The forex market is a dynamic space filled with a lot of interesting ideas and concepts about trading. It is also the biggest trading market in the world in terms of trading volume and number of active traders. The Forex world is also a popular and attractive space for people around the world. So, naturally, there are a lot of myths and misconceptions about forex trading that many beginners tend to believe in. However, those who plan to enter the volatile currency market with a lot of expectations for profits must be able to recognise the widespread false stories and beliefs among the general public.
To help you out, we will be busting the top 10 myths about forex trading in this article while revealing the truth that is relevant for attaining success as a forex trader.
Anyone Can Become A Forex Trader, & It Is Very Easy
The first myth that needs to be busted before entering the forex market is the misconception that becoming a forex trader is a piece of cake which anyone can take without any effort. This is actually the exact opposite of the reality that you are about to face while starting out in the forex market as a beginner. There is a steep learning curve, and becoming a skilled trader takes a lot of effort and time. The use of automated trading tools can minimise the time and effort to a great extent, but you need to do your part to obtain knowledge and understanding.
Accessing the forex market is pretty easy when you sign up with a broker, but the process of trading is not that easy for everyone. Thinking of forex trading as easy will only make it harder and riskier as you jump into trading without enough preparation. So, learning about the market and trading concepts is essential to increase your chances of success in trading. A Forex demo account can be the perfect place for practice, and all beginners should utilise it for risk-free trading.
Forex Trading Is The Fastest Method To Get Rich
The forex market is popular for being the fastest moving market in the world as the currency pairs that we trade with are one of the most volatile trading instruments which keep constantly fluctuating. However, becoming rich as a forex trader is not as fast as people think. Getting overnight success in the forex market is next to impossible in most cases.
If you are thinking of entering the forex market, then you must have some long-term goals and should not expect to make it big in the next few days. There is an age-old saying that ‘patience is a virtue’, and it is totally applicable in forex trading as well. Because impulsiveness will not be fruitful, it only puts you in a dangerous position in the fast-paced forex world. So, taking it slow would be the best approach for a forex trader.
A Forex Trader Should Be Highly Intuitive To Predict The Future
The core concept of forex trading is entering a profitable trade position based on the direction in which currency prices move. So, anticipating price movements is like predicting the future, and there is a myth that a forex trader should be intuitive enough to predict price changes. But no forex trader relies on intuition or guesswork to predict the future.
Instead, they rely on market analysis and follow the price patterns to place a trade with a higher probability for profits. You can use a profit calculator to precisely calculate the profits beforehand to avoid overtrading, or after the trade to check the profits in your own currency. So, you don’t need supernatural abilities to get into forex trading. Still, you will have to be analytical and logical; the rest of it can be learned from exposure to different market situations and hands-on experience.
To Become A Forex Trader, You Should Get A Degree In Economics
The fourth forex myth that many people tend to believe in is that a degree in Economics is your entry ticket to the forex market. Economics does indeed have a lot of impact on currencies and exchange rates, and fundamental analysis in forex trading is based on this fact. But not every successful forex trader is an Economics expert, and you don’t need to be from an economics or commerce background to tap into the profitable trading opportunities. You just need to spend some time understanding the relevant economic concepts in forex trading, which would be more than enough to navigate the currency market as a trader.
Forex Is Just Gambling, & You Need To Get Lucky
This is one of the most trusted forex myths ever, and many of us are still hesitant to enter the currency market because of the misconception that it is just a gamble and those who earn profits just have a ton of luck. This is far from the truth, as trading is a skill that needs to be learned and developed over time. The speculation in forex trading is based on in-depth analysis and logical calculations, which is not at all gambling. You can easily calculate the trading margin using a margin calculator, calculate the leverage in a similar way and other details. You can take stop loss to limit your losses and use take profit to seal the profit amount. So, luck plays little to no role in your success, but your knowledge and skills will surely play a key role in how far you can go as a trader.
Forex Is Nothing But A Scam To Lose Your Money
This myth has some truth to it, as we often hear about forex scammers who steal money from inexperienced newbies. However, that is not the whole picture, and we should try to find the truth before generalising things. The forex market is legit and real as it has millions of traders, regulated brokers, and platform providers. One negative side of this digital era is the increasing number of online scams happening in every field. The Forex world is also just as affected as any other tech-based industry. So, this has nothing to do with the legality of forex trading, and those who are careful will never become scam victims.
Forex Traders Are The Richest People In The World
Another myth that attracts many people to the forex market is the belief that forex traders always have a rich life. Well, that is quite true for highly successful traders like George Soros, but that cannot happen with every trader in a realistic scenario. Becoming a millionaire or billionaire with forex trading alone is a possibility, but there is no guarantee about it. So, you need to set realistic goals and start off with a rational mindset. Because setting unrealistic goals and expectations would only leave you disappointed and desperate in the end.
You Earn Monthly For Your Forex Investment
This misconception happens because the public confuses forex with other major markets and asset classes where you earn monthly interest. However, the forex market is different from those as we are not really investing but trading with currency pairs to make profits from favourable currency rate fluctuations. You can follow strategies like carry trading to earn from interest rate differences, but that is a different case altogether. The Forex market does not pay a typical interest to traders, and one has to earn profits by engaging in trend-based buying and selling of international currency pairs.
Female Forex Traders Don’t Get Success
This myth is directly related to the patriarchal beliefs that are still there in every field. For a long time, finance-based careers were reserved for men, and women who entered the space were always seen as weak and incompetent. So, the myth that female forex traders don’t get success or that it is not a place for women is not at all true, as your gender does not have anything to do with your success in the forex market. It is all about knowledge, skills and risk management.
Just Do What Everyone Else Is Doing
The last myth about forex trading that needs to be busted is the not-so-useful advice of doing what everyone else is doing. Here, we are talking about blindly following someone else’s strategy for trading. A strategy will only work when it is fully aligned with your trading goals, and you cannot expect a popular strategy to be the perfect one for yourself, as each and every traitor is different from one another. So, you need to do your own research, try out different things and tailor your techniques, and that’s how you find your footing in the forex world as a beginner.
So, these are the top 10 forex trading myths you should not trust as a trader. There is no secret formula or shortcut to success in the forex world. It is just about choosing the right platform and the right tools and then training yourself to use them in the best possible manner. Discipline and consistency will take you a long way, and being adaptable to changes gives you an edge.