Forex is a way of investing that has captured the attention of both experienced traders and novice upstarts alike. A low point of entry, 24/7 accessibility, and various means of approach have allowed the forex market to become simply unignorable. It’s reached the point where any investor worth his or her salt needs to have a forex trading account and should be making use of it. However, with everything that’s popular, myths are often in tow, with this being no different in the world of forex. In fact, forex trading myths are a dime a dozen, with some certainly having the potential to confuse and mislead novice traders. The following looks at five forex trading myths, debunking and explaining them as we go.
Myth No. 1 – It’s a get-rich-quick scheme
This is far and away the most common myth associated with forex trading, largely as it’s perpetrated by those who have actually no idea what forex trading actually entails. While, in years gone by, there have been cases of investors turning a small amount of capital into big-time profits in a short space of time, that isn’t the overall reality of forex trading. It is anything but a get-rich-quick scheme, as mastering the forex market and earning serious profit actually takes time, effort, and dedication. If you see anyone attach the words “scam”, “trick”, or “con” to forex, you can be sure that they don’t know what they’re talking about.
Myth No. 2 – The market is rigged
This is another common myth that comes about through those who simply don’t understand what stands behind the market. Forex and the currencies it features have values determined by factors such as economic issues, interest rates, and national stability, along with various other third-party issues. Those who invest in the forex market and are burnt by it often jump to the conclusion that the market is rigged against them. The simple facts of the matter state that such isn’t the case, as losing trades are anything but predetermined. When you fail with your trading efforts, it’s something that will only ever occur at your own hand.
Myth No. 3 – It’s easy to string together successful trades
Planning and execution make up an important part of forex trading—what you can take away from that is the fact that stringing together successful trades isn’t easy. Even the most successful forex traders in the world understand that you won’t make the right call every time, with the goal being to base your performance on a number of trades, instead of just one single move. The myth that it’s easy to make profitable trades back to back is just that: It’s simply a myth.
Myth No. 4 – More complex trading strategies yield better results
Trading strategies come in all different shapes and sizes, with what’s applicable to you being dependent on a number of major factors. This includes level of capital, allotted trading time, attitude to risk, and trading experience. There is no science behind the myth that the more complex and convoluted the forex trading strategy, the bigger the profits, with the reality possibly being the exact opposite. By taking on a confusing strategy that you don’t fit the criteria for, you could do more harm than good. Remember: When it comes to forex trading strategies, it’s a matter of suitability over complexity.
Myth No. 5 – You need a huge bankroll to start trading forex
Once upon a time, the world of forex trading was exclusive to those who worked in the business capitals of the world. Carrying high-grade expertise and the account balance to match, forex was once out of reach for the casual investor. Times have changed; these days, you don’t need big-time cash reserves in order to trade forex. Most online brokers allow for a low point of entry, often below $200 USD. This means that you can dabble in the forex market as you please, with there being no need to overextend unless you wish to. In numbers, casual traders now outweigh professional traders, with the fact that forex trading is now more affordable largely being the reason as to why.
Forex is a form of investing that is skyrocketing in popularity, as more and more look to explore the world of currency exchange. However, that hasn’t stopped myths from circulating, with these myths misleading traders at times, often in a way that reaps negative results. For that reason, it’s well worth taking on board what you’ve read here today, as it will help you separate fact from fiction next time you enter the forex market.
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