''Trading is not about being right. Trading is a game of math. It is about finding setups that offer you a good risk/reward and pulling the trigger'' - Mike Bellafiore.
Before starting your trade, be clear about your thought because there are a lot of misconceptions about Forex trading in the market. If you are a new trader, the first thing you need to know is to clear all these misconceptions.
Common Forex Trading Misconceptions
Misconceptions regarding Forex trading are circulating as "bad news travels swiftly," as the cliché goes. These illogical beliefs can impact everyone. Even the trader who has been trading for a long time is not immune.
All of this information should be known by every trader.
Here are some common misunderstandings concerning forex trading:
You can make easy money with forex trading
No way, no how. Trading in any asset class, in reality, is far from simple, as each has its unique set of skills and procedures.
The first step in forex trading is to open a trading account and begin trading. On the other hand, making consistent gains is a different story because the currency market is significantly more volatile than the stock, bond, or commodities markets.
To maintain your success rate high and generate money in forex trading, you must develop a trading strategy, test it, and stick to it.
High leverage is good.
Most foreign exchange brokers promote themselves in India by touting the huge leverage they provide to traders.
This gives the notion that leverage is always beneficial and may quickly make traders wealthy. Leverage, on the other hand, is a dangerous technique that can double both your gains and losses.
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High leverage can help you increase profits, but it can also eat away at your trading money and force you into bankruptcy if you're not careful.
As a result, never rely solely on leverage. Assess the level of risk you're willing to take, and then carefully manage the leverage on your trades.
Forex is for short-term traders
One of the most common misunderstandings concerning currency trading is this. Long-term investors would be better suited to looking at other asset classes. It is usually regarded that forex trading is only effective if you take short-term holdings. That, however, is not the case.
By analyzing geopolitical ties, the present macroeconomic situation, interest rates in both nations, and other factors, you can develop profitable long-term forex trading strategies for a currency pair.
A good long-term call made after thorough research can yield far more profit than a series of short-term calls. It will also keep your stress levels in check because you will not be trading on a minute-by-minute basis.
You need a lot of money for forex trading
When online forex trading was not available, this may be considered the truth of the past. Large financial institutions, central banks, enterprises, and high-net-worth individuals were the only ones who could access the interbank currency market back then.
Online forex trading, on the other hand, opened the door for small retail investors, with brokers offering them easy access to the forex market as well as the option of large leverage. Anyone with a basic internet connection and a little quantity of money in their bank account can now trade currencies without any limits.
You will make money in forex if you are a successful stock market trader
This is completely untrue. The stock and currency markets are two very distinct things. Both markets require different approaches, with each demanding its own set of abilities. Different types of causes influence the prices of both asset groups.
The hours and duration of trading are not the same. The levels of volatility and liquidity fluctuate. This equates to most stock market veterans failing horribly when they try to apply their typical tactics to FX trading.
So, if you already trade stocks or commodities and want to try forex trading, don't consider currencies as if they were different asset classes.
Getting Rich Quickly
Winning and losing is part of the trading process. There's no guarantee that you'll make money on your first trade.
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Some adverts quickly spread around the industry, claiming that Forex Trading guarantees you will become wealthy overnight. It is not feasible to engage in any type of trading.
Forex trading can be successful, but only over time. As a result, be aware of it.
Market Rigging is High
Most of the time, unsuccessful traders announce it as a rigging market. People don't judge their cause of failure and go with the hype.
Indeed, some illegal issues occurred here, but the total system isn't illegal. Start your journey with all security. Hopefully, you will be satisfied.
Every Time You'll Earn Profit.
There is no trading platform where you will get profit on every single trade. Also, it's not possible. Every trader has to face ups and downs.
If you want profitable trading, Strome your brain with the trading strategy and stick to your one. You should prepare yourself to accept losses because it happens sometimes.
The More Trades, The Better
Trading maintains a time. Avoid all this rubbish concentrate on your skill and scalping strategies.
Prediction of the Market
Some people think the forex market is predictable. These thoughts can ruin you. Mainly, newbie traders attempt it.
The forex market is always moving. So, the prediction here seems to pour water into a blind well.
Complexity Brings Betterment to Strategy
People assume that complex strategies make a lot of profit. It's not true at all. All you need is to understand the market.
Money Management Means Stopping
Money management is an important part of Forex trading. It doesn't stop your trading, protecting you from uncertain loss.
Follow Others Doing
You can follow other traders to gain knowledge. But don't follow them blindly. Always learn from others, do your own.
Hopefully, all misconceptions will go far away and have a fruitful trading experience.
To sum up, I told you all that "what is comfortable in investment is rarely profitable". So think about what you're doing before you do it, and never dispute with your trading system because a bad worker will argue with his tools.
I'm going to have to come to a halt here and wish everyone a nice, prosperous, safe, and secure trading experience.