SeanFX11
New Member
Hey Hey Hey.. Just sharing some good read for today..
Whether you're a seasoned trader or new to the forex market, the myths about forex trading are always swirling around you. These myths can potentially affect anyone, no matter how long they have been trading. By knowing some of the major myths, traders can avoid unnecessary frustrations. While there are potentially many trading myths.
Get Rich Quick-
Advertising has rapidly expanded the retail market in forex. This has brought many people into the arena who are on a quest to get rich quick (or with little effort). This unfortunately is very rare indeed. Trading takes patience and there is no final destination. Traders do not make some money and then walk away; rather they make trade after trade, even if there is time gaps in between. Therefore trading required consistency, not a gambling-throw-it-all-at a-couple-trades mentality.
The Market Is Rigged
Losing traders often point to a rigged market or a corrupt broker as the reason for their failure. While it is an easy assumption to make, forex is not a scam. The forex market is by far the largest in the world swayed by hundreds of thousands transactions and potentially thousands of inputs each day. This means it likely that if someone takes a non-businesslike approach to their trading, one of the other savvy participants will usually quickly notice – this is the way of all markets. (Forex scams are more common than you may realize. Know the signs before you throw your money away. Refer to Spotting A Forex Scam.)
You Can Easily Make Money Trading News
In hindsight, seeing a move in currency after a high impact news announcement like the U.S. Nonfarm Payrolls (NFP) Report can make people salivate with thoughts of quick money. This is far from reality as news events can be extremely hard to trade in real-time. What the charts generally don't show is that often there is no liquidity for much of the move that takes place in the first few seconds after the announcement, meaning traders cannot get into a favorable move once it starts, or get out of a losing trade once they are in it. Although it is possible to set up a trade before an announcement is made, execution requires analysis of the presented statistics in order to determine the likely effect on the market. This analysis must be conducted almost immediately as other traders are gauging the same indicators. Therefore, trading news takes a meticulous strategy, and consistently easy money is rarely found.
More Trades with More Pairs Is Better
While it would be nice to think that if a trader makes money trading once per day, that they can make 10 times as much trading 10 times a day, this is generally not the case. Trading less and focusing on a few currency pairs that the trader understands will be beneficial to most traders. Unless a trader is skilled and focuses on scalping strategies, the majority of traders will benefit from being patient, focusing on something they know and waiting for the best opportunities – few as they may be.
You Can Simply Follow What Others Are Doing
There is always lots of advice to be given on how to trade, what to trade and when trade. Yet ultimately it is the trader whose money it is, and will be the sole recipient of profits and losses. Therefore, since it is the trader's money at stake they should make every attempt to develop their own skills and come to their own conclusions instead of purely relying on the advice of others. Experienced professionals can greatly aid new (or other experienced) traders, but all information should be filtered and scrutinized before the information is acted on. No one else has a vested interest in the profitability of the account like its trader; therefore the trader of the account
should provide the largest input.
Bottom Line It is important for a trader to do their research and understand what currency trading actually involves; some of this will come from experience, which is why money management is so important, and some of it will come from educating one's self. The currency markets are full of myths that can harm a trader's chances at success or can lead her astray. Develop a solid trading plan that is personally tested and take full responsibility for the success or failure of that plan; in this way the affects of the myths will be diminished or discarded altogether.
some excertps (investopedia)
Whether you're a seasoned trader or new to the forex market, the myths about forex trading are always swirling around you. These myths can potentially affect anyone, no matter how long they have been trading. By knowing some of the major myths, traders can avoid unnecessary frustrations. While there are potentially many trading myths.
Get Rich Quick-
Advertising has rapidly expanded the retail market in forex. This has brought many people into the arena who are on a quest to get rich quick (or with little effort). This unfortunately is very rare indeed. Trading takes patience and there is no final destination. Traders do not make some money and then walk away; rather they make trade after trade, even if there is time gaps in between. Therefore trading required consistency, not a gambling-throw-it-all-at a-couple-trades mentality.
The Market Is Rigged
Losing traders often point to a rigged market or a corrupt broker as the reason for their failure. While it is an easy assumption to make, forex is not a scam. The forex market is by far the largest in the world swayed by hundreds of thousands transactions and potentially thousands of inputs each day. This means it likely that if someone takes a non-businesslike approach to their trading, one of the other savvy participants will usually quickly notice – this is the way of all markets. (Forex scams are more common than you may realize. Know the signs before you throw your money away. Refer to Spotting A Forex Scam.)
You Can Easily Make Money Trading News
In hindsight, seeing a move in currency after a high impact news announcement like the U.S. Nonfarm Payrolls (NFP) Report can make people salivate with thoughts of quick money. This is far from reality as news events can be extremely hard to trade in real-time. What the charts generally don't show is that often there is no liquidity for much of the move that takes place in the first few seconds after the announcement, meaning traders cannot get into a favorable move once it starts, or get out of a losing trade once they are in it. Although it is possible to set up a trade before an announcement is made, execution requires analysis of the presented statistics in order to determine the likely effect on the market. This analysis must be conducted almost immediately as other traders are gauging the same indicators. Therefore, trading news takes a meticulous strategy, and consistently easy money is rarely found.
More Trades with More Pairs Is Better
While it would be nice to think that if a trader makes money trading once per day, that they can make 10 times as much trading 10 times a day, this is generally not the case. Trading less and focusing on a few currency pairs that the trader understands will be beneficial to most traders. Unless a trader is skilled and focuses on scalping strategies, the majority of traders will benefit from being patient, focusing on something they know and waiting for the best opportunities – few as they may be.
You Can Simply Follow What Others Are Doing
There is always lots of advice to be given on how to trade, what to trade and when trade. Yet ultimately it is the trader whose money it is, and will be the sole recipient of profits and losses. Therefore, since it is the trader's money at stake they should make every attempt to develop their own skills and come to their own conclusions instead of purely relying on the advice of others. Experienced professionals can greatly aid new (or other experienced) traders, but all information should be filtered and scrutinized before the information is acted on. No one else has a vested interest in the profitability of the account like its trader; therefore the trader of the account
should provide the largest input.
Bottom Line It is important for a trader to do their research and understand what currency trading actually involves; some of this will come from experience, which is why money management is so important, and some of it will come from educating one's self. The currency markets are full of myths that can harm a trader's chances at success or can lead her astray. Develop a solid trading plan that is personally tested and take full responsibility for the success or failure of that plan; in this way the affects of the myths will be diminished or discarded altogether.
some excertps (investopedia)
