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Myths, rumors and legends are everywhere. The forex market is not immune to them. The new forex trader is likely to be inundated with a number of forex myths, legends and downright falsehoods, so it’s important to separate fact from fiction before your money leaves your hands. Here is a list of just a few:
Myth #1 – Forex can make you rich quick
Think about forex as a journey, and not a destination. There is no final winning trade; no huge gains; no trade of the century. Advanced strategies like margin trading, options, and futures, require a great deal of analysis. Traders make money in the forex market by analyzing trends and making smart decisions. The gain on each trade is a small step in the direction of his or her long-term goals.
Myth #2 – The forex market is rigged
Sometimes you might hear a trader complaining that the market is against them. Every trade they make is a losing one. They blame the broker, the interbank, the government, the timing. The truth is this: foreign exchange rates change often and are too volatile to be rigged. Forex trading is not for the faint-hearted. Blaming everyone but yourself for bad trades will prevent you from learning and growing as a trader. The only person responsible for your poor trade performance is you.
Myth #3 - The markets move in a predictable, scientific way
The junk emails you get from companies trying to sell their guaranteed, scientific formulas are just that – junk. Anyone who tries to tell you that they have the market cornered with forex predictions or a single formula is just as crazy as those people who tell you that you can win the lottery by scientific method. Try doing some paper trading (simulated, such as with a demo) and find the pattern. It’s not there.
Myth #4 – The experts know best (experts always win)
This is probably the most enduring myth. Tons of ‘experts’ abound with advice for the new trader, based on years of experience. News flash: Even the world’s best traders are right only about half of the time. Think about it – a trader can literally be a loser 50 percent of the time and still be considered an expert in forex.
Avoiding these and many other myths that pervade forex market blogs and Articles will help you keep your forex investment under your control.