Dispelling Forex Trading Myths

Posted by forex on August 21st, 2010

As we know, forex trading is a business of buying a currency in exchange of another currency, and trading is always done in pair of the currencies. We can do business with as low as investment of $100. Another factor which is attracting investors is high liquidity. These factors are responsible to attract newcomers into this market. However, there are several myths about this market, which can only be overcome by proper studying this market. There is lot of study material available on the net and on other media. It will help you to improve your knowledge about the forex market, however some myths you will be able to overcome only after gaining some experience in the market.

There are some common myths in this market.

Anybody Can Do Forex Trading Easily

It is difficult to understand the fluctuations of the currency rates. Fluctuations in the currency rates is so complex subject, and relying on many factors. It is very hard for a new comer to understand this. It is difficult to predict when particular currency price will go up or down, what to buy and what to sell. It is a reality of this market that sometimes even experienced forex traders are making losses.

Leverage Strategy

Due to easily available leverage facility, investors are easily attracted to try this option. Some people want to become millionaire overnight using this option. However there is great risk involved in trying this option. If your predictions go wrong, you can lose your hard earned money. There are exceptions in every market and forex market is no exception to it. Accept the fact that forex market is highly volatile market, so you must decide how much risk you can take and how much risk you should take.

It is Easy to Learn Forex Trading quickly

Some people think that it is very easy to learn forex trading and they can do it within a day or two. This is not correct. Just by reading few books, or some articles on the net you can gain some knowledge, but it takes a lot to thoroughly understand this market. If you are a new comer in the market it is highly recommended that you trade with small amount, in that case profits will be less but losses also would be less.

You should always be in the market

Some people think that if they spend all the time in the market, they will be able to catch some good opportunity. Chances are that they may get it or they may not get it. Good trading opportunities may not be available whole the year. It may available only few times in a year.

Others advice can work for you

If you are getting advice from other experts in the forex trading, it may or may not work for you. In fact you should know the logic behind that advice, and apply your mind. Don?t follow anybody blindly.

Market Movement is Scientific

This is another myth. This statement is not 100% true. For the market movement there may be one or the other factor would be affecting, but if you know all prices in advance and there would not be any market. You should unde

I hope this will help you understand myths in forex trading.