No matter which category you belong traders – beginners or old-timers, you will always be surrounded by a variety of myths about the forex market, which can cause some damage, even though there have any experience. Knowledge of the basic myths to avoid unnecessary worries and experiences. In this paper, we propose to consider the 10 most popular myths affecting different stages of “evolution” of relations with the market trader, from exploring the development of strategies to forex.
1) The Rapid Enrichment
Advertising led to the rapid growth of retail foreign exchange market share , but at the same time she admitted forex huge number of people seeking to get rich quick (often not applying to this great effort ) . Unfortunately, this happens rarely . Trade requires patience, and the endpoint does not exist. Traders do not come to the market to make a quick profit and leave, rather they are constantly open transaction after transaction , even if they do short breaks . Forex Trading requires a sequence rather than excitement inherent in card games.
2) Forex – only for Short-Term Transactions
High leverage has led to the increasing popularity of short-term trades in forex , but that does not mean that all committed transactions in the market have to be that way. Long-term trends depend on fundamental factors , and based on them , you can also build a trading strategy. Traders working with long-term time intervals , focuses on global trends, not caring about the daily fluctuations of currencies . It can be argued that the discovery of a long-term deals allow traders to save on the number of paid spreads (the equivalent of the commission) , and will also reduce the likelihood of impulsive trades. In addition, the currency can be seen as a tool for investment in order to diversify or hedge long-term investments.
3) Market Corrupt
Bearing loss traders often accused of fraud or market explain their failures corrupt broker. Despite the fact that to reach this conclusion is fairly easy , it has no basis : forex has no relation to fraud. Incidentally , the forex market is the largest in the world, every day there are hundreds of thousands of transactions are made and tested millions of tranzatsy . This means that if someone starts behaving foul play , then at least one of the savvy players to quickly calculate the offender.
4) The Ideal Strategy
Mistakes happen , and trying to find the invincible strategy can lead to a trader or waiting indefinitely for the right moment , or to finding a super- optimized strategy, which will not be able to adapt to new conditions. If the trader will be able to accept the fact that from time to time it will overtake the failures , as well as to find an approach that will allow the use of market situation with the maximum benefit , it will be enough to achieve good results.
5) Make the Sale on the News Easily
Looking back and analyzing the fluctuations of currencies after the release of an important publication , for example, data on the number of employees in the U.S. economy outside of agriculture , a trader can create a false impression of “fast money.” Nevertheless , it is far from reality , and trading news in real-time requires tremendous knowledge and effort . Typically, the graphics do not show that price movements during the first seconds after the publication provided sufficient liquidity . Despite the fact that you can open positions before the actual publication , to make the right deal requires careful analysis of the statistics, which will determine the possible consequences of its release to the market. In addition, it is worth considering that resorted to such methods and other traders , so you need to have a certain skill. Thus, trading news requires delicacy , and is unlikely to consistently bring easy money.
6) The More Transactions, the Better
If the trader earns spending only one deal a day, then he can get ten times more closed ten transactions – although pleasant , but still misleading. Most of the traders will benefit the opposite approach : fewer deals and more attention to a limited number of currency pairs. If the trader does not have sufficient experience and does not focus on ” scalping ” , it will be much more useful to concentrate on what he knows to be patient and wait for the most successful conditions for open positions.
7) To Earn on Forex
You need to predict the market situation Despite the fact that most of the “newcomers” are trying to predict the market situation , it can lead to the collapse of all their hopes. The fact that predictions can ” blind” the trader, his bowing to certain transactions and depriving rationalism. On this basis, the trader must show resourcefulness, according to trade and develop systems along with victories take their defeat. Opening and closing of positions should be based on the market situation, which is constantly changing. If the forecast yet been made, the trader must wait for confirmation.
8) The More Complex the Strategy
The More Complex the Strategy, the better Typically, traders begin to work in the market with simple strategies , generating a small profit. A little later, they come to the conclusion that the complexity of the existing strategy and consideration of a number of new variables will allow them to increase profit . However, as a rule, it is not so . Instead of analyzing such simple things as the volatility , as well as to understand whether there is a trend or development of the market is in the flat , the trader is trying to determine the exact point of reversal and opens up new positions . Nevertheless , we should not forget that even the best traders profit only slightly more often than incur losses . Therefore , if the system brings you money , follow it unchanged, and instead listed above focus on capital management.
9) Capital Management Involves Placing Stop
It can be argued that the management of capital – one of the most important factors in determining the success of a trader after he learned to successfully close the transaction in the black. Management rules – it is not just knowledge of techniques for placing stops, rather they teach literacy ratio selection risk level to the size of the account. As a rule, this figure should not exceed 1%. Management rules will also help determine the feasibility of simultaneous opening of several transactions , and also indicate , for example, whether parallel open positions to hedge losses each other. Focusing on capital management , the trader moves to the next phase in its relationship with the market , and its neglect of the rules will inevitably lead to defeat, despite the excellent trading strategy.
10) You can Mindlessly Follow the Example of Other
Trader constantly surrounded by all sorts of advice about the ways time and trafficking routes . Nevertheless , the responsibility for decisions and their consequences rests only on his shoulders. It is for this reason that a trader needs to master all the knowledge and self- analyze the situation , rather than relying on other people’s recommendations . Sure, professional traders can help “newcomers” (and other traders ), but before using the information thus received , it is necessary to carefully and thoroughly examine the filter , because no one is interested in profit as the account holder , so he should make greatest efforts to achieve success.
Each trader must learn self-assessments in the market – any market participant is required to understand what the trade . Something comes with experience ( so it is important to learn to manage capital ) , but something – through independent study topic. Foreign exchange market is surrounded by myths that may prevent traders move to the success or mislead , so as to minimize their impact , it is necessary to develop and test your own reliable trading plan and be prepared to take full responsibility for the results of its application.