Forex trading: 6 common misconceptions

[rohit]

Forex trading: 6 common misconceptions
1. Forex trading is easy

Trading currencies shouldn’t be that difficult, right? Well, it isn’t rocket science, but it’s not really safe to say that it’s “easy”.
Everyone, or at least everyone except professional traders, says that you only need to read a book or two about trading, set up a brokerage account, and you can jump right to making profits in the Forex market. Well, sorry to disappoint you, but understanding trading isn’t that easy, and if you’re in for a quick turnover, you’re in for a rude awakening.

Understanding forex trading takes getting educated on the market, strategies, risk management, active forex trading times, technologies and tools, and Forex market jargon.
Plus, you’ll also have to acquire a few years of experience to be able to place winning trades that will bring you a considerable profit.

So, if you are a beginner, spend some time getting educated on everything related to the market and trading currencies.
2. You need to have a degree in economics to trade

As mentioned above, understanding how to trade Forex is anything but easy. Yet, on the flip note, you also don’t need to have a degree that says you are an economics wizard to understand how trading currencies works.
Now, there’s no doubt that the more you know about the world economics and economic concepts, the easier it’s going to be to trade foreign currencies.
Yet, it isn’t an imperative factor that will decide whether or not you can be a trader. In fact, many forex traders come from various academic backgrounds not only economics.

Yet, to be a successful trader, you’ll need to have a good head for numbers, an intuition to help you estimate where is the market heading, and the ability to react and make critical financial decisions depending on the market-moving events.
3. You don’t need to start with a demo trading account

Like we mentioned earlier, you’re in for a rude awakening if you think you can start trading and make profits immediately as a beginner.
Even after you learn the basics of the Forex market and trading, you still need to test your trading skills out before you jump into the market. Or, at least that’s what you should do if you don’t want to lose money.
Understand that learning about Forex is one thing, actually trading on the market is an entirely different thing.

And, what better way to learn how to trade by actually applying everything that you have learned than by using a demo trading account? Plus, you also don’t have to worry about losing money.
Take demo trading as an indicator of your trading skills You’ll avoid putting your capital at risk, familiarize yourself with the trading platform and broker, and learn a thing or two about the psychology of trading, meaning that you’ll learn how to manage your emotions when trading.

4. Forex trading makes you rich overnight

This misconception about Forex trading is entirely the result of a little bit of false advertising.
Who doesn’t want to get rich overnight or with little effort? So, this “get rich quick” advertising line has brought many people into the arena who are looking for easy or rapid returns. Unfortunately, this may not be entirely true, or at least it is a quite rare scenario.
Building wealth with trading takes patience as for the average trader, it’s rarely an easy road to riches but instead can be a rocky highway that can also involve losses and potential penury.You’ll have to trade consistently, avoiding the gambling-throw-it-all-at-a couple-trades approach. Over time, as your trading skills improve, so will your trading decisions and your returns. But, once again, it all takes time to happen.

5. Forex is an unregulated market

Another misconception about the Forex market is that there is no authority out there to say what is right and what is not correct to happen during trades.
Now, technically, the Forex market is one of the biggest and most liquid decentralized markets in the world, meaning that there’s no single global body to police this market. However, read that again, no SINGLE global body because some market regulators are covering the jurisdictions where most of the world’s forex brokerage businesses are located.


These regulators are essential to make the market safe for traders because there are massive amounts of money passing the market every day, which makes it very attractive for all sorts of scammers and white-collar criminals.
So, these regulators ensure that those qualified to do Forex brokerage are legit and trust-worthy.

Thus, it is imperative when you’re choosing a broker to check whether or not it is licensed by the Forex market regulator in your location.
6. Forex trading is a low-maintenance, passive income

Another misconception about Forex trading for which you can put the blame on exaggerated advertising is the fact that Forex trading is a passive income that requires very little of your free time.
However, although Forex trading can be a great side hustle, as it gives you the flexibility to trade when you have the time, the fact that it is a 24/5 market is both an advantage and a massive disadvantage if you only trade in your spare time.
Being a 24/5 market allows you to trade during any part of the day that suits you best. Yet, it also means that the market might be moving when you are not in front of the computer.
Yet, no matter if you are a full-time or part-time trader, you shouldn’t stress too much on keeping an eye on the market. Instead, you should, however, keep an eye on the global news for important events, be it economic, political, or natural disasters.
Over time, the more experienced you are as a trader, the easier it will be to spot events that will influence the market and require you to take action.

ibri">understanding forex trading takes getting educated

[Ryoji]

Oh yeah, I still remember back when I was thinking about starting a trading career, how most of my friends were telling me that I need a degree in economics. They were saying that I do not even have the basic economical knowledge, so I would only fail! However, the worst one was that you can become rich overnight DD. Now since I have been trading for more than 5 years, I understand how absurd it that thought. You can get rich overnight in case you are gambling on the best online gambling platform, while trading is something way more complicated.

[Katrina]

I agree that if you do not keep proper eye on market then you must be losing big due to this mentioned 6 misconception.

[maby81]

Very well put - these are very common misconceptions, especially the fact that there are two kinds of tendencies: either they think it is really easy, or else they think it is really hard and you will not be able to understand anything unless you have a high level of education. The truth is that it is neither easy nor hard - and anyone can do it as long as he or she puts his mind to working at it and carry out proper analysis. And it is definitely not something ythat you will get rich from overnight!

[ridoskon]

Let's say you are a successful conservative trader, and you earn 20% per month of your deposit. If you take $10,000 or more, you earn about $2,000 per month. Let's say you earned $2,000 in the first month, and you no longer have $10,000, but $12,000. Plus, you continue to work at your main job. And you donate another $10,000 from your salary in the second month as well. In total, in the second month, your capital is now $22,000. It's a tentative comparison, but it really works. I worked through forex brokers in india and on my own. And I can say that forex is not something terrible as it seems to many people.

[Katrina]

There is no place for Misconception in the Forex Market, you need to learn all about the Forex Market and learn to do market analysis and much more to achieve success.