The world of investment is dynamic and one can be successful by keeping up with its dynamics instead of believing in myths that remain unchanged. The list of myths regarding the forex trading is never ending; however, top 5 of them are listed below with explanations that bust them.
Less time, less effort, more money.
It is believed that forex trading is a way to make a lot of money in very little time and with very little effort. There may be stories that support this belief but those stories are quite rare. Where the “less effort” idea is concerned, a successful forex trader needs to do his homework and has to keep up with the market by knowing what is happening. This requires in-depth research and analysis which is a greater part of the “effort” that investors put in. As for “more money in less time” concept, it all depends on the market dynamics. Trading requires careful observation of trends and a lot of patience. There are times when a trader has to act quickly in order to make a profit and there are times when years and years pass after an investment gives return. Professional traders do not walk away after a few trades. Trade after trade has to be made to keep the profit coming and the market running.
Trading news is an easy way to make money.
In an environment where information is free and readily available, the consumers are smarter than ever and less likely to pay for something they are getting for free. In forex market, a news can only earn you money if it is traded in real time, yet the question is if the internet and business channels speak of the news event within seconds of it occurring, how can there be time to trade that news with another trader. Chances are rare to none of such opportunities existing.
One who learns to predict the market makes money.
Trying to predict the market is the biggest blunder a trader can commit. It is usually a practice that amateurs attempt. This practice can be potentially harmful as one who predicts the market develops a judgement and is heavily inclined to follow his prediction. This takes away the rationality of the trader and rationality is one of the fundamental things needed by a trader in order to observe the market trends and dynamics to decide upon his next move. When rationality is taken away and the bias remains, the next move may bring a loss.
Never be wrong.
The traders usually are determined to never be wrong. However, it should be accepted that losses would occur and there can never be a strategy that can account for all the variables in the trading market. Telling yourself to never be wrong may end up with you as a trader, lagging behind for putting unnecessary pressure on yourself and playing too safe in the market consequently losing on trades that had great potential.
Go with the flow.
In the forex trading, counselling and advice is freely given. The how, when and how much of trade are questions answered by many , yet one should think that these advisers have no direct interest in their trade. Whether the trade brings in a profit or a loss, it does not consider those giving out information or advice. It is the trader’s own money at stake so the information acquired should be analysed the advice acquired should be pondered upon by the trader. Instead of watching other and doing what they are doing, one must ponder upon their plans and decide upon their move after a careful observation of the market and scrutiny of the information at hand.
Above mentioned myths related to Forex trading , may seem foolish and harmless ,but if someone believes them, they can result in big losses and lost trade for that investor.