. It is essential to know that traders who got wealthy and successful trading forex developed patience, discipline, a strong will to succeed despite all odds, and a winning strategy. Trade after trade, they kept at it consistently for years.
Although it is possible to earn good profits in the short run, it is also essential to view forex trading with the right mindset and plan to stay for the long run.
Another myth/misconception about forex trading among both beginners and professional traders is that your trading strategy should be very technical for you to make profits.
This doesn’t apply to all scenarios. . In some cases, complex/technical strategies will fetch some profits, while in other cases , simple strategies like monitoring the charts can get the profits coming in.
Complex strategies do not guarantee consistent profitability. Instead, continuous learning, adapting to market changes, and perfecting your Forex trading skills will make you profits in the long run.
This is a persistent myth in the forex market. While most successful traders seem not to agree with this completely, it is a tough one to debunk.
This is because many successful traders who have spent years understanding how the market works make it seem like you can predict the market easily - but it doesn’t work that way.
It is important to note that the forex market is controlled and influenced by various factors and events.
These factors and events include but are not limited to:
These factors make it difficult to accurately predict how the market moves or swings in the short run. Therefore, if you attempt to predict the market, you will be working with probability.
By including risk management techniques, identifying high-probability trade setups, setting realistic profit targets, and managing your positions well, you can make profits despite the events that influence the market.
This misconception is dangerous to have. Almost every successful trader in the Forex market was trained by someone or belonged to a thriving Forex community where successful traders help each other.
This myth is one of the strongest myths in the Forex space, and this has caused some individuals and institutions to frown at Forex trading.
Yes, both forex trading and gambling indeed involve risks; however, they do not work the same way.
Trading forex does not rely on smooth predictions or luck like gambling; instead, it depends on a combination of technical analysis, fundamental analysis, risk management, strategic decision-making, patience, etc.
Successful traders spend time analysing charts and candlesticks, monitoring economic indicators, and implementing various trading tools and well-thought-out strategies to make informed trading decisions.
Thinking of forex trading as gambling means that you view forex as a game of cards where you cannot guarantee profitability on the trades made, which is definitely not the case.
The forex market is very lucrative, and there are quite a lot of brokers and traders who carry out trades for individuals, private organisations and government bodies. They make profits for these institutions and charge a certain percentage when profit is made.
However, in marketplaces like Forex, some bad actors lie to individuals and profit from their trading capital.
This is not only witnessed in the Forex market, but in almost any industry or marketplace. This is why it is essential to adequately research the brokers or agencies you want to use to help you carry out your trades to avoid loss.
While this might be true in some cases, it does not automatically apply to all. . It is important to understand that losses occur frequently in FX markets whether you are a seasoned trader or novice. It is mainly due to the volatility of the markets.
While finding a strategy that is right every time is nearly impossible, it is essential to accept that every trader will be going through trial and error, and eventually come up with a convenient strategy.
Being a successful trader involves developing your trading strategy while connecting and learning from other successful traders.
The best traders learn from their mistakes, and work towards refining their strategies. While copy trading is not necessarily a bad strategy to follow, it doesn’t automatically make you successful either.
What Does This Mean For BitDelta Traders
Before investing or trading in any financial marketplace like FX markets, it is always recommended to do your research and understand how the market works.
This is because the financial market is full of myths that can instil various emotions amongst traders while reducing their chances of succeeding.
We believe that by debunking these myths above, your journey in trading Forex will be more precise.
If you want to get started with Forex trading today, you can sign up to the BitDelta Exchange.
This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.