“The earth is a flat square” is a concept that has haunted humanity for years. But when Columbus proved that this was a delusion, trade flourished and the world flourished. It was a revelation and a revolution. Similarly, new entrants to the forex market are introduced to some false ideas that are either misconceptions or myths. And when you become enlightened, your transactions will also flourish. So here is your chance for enlightenment.
1. Easy to double your money
Of course, you can double your money in many areas, such as business or real estate. In Forex trading, this is certainly a possibility.
Intrigued, why then the delusion? This is not the “double your money” part; instead, it’s the “light” part that draws attention.
Forex trading is like any other field. You have to learn, gain experience, and then build a strategy. Also, you need to develop mental endurance, as emotions eat you up over time.
So the “easy” part is defined by the 3Es: Experience, Impact, and Emotional Coefficient.
Do not be afraid; Forex trading is not difficult either. It just has its share of challenges.
If you really want to double your money, here are some noteworthy ideas of what has worked in the past. Check it.
2. I can use all leverage to make more money.
Yes you can. But you don’t have to.
Leverage is a double-edged sword, just like a credit card.
You need it in your system to reap the benefits.
But if you abuse it, you will end up bankrupt.
In addition, when you try to hit above your weight, emotions flare up, which also reduces your stress level.
One of the best ways to keep your emotions in check is to reduce them in the game. It helps to think sensibly and be self-confident.
Always remember the phrase that brokers advertise: “Losses can exceed capital.” This is not a prank or a prank. This is a risk to your capital and, more importantly, to your confidence.
So don’t go down that path because there is no rewind button in real time.
3. Top brokers offering 100% BONUS
Although, this is a delusion, it’s good. Because it means, as mentioned in Misconception #2, that you understand the risks associated with Forex trading. So, instead of using leverage, you are cashing in on your broker’s money. Your attitude is up to the mark, so give it a thumbs up!
But here’s the thing.
Conditions are attached to the bonus. Not one, but many. And it’s hard to get it out.
No one is willing to donate their hard-earned 5 cents to you. You need to earn it.
Remember, brokerage is a business. And in order to do their business, brokers want you to trade more. But as a trader, you should not fall prey to the vicious overtrading syndrome.
Don’t let the glamorous bonus overshadow your broker priorities – security, reliability, fast order execution and modern technology.
Note: The bonus is not fictitious. To survive in the market, every broker now offers a bonus. But this should not be the cornerstone in decision making.
4. Market under my control
This is more of an illusion than a delusion.
The market is like a wife to you.
You feel like you are in control of her. But you never are (no pun intended).
And when you’re more confident about it, that’s the best time to get ambushed. This is the curse of trading.
You have to accept uncertainty and unpredictability. He is preparing you for what is to come.
For example, you have a long position in a trade. The asset shoots up from your entry price. So, you feel that the market is under your control, set a goal of 1000+ points and go to sleep. The next morning you see a market below your cost. BOOM!
If you accepted the fact that the market is NOT under your control, you would make a partial profit.
Accepting the problem can only help you solve it. So accept it and then find ways around it.
5. I will not trade with a stop loss
Well, who hasn’t had this misconception at least once in their Forex trading career?
When the market cuts your stop losses, and then rushes to his goal, it is, of course, heartbreaking. If this is happening in repeat mode, then you have to trust that the stop loss is the culprit that is holding you back. But the irony is that if you fall prey to this delusion, then what you save in 5 trades, you will lose in just one trade.
Remember when you are not trading with a stop loss
- Your capital becomes vulnerable.
- Your risks are limitless.
- In turn, you are exposed. Sometimes you can be caught with pants on. Ouch!
On the contrary, when you pre-set a stop loss, your emotions are in a stalemate.
So, determine your stop loss before entering a trade.
6. My system works 100% perfect
Unless you are a time traveler from the distant future who has all the knowledge of the past, you will not be able to create a 100% perfect system.
Even so, it is impossible to create the Holy Grail because you never know The ripple effect the size of your order.
This attitude almost coincides with fallacy #5; only this time it is based on logic.
But here’s the thing: data and charts don’t move markets. These are traders, their emotions drive the market. For example, we have often seen double tops and bottoms fail. Why? Because traders are willing to do (buy/sell) this way regardless of the pattern. While this is not an everyday occurrence, it does happen from time to time.
No system is reliable, either by default or custom. So, let go of this misconception and master the finer details of Forex trading.
7. No one can make money trading
When you get rid of misconceptions #5 and #6, you will realize that “profitable Forex trading” is itself a myth.
Well, there are professional traders who make their living in the market.
And there are institutions that earn their significant share of the income in the markets.
If they can survive on the market, why can’t you?
Yes, they have an advantage. The advantage is not the fancy tools they have; it is knowledge. Wisdom obtained after many years of work in the market.
Of course, you can also acquire know-how, but it will take a long time.
So, if you want to have a trendy tool up your sleeve until you get smart, here’s the best one for you. Check it.
Making money takes effort. It’s not as easy as you imagined being on the beach. It’s not as difficult as you think after testing the water. The bottom line is that Forex trading takes effort.
8. Trading is gambling
This is a school of thought that has existed among outsiders for 3-4 decades. And this is the threshold that prevents many ambitious individuals from entering the market.
But there is a subtle difference between trading and gambling that you should be aware of when signing up to trade.
Trading is a form of speculation where you take calculated risk with the possibility of losing, while gambling is betting on a certain outcome without any logical support.
Anyone can play without any training or knowledge and even win occasionally if luck is on their side. And in the markets, you can also take a risk – buy or sell an asset without proper preparation.
But trading requires knowledge of either technical or fundamental analysis in order to achieve any success.
They have the same goal – wealth creation – but by different routes.
So trading is never gambling!
9. Brokers that offer low spreads or 0 spreads are the best
The broker is the custodian of your funds and an intermediary for your liquidity.
Their main income stream is the spread or commission they charge for your orders.
Obviously, it is impossible to run a business without charging customers a dime.
If a broker is bloated by offering “no spread” then this is either a temporary gimmick or just means they are charging you a fixed amount for another reason.
So, pay attention to conscientious brokerage service and impeccable trust on the part of the broker, and not to fantasy.
The myths and misconceptions discussed here are just a few of the many that are floating around in the forex world. As your career goes up, more and more myths creep into your forex trading system. And some misconceptions can cost you dearly. So never trust what you can’t draw on the drawing board. After all, you are playing with your hard-earned money. Bet on logic, not on myths!