Myths about Forex
As on-line Forex trading becomes more popular, it is getting cloaked in a
wrap of some myths. Some of these myths are harmless, but some can be extremely
dangerous to the beginning traders. To recognize such myths from reality is the
basic condition of successful Forex trading. More than that, maybe after you
learn about some Forex myths that they are really just myths you will
dramatically change your opinion about Forex market.
Here is the list of the most dangerous and stupid Forex myths:
- Forex trading is easy. Actually it’s not easy at all, it’s
pretty hard. It’s easy to start trading, but succeeding takes time and practice.
Of course, there are talented traders that learn very fast, but generally
starting traders should dedicate part of their time to educating
themselves.
- Forex is a scam. Forex got some bad fame after HYIPs
started to claim that they earn money on Forex. Actually Forex is a real
currency market and anyone can trade there themselves and be responsible for
their own decisions, so it’s hardly a scam. Forex can be compared to a stock
market, but it is more volatile and the leverage is usually higher. The only
scams you should be afraid of as a Forex trader are scamming brokers or
scammy marketers that sell Forex e-books and sure-fire strategies. A good way
to avoid scam Forex brokers is to use only well known and tested brokers (you
can choose one from the list compiled by Forex Nigeria.)
- Only rich can trade on Forex. This could be true like 20
years ago, but with the fast development of the informational technologies and
particularly the Internet, Forex is now open to everyone. You can start trading
with just $1. And you don’t need big amounts of money to "move„ the market,
it’s almost impossible with the current daily volume ($3.2 trillion). All you
need is practice and a trading strategy.
- Forex is completely random. Although the short time
fluctuations on Forex market may spontaneous and random, the long term movement
of the currency pairs rates is not random. It has a certain range of
probability, but it is not random and can be predicted. Major banking
institutions forecast the currency rates and earn big money on that.
- There is a “holy grail" in Forex. Some prefer to believe
that they can find some strategy that will earn the millions and will work
forever. Unfortunately that belief has no proof, successful traders always
change their strategies and adapt them to the market. Usually even a Forex
strategy is something that can’t be expressed as a simple set of rules, it
must used with someone with enough experience to be really profitable.
- Stop-losses are not necessary. In a short, trading without
a stop-loss is a suicide. With high leverage and no stop-loss your
Forex trading account will wiped clean in no time. Learn to set your stop-losses
to some point not too far from order’s entry price. Keeping losses low and
profits high has always been a good move.
