There are many myths about forex trading that can mislead both experts and new traders. Separating fact from fiction can take a bit of time and research, but it’s necessary if you’re going to make smart trading decisions. So, let’s take a look at some of the biggest forex trading myths still going around and debunk them once and for all.
Myth #1 – Forex trading is like gambling
A common myth about forex trading is that it’s a risky game of chance, just like gambling. While it’s true that trading currencies, just like trading any assets, has its share of risk, successful forex traders don’t rely on chance. They perform careful technical and fundamental analysis to determine potential market outcomes. They also use time-tested strategies designed to mitigate risk.
By understanding the forex markets, and learning effective trading strategies it is possible for anyone to make profitable trading moves by understanding how the forex market works, knowing how to analyze market data, and applying strategies that minimize any inherent risk.
Myth #2 – Forex trading needs an economic degree and lots of money
This is a myth rooted in the history of forex trading. In its early days, the Forex market was only accessible to affluent traders employed by large financial institutions. In those days, you needed an economic degree, preferably from a leading university, to work in any one of these companies.
However, that’s not the case at all anymore. The internet has helped democratize forex trading. Today there are a wealth of educational resources and trading guides online prepared by successful traders, that will teach you everything you need to know about forex trading, and then some!
Gone too are the days when you needed a lot of capital to invest in forex trading. Many brokers today will let traders join their platforms for as little as $100. Traders can also open free demo accounts to learn how the forex market works risk-free.
Myth # 3 – The Forex market is rigged
It is hard to deny that there aren’t unregulated companies and institutions who look for ways to manipulate the forex market for their own gain. This may have been a common practice in the early days of forex trading, but nowadays, it’s harder than ever to get away with it.
There are stricter laws and regulations in place today than ever before. There are government agencies and regulatory bodies that are dedicated to finding these unethical players. Due to the speed at which information travels on the internet, it’s impossible for anyone to successfully manipulate the markets and get away with it anymore.
Every year, numerous individuals and companies are successfully prosecuted and heavily fined to deter those who may wish to manipulate the market.
There are many myths about forex trading. Some of these myths are rooted in facts that have been exaggerated over time, and some are pure fiction conjured up by traders who don’t know enough about forex.
Successful forex traders know how to separate fact from fiction. They arm themselves with time-tested trading and risk management strategies to mitigate their risk. If you educate yourself and base your strategies on real-life data analysis, you’ll be able to make smarter trading decisions that position you more favourably for success.