Sorry, we skip the grammar explanation right now. Next in line is Forex, which is also quite a strange world for a novice: you read online people making $100,000 in trades and losing $100,000 as well and it’s hard to understand the truth behind it all.
For a trader who aims to be in the market, an accurate and pragmatic approach will lead to success, as long as he or she has good strategies. Busting these five myths will bring a trader closer to understanding this ever-changing market.
It’s Easy
Forex (an abbreviation for foreign exchange) is the buying and selling of one currency for another on an international market that’s open 24 hours a day. The foreign exchange market offers speculators an opportunity to make investments on currencies. Unlike more centralised markets such as those for stocks or bonds, there is no central exchange for forex and, as a result, there is less scope for the kind of insider dealing that can operate in stock markets. Forex also offers greater leverage than other markets (an issue we will return to below) and these factors could heighten both gains and losses. It is crucial for any trader to come up with a trading plan before starting to spend money in the foreign exchange market. It is recommended that you take some time to explore the currencies that you wish to trade, in order to avoid expensive mistakes that will cost you in lost opportunities. Once you are properly educated, you can start developing an effective trading strategy that is conducive to your profit objectives but at the same time is cognizant of your risk tolerance level. It is better to look at your trades as a percentage rather than in dollar terms as this will keep fear or greed from creeping in and making poor decisions.
It’s a One-Size-Fits-All Strategy
It is essential for traders to master new tools to use them efficiently in order to make investing decisions. It takes time and effort for traders to make a good trading plan. Forex market trading is a dynamic ecosystem and requires from traders a certain persistence and patience in order to make progress. Every single trade leads to a series of decisions that often affect the next trades, for better or for worse. The one thing that different trading strategies have in common is that there is no single formula for success and there isn’t one trading strategy that fits all. In order to succeed in Forex, it comes down to traders understanding their strengths and weaknesses, creating a strategy, and following it through. You might think you need millions of dollars to get started, for instance, when in fact even a small investment on Forex can prove fruitful with time. Debunking myths surrounding investing not only gives you a much clearer picture of what to expect, but it can also provide greater immunity against unrealistic expectations and frustrations and increase your chances for long-term success.
It’s a Scam
Trading on the foreign exchange market (forex) involves buying and selling currencies against one another. The forex market runs around the clock, Monday through Friday, on a global network of banks, dealers and speculators. Increasingly, it’s used for investment – despite being a volatile market – but it’s also used by fraudsters to lure unsuspecting investors. We should not exempt them from a consideration of forex scams, from untrustworthy brokers to automated trading systems with fraudulent results. Ponzi schemes are one of the more common forms of fraud: a trader is promised high returns with no risk in exchange for funding from a new investor whose money pays out previous ones while the scammer flees with all the money. Forex markets are inherently unstable and, therefore, for anyone to claim consistently high return is usually not possible. You should be cautious of any trader who promises you consistently high returns; watch out for their suspicious trade results, excessive marketing language or other psychological techniques that persuade you to bite the bait.
It’s a Quick Path to Wealth
Although forex trading is one of the best ways to speculate, there is no quick way to become a millionaire through it. Although some individual traders retrieve some money from the forex market, they usually need to spend a substantial amount of time before being able to enjoy the first profits. Therefore, beginners might consider it to be a risky market before they start to make profit form it. No one size fits all to trading but the best way to get there is to experiment with several strategies and methods. Successful traders use many techniques before they find the one that best suits their style over time. It gives the opportunity to find a diverse range of strategies and ultimately have ways of trading that are personally suitable. Losses are an essential element of trading, but do not feel downcast when it ends up in a loss – make yourself remember that, having taken the best decision possible at that particular time from the market knowledge, it was most likely to end up with a loss, why not it could’ve been right if you had thought you were strong at your edge and criteria was matched!
