You must understand that many myths have emerged around Forex trading over the years that pertain to you as a newbie Forex trader and that you should explore them to understand the reality of Forex trading.
Some of these myths may be due to how the Forex market used to work before retail traders could trade online. We hope to debunk some popular myths about Forex trading in this article, especially among retail traders with no professional or academic background. In addition, this paper will examine those myths that either does not have current support or rely on atypical events disproportional to the Forex market.
1. Forex trading is easy
Among the myths about Forex trading, this is the most prevalent. “Read a few books, set up a trading account, and you’re good to go. That’s all you need to do to start making daily Forex profits.” But if you’re serious about trading Forex, you’ll need a lot more than just reading a few books.
Recognise that trading is not an easy endeavour. Trading the Forex market can be a rude awakening if you expect to make a quick buck! The suggestion may be, “Download a Forex Expert Advisor, and you’ll make lots of money trading.”
2. High leverage is good
Brokers who market themselves as providing high leverage to traders in India are prevalent. Leverage act as a good thing that can make traders rich quickly. Although leverage can multiply your profits and losses, it is quite a risky tool.
Using high leverage contributes to greater profits, but it can also wipe out all your capital and push you towards bankruptcy if you are caught with your pants down. Beware of blindly following leverage. Identify the risk you are willing to take, and then manage your leverage carefully.
3. Forex markets are unfair
It is common for traders to complain about rigging or corrupt brokers when they make too many bad trades. Governments and central banks may control the value of a country’s currency, but Forex is not a scam.
In reality, foreign exchange markets are too liquid and volatile to manipulate. Currency rates frequently change, so traders who use winning strategies can take advantage of these fluctuations. When you lose too many trades, look at the most likely cause: that you need to put more time into learning to trade instead of believing the market is unfair.
4. Forex brokers make their money trading against their customers
As a result, this statement can be either true or false, depending on the broker model. A counter trade must also be executed simultaneously as the trade itself in the Forex market. Traditionally, brokers will place your order with another broker. Still, if that broker cannot offset the trade, your broker will probably take the other side and offset their exposure with another party.
5. Trading forex requires an economics degree
Forex trading requires a general understanding of economic concepts and a certain degree of world economics. Nevertheless, having a degree in economics and understanding every economic principle is not required to trade currencies.
There are many different academic backgrounds among Forex traders. However, you can be a successful trader if you have an intuitive understanding of where the market will go, a good head for numbers, and the ability to react to market-moving events quickly.
Bottom line
An intelligent investor has several advantages, such as correct information, hard work, and dedication. Avoid having your judgment clouded by Forex myths. Instead, make a well-informed decision based on your research rather than listening to what others say.
