If you’re a novice in the Forex trading world and you want to learn the truth about it, you’ve come to the right place.
There are many misconceptions and myths about Forex trading that many people believe. Some of the false information is out there on the Internet due to exaggerated marketing from brokers. Other misconceptions are found online because of traders who have either found success or failure with trading foreign currency and shared their specific experiences as a general rule. Plus, some myths have been created by people who never even traded once in their life but have heard a piece of information that they pass on without even checking its validity.
The point is that there are many things about Forex trading that you may read, hear or see that aren’t exactly true. As a novice in the industry, it may be really challenging to distinguish truth from personal opinions or misconceptions.
Don’t worry! We’ve got you covered! This article explores and explains the most common myths and misconceptions that you’ll likely come across during your trading journey.
1. Trading foreign currency is easy.
It’s clear that trading Forex isn’t exactly rocket science. Yet, it also isn’t easy.
More often than not, you’ll find Forex trading being marketed as an easy way to win a lot of money. Well, sorry for the disappointment. This is by far accurate. That’s at least if you aren’t a genius trader that knows how to trade the second you see the live Forex charts and currency rates.
Being a successful trader takes more than reading a few trading tips and setting up a brokerage account to your disappointment. It’s impossible to be able to jump right to making significant profits. To really master Forex trading takes time as you need to understand how the market works, the best strategies for you, how to manage risks, the best tech tools you can use to trade, and even the Forex market jargon. Unless you know all these things about the market and trading, you won’t find trading Forex any easy. In fact, quite on the contrary, you may find it a bit intimidating in the beginning.
2. Forex traders get really rich.
Well, this one is both false and true. Some Forex traders can get rich by trading foreign currency. Yet, this doesn’t mean that anyone who invests in Forex will be the world’s next billionaire. To get rich with Forex trading takes time, patience, and really, really good trading skills.
This misconception is the result of a lot of exaggerated marketing about trading’s potential to bring significant returns. Sure, this can be the case. Yet, it only happens to experienced and skilled traders. And, it never happens overnight.
Building wealth with Forex trading requires you to be consistent, constantly improve your trading skills, and get to the point when you are able to predict the market’s next move so that you can make profitable investment decisions.
Brokers who offer a 100% bonus are the best ones.
3. This one is far from being true.
Think about it: no bonus comes with no string attached. That’s because no one will give you money for free. So, behind that big bonus, there can be plenty of pitfalls that are hidden by empty promises.
The best broker is the right one for you, based on your specific trading preferences and needs.
For example, if you live in the US, offshore Forex brokers for US residents might be the best choice for you. Why? Because as an American Forex trader trading with a broker from the USA, you may experience problems like no access to normal leverage, no hedging, or no rubber stamps.
Or, another specific need you may have, particularly as a novice trader, is for the broker to provide you with a demo account. The demo account will allow you to learn how to trade without involving real-life risks.
Another factor that determines whether or not a broker is good is the tools they offer you to help you trade better. Some traders offer trading guides, pip calculators, and many other tech trading tools that can make your trading experiences a lot easier and more profitable.
The best broker is the broker that offers a secure, reliable, fast, and tech-savvy trading platform. Also, pay attention to the customer support offered by the broker.
4. You don’t need to start with a demo account.
Speaking of a demo account, this one is another misconception that you can hear or see from others.
Those who already know how to trade may advise you against using a demo account at the beginning. However, this is a very reckless piece of advice.
Demo accounts, as the name suggests, basically allow you to try your trading skills without requiring you to invest real money in them.
With a demo account, the trading activity looks exactly how it will look when trading for real. You’ll see live charts, market fluctuations, currency rates, and you’ll apply the same strategies you can use with actual trading as well. Yet, the only difference is that nothing that you do on the demo account is actually real. You don’t trade for real money, and none of your investment decisions holds risks or advantages.
So, what safest and better way to learn how to trade than to actually trade without fearing that you’re going to lose money? So, a demo account offered by the broker you choose is a great perk to look after when choosing the broker.
5. Profits from trading Forex are a passive income.
Again, sorry to disappoint you. Profits from Forex trading are rarely a passive income. To ensure that you’re getting money out of it, you need to invest some time in it.
Sure, Forex trading can be a side hustle that allows you to be flexible about trading when you have time for it. However, if you only trade, say, once a week, you can barely call yourself a trader. And, you’ll also likely not going to win enough profits to see it as a passive source of income.
Keep in mind that the Forex market can be influenced by a number of factors, from global political crises to natural disasters or critical economic events. So, unless you’re there to keep an eye on what’s happening in the world and the market, you probably won’t be able to make informed trading decisions that will bring you satisfactory returns.