Forex day trading myth vs reality

Forex is the largest marketplace in the world as it is the largest financial market. Whatever how long you are trading in forex market, these rumors and myths are always around you. To keep your mind safe from these psychological impacts, you should know about these forex myths. This is the most common myth in forex. Forex market allows a trader to trade for a very short term to long term, which is not so easy and available in other financial markets.

Due to this specialty of forex market, most of the traders think that forex is the place to get rich in almost no time. Excessive trading can be dangerous as every trade carries equal amount of risk and opportunity. They build up the profit house brick by brick.

This is another myth or misconception about forex market. In fact, long-term trading is less risky and more profitable than short-term trading. In any financial markets including forex, price tends to follow the major trend most of the times. Thus, the price has a tendency to move in one direction for a long time.

If you can trade in the direction of price movement, then you can get healthy profits. On the other hand, short-term price movements are short-lived and not smooth enough to make a good amount of profit. There is no tangible headquarter and regulatory authority for forex market. This is why many people think that forex is rigged or predetermined market. Many people even think that the whole forex market is a scam.

These are not true. Losing traders often blame the market as rigged or point a broker as a scam. Forex market is not rigged. Forex is the largest marketplace in the world having hundreds of brokers. This is so competitive business that if a broker is really involved with a major scam, then other competitors will take advantage over that broker.

This might lead a broker to close the business.

It is true that some brokers do have minor scams. These scams are easy to find out and you can be on the safe side by knowing about these scams and avoiding them. There are some sites that publish scam reports of forex brokers and also rank forex brokers.

This is a weird one. Only a fool can believe this way. Remember that, there is no certainty lies in financial markets. Losses will occur and you have to manage your profits and losses properly to be successful. This is not that easy to make money by news trading in forex. It is true that news can impact on the price movement.

How profitable is Forex Trading. Myths and reality

Most of the times this price movement due to news impact is so rapid and short-lived that traders get trapped. It is very hard to take a position or close a position when the news has just published. During these news sessions market fluctuates too much with low liquidity. In this time spread becomes higher, so it becomes risky. One can take positions before news events and can wait for the news impact on price. Making a profit this way is not easy either, because sometimes price moves according to the news and sometimes price moves against the news.

This leads a trader to increase the risk by taking more and more positions to make big profits. In real, situation is different. It is better to avoid excessive trading in many pairs. Excluding expert scalpers, most of the cases market rewards that one who is patient and with the major trend.

This is why patience is a profitable virtue in case of trading. This can be very dangerous in case of forex trading. Most of the traders have a tendency to predict the market moves and when his prediction fails, he becomes blind believing that the market will come in his favor soon.

This makes him blind and as a result he violates his trading rules for the sake of his prediction. All you have to know in which direction the market is moving and might continue to move for some more time. This can be identified easily by understanding the major trend. This is another misconception of traders.

They think this way because they start with simple strategies and fail to make money and then they start to think that they need to improve their simple strategy to make money. This is why traders tend to add more and more rules which makes trading strategy complex and provide very little amount of trading signals. Any complete trading strategy is profitable if traded in a disciplined way. Trading strategy fails if it is incomplete, missing any important rule or if not traded in a disciplined way.

Both simple and complex trading strategies are profitable. Simple trading strategies are easy to read, easy to develop and profitable. On the other hand, complex trading strategies are profitable but complex, include too many rules, provide fewer signals and not flexible.

This is not true most of the cases. Real trading involves psychological barrier which resist a trader to trade in a disciplined way.

Popular Forex Trading Myths and Realities

This is why it hard to follow others advice and rules properly. In fact, it is quite difficult to follow the own developed trading strategy in a disciplined way. All of these forex signals or advice are not that much reliable. So, before following these signals or advices you should judge those by own analytical skills. Before trading in forex one should develop own trading strategy and then trade with it. It is your money so the decision should be yours.

Economy drives the forex market. Economy reflects the major trend of the forex market. If you have economic knowledge then it is an advantage. However, you can still trade forex successfully without in-depth knowledge of economics.

Successful forex trading requires quick reaction, understanding market trend, money management and discipline. You can cover these attributes by using technical analysis. There are many reputed analytical websites which include economic forecast and analysis. These websites can help you to understand economical aspects easily. There was a time when forex trading was allowed for only banks and large fund managers.

That time has come to an end with advance internet and online trading concept. As forex brokers allow high margin ratio, you can trade big size with a small investment. But you should be careful about using high margin or leverage as it carries a high risk beside high profitability.

Almost every forex broker offers demo accounts. You can open a demo account without any deposit. This is a huge misconception and those who think this way end up with a loss. Forex trading requires good analytical skills, fast execution, proper money management and disciplined approach. It is not necessary to watch the market whole day for forex trading.

Forex brokers provide advanced platforms by which you can place advanced orders. If price hits the placed order, then your orders will be executed automatically even if you are not online. These misconceptions can make any trader confused or frustrated about forex trading.

A trader should know these myths of forex trading so that he can keep himself away from these misconceptions. Getting Started with Forex Power of Social Trading Top Forex Brokers Some of the major myths are discussed below, Forex is a quick way to get rich: Forex is suitable for short term trading only: Forex market is rigged: News trading is an easy way to make money: More trading in more pairs gives better result: To make money, you have to predict the market movement: Complex strategies work better than simple strategies: You can make money by following others signals or advice: You should be an expert economist to trade forex: You need a large investment for forex trading: Forex trading is easy: Without these skills, it is almost impossible to make a profit in the forex market.

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