5 Common Misconceptions about Forex Trading Every Newbie Should Know
Even though it has changed the world in a significant way, the internet is the number one hub for fake news, myths, and misconceptions. Being one of the largest markets in trading volume, the forex trading market, to be precise, has had its fair share of these misconceptions. Even though they affect all types of traders, new entrants tend to be the most affected as they are yet to master the art of forex trading. Luckily, learning about them puts you one step ahead and saves you significant losses and frustrations. In that breath, here are some of the common misconceptions about forex trading you should know.
- You Need an Economics Degree to Succeed
Many a people who had chances to succeed in forex trade have backed off from venturing into the market because someone told them they need an economics degree. While it’s true that forex trading calls for knowledge in world economics, it doesn’t necessarily mean you need to have graduated from Harvard with an economics degree.
In other words, to be a success in this realm, you only need to be good with numbers, have the flexibility to react to market altering events, and an excellent intuition to determine where the market is heading. So if you don’t have an economic degree, fret not, but if you do, good for you as it is a great bonus.
- Brokers Will Always Try to Wipe You Out
This is probably one of the first misconceptions you’ll come across when you first venture into the forex trading arena. Some know-it-all traders will advise you not to engage with forex brokers as they will be working against your best interest.
Well, the truth is that while there are always a few bad apples in every market, a majority of forex brokers often have the best interest of their clients at heart. They usually want you to succeed because your success means great turnover for them and consequently bigger commissions and bigger trade volumes. Wiping you out, on the other hand, means bad reputation for them and as a result, low turnover and closure of business.
So, in a nutshell, it doesn’t make any sense for a broker to stop you out as it’ll only result in bigger losses for them in the long run. Additionally, the forex trading market is way too volatile to be rigged by corrupt brokers. But as mentioned, every market has a few bad guys, and forex is no exception. So while you need not worry about being duped, you also need to do your part by trading only through a reputable broker. Check out https://www.trusted-broker-reviews.com/ to find one you can trust.
- You Need Plenty of Money to Venture in Forex
This is one of the longest-standing misconceptions of the forex trading realm. When you first want to venture, you’ll come across loads of people who’ll tell you it’s a rich man’s thing and that you need at least a million dollars to reap benefits.
Luckily it’s all a lie. While there was once a time only major financial institutions had access to the market, anyone can have the piece of the forex pie today. This is thanks to advances in technology as well as the advent of online forex brokers. Now with a modest amount of money, a quality device, and reliable internet connectivity, anyone can venture into forex trade and make money.
- Complex Trading Strategies Get You the Bag
When starting, most traders often adhere to the conventional way of forex trading. That is a simple strategy for simple returns. But a few months into the market, they’ll often come across wannabes who’ll tell them the only way to make the most returns is by using more sophisticated strategies. As a result, they’ll try to trade against the market, which unfortunately leads to catastrophic consequences and might even damage a trader’s entire portfolio.
The secret to success in this arena is to trade with the market and not against it. That said, you don’t need complicated methods to be succeed. What you need is excellent understanding of the market drivers, as well as what influences the rates. With that information, you can propel yourself to any level of success.
- Keep Watch 24 Hours
Sure the forex trading market requires a lot of commitment for you to succeed. But that doesn’t mean you stay up the entire night or day watching it. Some traders consider forex trading a side job, and still, they succeed. So although the market may be open 24 hours, you don’t need to keep watch all through.
If you’re worried that even turning away might cause you to miss out, then consider investing in an automated software that will not only alert you whenever there is a change but also shoulder most of the work for you.
Just because you recently dipped your toes into the forex trading market doesn’t mean you end up a victim of the myths and misconceptions that come with it. Learning about them is the key to avoiding them, and while our list might not have covered them all, it has outlined some of the most common. You can, therefore, start on the right note.