The Forex (foreign exchange market) is a global decentralized or over-the-counter (OTC) market to trading currencies.
Who trades in the markets, they know as a forex trader. Forex trader's buy, sell and exchange currency at the market current or determined prices.
In this way to trade or exchange, forex traders do some mistakes. Here are some common Misconceptions of a Forex Trader:
Easy to double the money
Most of the newbie traders thought making their own fund double is easy. Earning money and generating money is certainly possible in many avenues such as real estate, business, and forex trading.
Then why it is a Misconception?
It is not the ‘double your money’ part. Earning and profit-generating are to have a lot of difference between making money double.
To earning via forex trading, you have to learn, research, analysis, and build a strategy. Forex trading is heard not difficult.
So you can double your money, it is right, but you have to patience, you have to learn, you have to give time.
Maximum leverage is the best to make more money
Leverage is the proportion of the trader's fund to the size of the broker's credit. At the end of the day, Leverage is obtained money to build the potential returns. The Forex Leverage size, for the most part, surpasses the contributed capital for a few times.
Yes, traders use leverage to make more money.
But you shouldn’t.
It is a sword like a credit card.
You have to use it properly, if you overuse it, at the end of the result you will be bankrupt. Most of the time beginners and intermediate traders take maximum leverage for their emotions.
So, one of the better options keeps controlling your emotions to avoid destroy your strategy and fund.
Sometimes beginners think Forex broker who provides a free bonus or offer 100% deposit bonus is the best.
Although, it’s a misconception, it’s a good thing.
How it is a good thing?
You are a newbie, want to learn forex trading, without any investment you can start learning through the broker free bonus.
You have to understand the live market, risk of forex trading, trading platforms, account types, leverage, and more so it’s good.
And after learning a lesson, you will invest some in live trading to make money. But you will start with a small fund due to the risk reason. This time if you will get a 100% chance to start trading with a double fund then, obviously it will be good for you!
But the misconception is that broker who provides bonuses is good.
There many good brokers in the market, who cannot offer bonuses for financial regulation, authority support, and terms and conditions.
Also, you have to consider, the broker is a business, and some broker has a strict mindset.
No one going to give you free money. But as a broker, they offer some bonuses to make you a perfect trader.
Avoiding stop loss
A stop loss is a function offered by forex brokers to avoid empty of the trading funds. This function is executed by setting a stop loss level, a predetermined measure of pips from the entry price.
We researched, more than 95% of traders have/had the misconception. Traders think about it at least one time in their trading career.
Stop-loss protects your fund to lose the entire whole fund.
If you don’t know about stop-loss, you should think about how it is a misconception?
Remember these three 3 things, what could happen to trade without stop loss:
Your capital becomes vulnerable.
Your risks are boundless.
In turn, you are exposed.
Again, trading with emotions is very bad so you have to patience. And don’t forget to set stop loss before opening a trade.
My strategy is perfect
Sometimes traders thought his or her strategy is 100% perfect. You can say only about the past, not about the future!
Forex is an unpredictable market, it can move any time in any direction. So without you have a time traveler you cannot say about the future, and this why you cannot say also your strategy is 100% perfect.
But after earned some profit via a strategy and technique you can say it is ok!
It is a big misconception of a forex trader. Forex strategy or technique is just logic.
Data and charts do not move on the market, but emotions can move at any time.
The Japanese candlestick chart is a real example to see data and charts.
No strategy is fool-proof, so lets out the misconception from your mind, and trade wisely.
No one can earn money in forex trading
We researched there are some failures, who don’t want to learn, just start to gather money, and more money.
They have never been a success in trading. Those peoples thought and say forex trading is very difficult and like a casino, no one can earn money in forex trading.
Also, those failures start forex trading with forex bonuses to earn money. But forex bonuses are to learn forex trading, know about forex and to change broker platform or broker.
So it is also a big misconception. If you can learn properly, analyze the market before open trade and build-up strategy, study the market over (fundamental analysis), you can earn easily.
Many peoples and some failures though forex trading is gambling. They thought it is also a casino.
But not! It’s totally different from gambling. The gambling totally different on luck, but in the trading proper analysis and strategy can make a success.
Anyone can start gambling without learning, knowledge and any kind of preparation but you cannot start trading!
Trading starts from speculation and ends with calculation, to do gambling doesn’t need any logic but the other-side in the trading you have to build strategy needs logic, analysis, learning, and more.
So trading is never gambling!
These are the most common misconceptions. Remove this thing from your mind and keep yourself update to earn more and avoiding being a loser!