The forex world is, understandably, quite an attractive financial realm for many people. It is accessible and allows for considerable profit if one knows what they’re doing. Many people dream of winning big here. For this reason, there are a whole load of myths that have popped up concerning this market. However, we are here to dispel some of them if we can. This should hopefully help people deal with the market properly once they start.
Forex is not a place for getting rich quick
Some people seem to make out that once you figure out forex, you are set for life. Advertisers have been promising the world to budding traders for a while now.
However, this is certainly not true. People can do well in forex, but this does not happen quickly. Traders first have to learn how the market works and then learn patience. People should trade when they see a promising opportunity open up, but should not hope for the world. Gathering money in this market is a slow process. Usually, this means taking advantage of small price fluctuations in currency pairs.
One should not try to put all their money on one trade and hope to make it big. This is almost never successful. If one does this, the costs of failure are usually far worse than the possible winnings.
Forex trading is not just short-term trades
From the outside, it looks as though short-term trades are the only option for forex traders. This is not necessarily true.
It is perhaps the high leverage you can get with forex trading that causes this. This way, people can improve their gains on small price fluctuations. People think that therefore, short-term is the only way to go.
However, using fundamentals can also be effective. You can look at long-term trends to see where economies are going to go. This also means paying less in spreads overall, as you are doing a smaller volume of trades. You are also more likely to think properly before you trade with this method.
We will continue dispelling these myths in the next instalment.