FIVE MOST POPULAR MYTHS ABOUT FOREX
1. Forex is a get rich quick thing
If it were true then traders would be getting rich and happy fast. However, the truth is opposite. Most of the traders lose their first account pretty quick in one or few trades due to overleveraging and breaking all position size rules. You can certainly get rich trading forex, but it very time and effort consuming. For some people it takes years and for some it never happens. Proper education with a large number of screen hours is the only way to success in forex trading. However, once you learn trading it will be the easiest thing you could do to make a living.
2. Forex market is a scam
Forex is definitely not a scam, however it may seem like it is designed to make you broke. Big institutional players move the market and they do it by hunting stops, that’s why traders have their stops hit before market turns the way they initially planned.
3. Stories about a poor grandma that made one million percent return
Those are the stories told by brokers and other affiliates interested in more people opening an account with them. They make it sound very easy like “Start making money right away”. The truth is that you may make some money in first week or two, most likely on demo. After you are convinced that trading is not that hard as you thought you open a real account and get slammed by the realities of trading. So, don’t get carried away by beginners luck and some stories that you can’t trust.
4. Proprietary and sophisticated indicators
It is believed that successful traders posses some hidden knowledge or sophisticated indicators. The sad truth is that there is no indicator that is going to tell you what is going to happen next. Indicators are based on past price action, they are only calculating what has happened before but you can see the same information on the chart with a naked eye. No matter how complex the indicator is it will still show only what happened earlier, but in reality price does not care what your indicator is telling you. The price moves in direction of stops. There is no hidden knowledge either; all information equally is available to all traders on the chart.
5. Automated trading
This myth is popular among beginners. While looking for a best forex trading strategy beginners turn to automated trading systems and their super gurus who sell a system for less then 100 usd. Just think about that if they were able to make money with autopilot they would not be selling they robot, but doing something else with their money. Also biggest banks and hedge funds would not be hiring traders but using trading robots instead. A profitable algorithm costs a lot of money and needs a technician to tweak it and update all the time because market conditions are always changing.