There are always myths around the forex market. And these myths can potentially affect anyone, whether they’re seasoned traders or newbies in the industry. If you know some of the major myths, traders can avoid unnecessary frustrations. Here are some of the most common forex market myths that you have to know.
Getting Rich Quickly
The industry of advertising has quickly expanded the retail market in the foreign exchange world. This has brought about people into the game who are on a quest to get rich quick or with minimal effort. Unfortunately, this kind of scenario is very rare.
Trading takes patience and there is no final destination. Traders do not make some money and then just walk away. Instead, they make trade after trade, even if there are time gaps in between. Thus, trading requires consistency, not gambling-throw mindset.
Forex if for Short-Term Traders
High leverage has made short-term trading very popular, but this is not the way it must be. Long-term currency trends are driven by underlying fundamental factors, and those long-term trends are tradable. Long-term traders focus on the larger trend and they’re not concerned with the daily temporary fluctuations.
It is arguable that taking a longer-term timeframe may be beneficial to some traders since it will reduce the number of spreads paid, which is the equivalent of commission in the forex world, to diversify or hedge buy-and-hold portfolios.
The Market is Rigged
Traders who keep on losing their trades usually suspect or outright accuse that the market is rigged or a corrupt broker has made them fail. Even though this is a go-to assumption or an easy escape goat, forex trading is not a scam. The forex market is by far the largest in the world swayed by hundreds of thousands of transactions and potentially thousands of inputs each day.
This means that it’s probable that if someone takes on a non-businesslike approach to their trading, one of the other savvy participants will usually notice—and this is more common than you may think about the markets.
You can be Right All the Time
Losses take place, and trying to find a strategy that works right every time will either leave you on the sidelines or will bring you to the market with an over-optimized strategy that isn’t flexible enough to adapt to changing market conditions. Accepting that losses take place and finding a strategy that provides a slight edge in the market condition is already enough to bring in positive returns.
You can Just Do What Others Do
There is always a ton of advice being given when it comes to the proper ways to trade, what to trade, and when to trade. Even so, it is ultimately the trade whose money is at stake, and he or she will be the sole recipient of profits and losses.
Therefore, they should make every attempt they can to develop their own skills and come to their own conclusions rather than just relying on the advice of others. Experienced professionals can great help new traders, but all information should be filtered and scrutinized before they are acted upon.