Despite the fact that there are currently more than 9.6 million forex traders globally, the subject of currency trading still manages to raise many myths and misconceptions. Knowing the truth about some of the most common misconceptions can really save you money in the long run if you're a trader. On the other hand, some people may have chosen not to open a trading account based on a mere rumour, while others may begin on unrealistic expectations. If you want to know the truth about trading in the forex market, keep reading, as we bring you the 7 most common misunderstandings about forex trading.
Misunderstanding #1: Forex is a get-rich-quick way.
We can thank several films, brokers and traders "motivated" for the misunderstanding that forex trading can make you rich overnight. Often people see flashy advertisements that show traders living in luxury and they decide they want it for themselves. In reality, these are just advertising gimmicks meant to get your attention and get you in the game so that the trader can sell you something or to convince you to open an account with a broker. On the bright side, you can really make a lot of money trading the forex market, but the amount depends on experience, the amount you invest, the market environment, and the situation. other factors.
Misunderstanding #2: Trading is a scam.
While some traders think forex is a get-rich-quick scheme, others think the system is rigged and don't believe you can really make money doing it. Rogue and unregulated brokers contribute a lot to this misunderstanding, but you might also hear despised traders who have lost money because of their own mistake. These traders then turn around and blame their broker, the market, or something else to ease their bruised ego, when they probably weren't ready to open their first trading account. As long as you choose a trustworthy, regulated broker and with positive customer feedback, you shouldn't have to worry about any issues.It is also important to know that too many factors affect the forex market and things move too quickly for your broker to have any chance of rigging the market.
Misunderstanding #3: More complex strategies are better.
Many traders believe that the more complicated a trading strategy is, the better the results will be. In fact, there is no harm in sticking to a simpler strategy, you just have to take into account certain elements, such as the evolution of prices, a consolidating or trending market, turning points , etc. If your trading system is making profits but not as much as you would like, consider these factors first before adding other variables and complicating things. Know that even the best traders usually get away with a win rate only slightly higher than their loss rate, so you shouldn't throw an entire trading strategy out the window just because you think you should make some mistakes. profits faster.
Misconception #4: More trades = more profits.
This is a common belief among forex traders because it makes sense that the more trades you enter, the more likely you are to make money. The truth is that you can actually make the mistake of overtrading if you do, and thereby put yourself at greater risk of losing money. If you open too many positions at once, you may also find it difficult to keep track of everything and you may get overwhelmed, causing you to forget to exit positions and force you to make more reckless decisions. On the contrary, you should only commit to a trade if you have good supporting evidence and ensure that you never open more trades than you can handle. Even if you feel unproductive,
Misunderstanding n°5: it is possible to have a track record of 100% gains.
If you hear a trader say they never lost money or made a mistake , don't believe them. With the forex market being so volatile, it is not possible to make the right moves every time, even if you are an expert trader with a high win rate. It is also impossible for signal providers or Expert Advisors to trade with 100% accuracy, so don't be fooled by these false claims. When you lose, don't worry , because the solution is to stay calm and assess what went wrong. If your strategy is problematic or you made a mistake, just try to learn from it, make the necessary changes, and move on.
Misunderstanding #6: Trading with high leverage is more profitable.
There is an old saying about currency trading that says “leverage is a double edged sword”. It's absolutely true: the more leverage you use, the greater the potential return; however, it also increases your risk significantly. Many beginners rush and decide to use the highest leverage available through their broker, which can be as high as 1:400, 1:500, or even 1:1000 for some offshore brokers. Beginners should be aware that European regulations prohibit leverage greater than 1:30to protect retail traders, only professionals can obtain higher leverage. You are always free to make your own decisions regarding leverage, but keep these facts in mind if you are tempted to use a high level of leverage.
Misunderstanding #7: It is better to choose a broker who offers 100% bonuses.
European regulations prohibit bonusesoffered to attract traders. But some offshore brokers offer advantages in the form of bonuses and promotions to traders. While it's go