Forex trading gives you access to one of the largest financial markets of the world. The working of any market is largely controlled by the psychology of its traders. Similar is the case with forex trading. Human psychology spurs different myths to sprout their heads and no matter where you go, these myths will follow you around. These myths can incite a myriad of emotions in the trader such as unnecessary fear, greed, price and excitement. The trader has to be very careful, lest these myths take their toll and have an impact on the trader’s performance in the forex market. Following are some common myths which are characteristic of forex trading.
1. FOREX TRADING IS EASY
You will come across many people who will tell you that forex trading is very easy. In reality it is anything but easy. Undeniably it is easy to start forex trading and sell and buy currencies online. But the game doesn’t merely end at that. In order to make money out of forex trading, you need education, practice and time. So don’t think that forex trading is a piece of cake. To become a successful trader, you have to put in the best of yourself.
2. FOREX TRADING IS A GAMBLE
This myth is the most prevalent one and is often coined for not only forex trading but stocks, bonds, futures, options etc. However if truth be told, then forex trading is the epitome of macro-economics. It has an intrinsic dealing with the performance, structure, and behavior of national or regional economies as a whole, and their interrelationships with each other. Claiming forex trading to be a gamble is like claiming that all the national economic administrators, advisors, consultants and students are the world’s best gamblers.
3. FOREX IS THE SHORT FLIGHT TO GETTING RICH
It is a common perception that forex can make you rich in almost no time. But the shrewd trader would never trade too excessively and take short cuts. He would establish his trade brick by brick. He knows that excessive trade and short cuts carry the same amount of risk and opportunity therefore he will be very cautious and go in forex trading for the long term. Undoubtedly this market offers you a lot of opportunities but this doesn’t imply by any means that you can get rich with little or no effort on your part.
4. ONLY THE RICH CAN TRADE FOREX
This myth was true in previous times but now this truth has been reduced to a mere myth. With the fast development of high bandwidth in the common Internet connection, coupled with the financial backing of the largest financial institutions in the world, Forex is now accessible for everyone. You can start trading with just $1.
5. FOREX TRADING IS FOR SHORT TERM TRADERS
Forex trading has a promise of high leverage in the air around it. This has made forex trading pretty popular amongst the short term traders. However the traders ought to remember that long term trading is less risky and more profitable .In any financial markets including forex, price tends to follow the major trend most of the times. Thus, price has a tendency to move in one direction for a long time. If you can trade in the direction of price movement, then you can get healthy profits. On the other hand, short term trading cannot promise such benefits. They are short lived and not smooth enough to make good profits for the traders.