Did you know that the Forex Market is the biggest financial market globally and is mind-blowing 35 times larger than the stock market? Over 179 different currencies in the world today make up the Forex Market, creating endless possibilities. The US Dollar is the most traded currency comprising around 73 percent of total global trades.
These were some facts that are true about the forex market. However, the Internet is a jungle, and there are many myths around forex trading floating around. These myths can overwhelm novice traders and hinder their ability to learn. Without learning about the forex market, new traders usually end up taking more risks than necessary.
Some of these myths are pretty absurd and either push a new trader to risk more or no risk at all. Here’s a compilation of the top five forex trading myths and the realities behind them.
Forex Trading is Easy
With easy access to the Internet and forex trading platforms offering trades as low as $25, it’s easy for anyone to start trading in foreign exchange. What’s not easy is to succeed and make money on your trade. Like any other trading market, forex is a complex market that requires analysis and knowledge of the trade to make money back.
Success in forex trading depends on a well-thought trading plan, studying market dynamics, and patience. Patience to start slow and learn along the way before you are confident in your knowledge to trade big. After all, practice is the key to perfection.
Forex Market is The Riskiest of All
Horror stories of people losing every penny to forex trading losses and forex scams are a dime a dozen on the Internet. When you skim through its surface, it appears that foreign exchange trading is the riskiest. After all, the forex market is the largest trading market globally and can scare inexperienced traders.
While a loss in forex trading is inevitable and the magnitude of loss depends on the experience and knowledge of the trader. The trader should know and set a risk level that you’re comfortable with to avoid incurring heavy losses. Set stop-loss for every trade and condition under which you exit to help you prevent any expensive errors.
If you find yourself as a victim of a forex trading scam in an unfortunate turn of events, don’t give up. There are methods to recover your lost money like forex scam recovery companies, complaining to regulatory authorities, and card chargeback, among others.
The best way to recover the lost funds is to approach a forex scam recovery service as they can build your case by gathering evidence and then confront the scammer to get the money back. Alternatively, traders can equip themselves with the knowledge of how forex scams work to spot them before falling prey.
Forex Trading is Gambling
There is a popular myth that forex trading is gambling. The myth stems from the fact that there is no certainty in forex markets. However, the lack of certainty doesn’t indicate that traders are randomly betting money based on predictions and forecasts.
Forex trading involves studying various economies around the world and their dynamics with each other. To illustrate, the long-term movement of currency pairs is far from random and influenced by global/national economics, dispelling the myth that forex trading is gambling.
Forex Market is Rigged
The forex market is far too random to rig it. Large entities like governments and central banks can control the currency value to some extent, but it’s nearly impossible for them to rig the system. It’ll require major players like investment banks, private equity firms, hedge funds, big corporations, and central banks to come together to rig the system.
The truth is that successful forex traders will never tell you that forex trading is rigged because they understand the market and successfully make money for themselves. The myth comes from traders who lose a huge sum of money in bad trades and blame the broker or government for the failure.
Foreign Exchange Trading is Meant Only for Affluent
This is one of the most popular myths about forex trading that only the affluent can dabble in. This no longer stands true as nearly everyone has access to the Internet these days, and it’s possible to open a forex trading account with a minimal amount.
However, what’s true is that the investment has to be significant to achieve a higher level of profit. Therefore, to make it big in forex trading, you should be able to invest a considerable amount. If you’re planning to learn the tricks of the trade, you can sign up for demo accounts on offer by a CFTC, NFA or FINRA regulated broker without any actual investment.
These are the top five myths that every trader comes across at least once. It’s best to know the truth behind them and take an educated approach towards forex trading.