Those who are new to trading currency pairs/forex or have already dabbled will be familiar with the wealth of information available on the Internet. Many truths and untruths are floating around on the internet regarding forex, so it’s not always simple to know whether what you’re reading is accurate.
There are a lot of myths floating around, which can make it difficult for anyone to learn. For novices, in particular, these might stifle their progress and cause them to take risks that they would not otherwise engage in. As a result, it’s best to be aware from the start that there are numerous currency pair myths. Let’s jump into the top five.
Trading is easy
Yes, it is simple to get into forex trading since you can buy and sell currencies online. With easy access to the internet and many online resources, it may appear like a straightforward way to generate money. However, attaining success and consistently making money is not easy. Forex is a highly volatile market in which it is possible to make money regularly, but it’s not without its risks and challenges.
Both time and effort are needed to become successful. Novices need to set aside some of their time to learn and practice developing methods that work. The only way to succeed in forex trading is to think of it as a business and work hard at minimising the hazards. Also, many novices rely on signal-following, blaming their decisions on someone else. Many new traders have suffered significant losses due to relying on others instead of their knowledge and abilities, so it’s critical to learn how to rely on oneself.
There is a holy grail in trading
Many people believe they can discover a unique or ‘magical’ fool-proof method to make millions and continue doing so. A simple Google search will give you a slew of strategies and systems that claim to be wholly accurate but are not ‘guaranteed’ to work. Every technique utilised ultimately has its drawbacks and is subject to occasional losses.
It is well-known among seasoned traders that returns cannot be obtained without taking a risk. Successful traders adjust their methods regularly to fit the current market circumstances. Currency pair trading strategies can’t be fully explained by a set of rules but must be implemented with adaptability, necessitating changes as needed for them to make profits.
Trading is gambling
Even though there is no certainty in the foreign exchange market, it does not mean it is unpredictable or random. Your success in forex trading depends mainly on your abilities and experience rather than luck. This popular misconception may be heard about various trading instruments, including equities, futures, and binary options, but there are often patterns that can be deduced in terms of market charts and historical performance, that can help traders predict and speculate better.
Forex is rigged and controlled by the central banks
To a certain extent, central banks and governments can regulate the price of a currency, but the forex market is decentralised for the most part, meaning not one single enterprise or entity will ever have enough sway to make significant changes in the market performances of currency pairs.
As a forex trader, you are also not there to compete against central banks and large enterprises. Individual forex traders exist to take advantage of the advantage they have created through their trading methods and trade according to what the market tells them.
Many traders claim that the market is consistently against them and that each trade they make is a loser. They might also point the finger at their broker or government, but reality tells us that foreign exchange rates are constantly in flux and are too volatile to be tinkered with. It’s better to learn how to profit from current market conditions rather than shifting the blame onto others for bad trades.
Trading with currency pairs is only for the rich
It’s possible that this was the case in the distant past when forex trading was exclusively available to banks and large fund managers. This is no longer the situation since modern high-bandwidth Internet connections combined with the financial backing of the world’s major financial institutions have made forex trading accessible.
It is now possible to open a forex trading account with as little as $25 and trade with as little as $1 today. Although more significant investment is required to attain a higher profit level, forex trading isn’t only for the wealthy. There are chances available even for those who do not have much money to invest. These days, virtually all forex brokers provide free demo accounts, allowing traders to test out trading without risking any money.
At the end of the day
The following five misconceptions have perpetuated a lot of uncertainty in the currency pair trading business. Therefore traders must be aware of them. Knowledge is power, so traders should be able to tell the difference between some of the most common urban legends from reality. Overall, it’s crucial not to get fooled by fraudulent promises about how quickly you can make money.
However, it is also critical that traders not be discouraged by the market because some think it is impossible to make money there. Whether or not a trader will be successful ultimately comes down to a rational and educated approach that incorporates sound trading tactics.