According to a survey by BIS (Bank of International Settlement), the daily forex market turnover was $5.1 trillion in 2016.
This report further underlines the fact that forex is the world’s largest market when it comes to volume trading.
As with any trade, forex trading comes with its own myths and facts. The myths especially may potentially affect any forex trader, whether they’re a beginner or experienced.
For this reason, understanding the myths and facts can save any potential trader from unnecessary frustrations.
Is forex legit? This is one of the most common questions skeptics ask about forex. Well, to be honest, forex is real. It’s not a scam.
You just need to be patient and wait for your chance.
In this piece, we’re going to look at some of the common myths and facts associated with forex trading, which will be useful for anyone considering trying their luck at foreign currency trading.
Myth: Forex Trading is Simple
One of the biggest myths about forex trading is that it’s an easy thing to do.
However, the reality is that it’s not. Successfully exchanging foreign currency with others is one of the hardest ways to make money online.
Downloading the right forex software is certainly easy but making money through forex is a completely different matter.
Beginners should always spend enough time learning the basics of foreign currency exchange and develop better forex trading strategies in order to earn handsome returns in the future.
Fact: The Best Forex Strategies are Simple Ones
You might want to know everything to do with forex training, such as all the currency pairs, all the complicated risk management ideas, and all the forex trading signals.
But if you can’t comfortably explain your forex strategy to a junior high school student, then yours is not a good trading strategy.
If they can’t get your strategy, then you’re overcomplicating it and you’ll find it almost impossible to stick with the strategy.
The best forex strategies are straightforward, easy to understand, as well as easy to follow.
Myth: Forex Trading is Very Risky
Every decision you make in this life carries some level of risk–even routine activities such as eating, drinking, driving, etc.
There are different risk levels regardless of how you spend your money. Even putting your money in the bank carries some risk. If the bank goes bust, you might never get your money back.
Forex trading is not like gambling. You don’t have to be a pro gambler to successfully trade in the forex market.
When you sell or buy a financial asset like a currency, you do that based on your analysis. You just hope to have a positive result over time, not counting your starting capital.
When you bet, you just roll the dice and cross your fingers.
Fact: All Brokers are Different
Your broker can affect how you’re going to perform as a trader. Therefore, you’ve got to research well before you choose a forex broker.
For example, while a broker offers many different products and services, some brokers limit the possibility of their traders. Customer service, spread charges, and even transparency can also vary with brokers.
Therefore, you want to restrict your search to only the very best brokers who treat their clients well, work transparently and, above all, charge reasonable spread charges.
Myth: Forex is a Rip-off
This is something some frustrated traders and skeptics say but the truth about forex is that it isn’t a scam. But you may have to wait and exercise patience in order to get something huge in return.
As a bad apple can make the whole basket go bad, there are some individuals who are hiding behind their ineptitude to tarnish the name of foreign currency exchange.
But there are still plenty of forex brokers, account managers, and institutes which you can trust if you want to successfully start your forex trading career.
Fact: Overtrading is a Disaster Waiting to Happen
One common error many new traders make is to overtrade. Most of them believe that they need to spend every single minute in the forex market so as not to lose opportunities.
Other traders like to enter into several positions believing that this ups their chances of profitability. Many other traders incur losses on a trade and get into more trades in a bid to recoup losses. They do so without thinking twice.
Some people call this revenge trade. Another kind of overtrading involves a trader holding a losing position for far too long, hoping that the tide will turn in their favor. This only leads to more losses.
Myth: Only Pros Can Make Money
Entering the forex market without learning the ropes is certainly a foolish move as there are always chances of failure. But it’s also not true that you must be a professional in order to make money via forex trading.
You don’t need expensive forex trading lessons to get started but you should teach yourself to deal and think like an expert.
Fact: Discipline is the Most Vital Attribute of a Trader
When it comes to the forex market, chasing instant riches is a futile exercise. If you think that forex trading is like some get-rich-quick scheme or lottery, you’re setting yourself up for certain failure.
Any trader who wishes to secure their future should forget about instant riches and build a strategy that’ll see little but consistent profits throughout their career.
To be successful, the trader should have effective risk management strategies, money management strategies, as well as a solid strategy that lets him/her gain from currency price fluctuations.
Being disciplined includes having a trade journal and documenting all your trades in the foreign exchange market.
So, Is Forex Legit?
Forex trading is basically about the facts. You’ve got to analyze all the facts and figures prior to making major decisions. If you trade without facts, it’s like shooting in the dark.
Hopefully the above facts and myths of forex trading will help you better understand this diverse market.
So is forex legit? Well, to find out the answer, be sure to read through our blog. We’ve got plenty of information that might help you understand forex trading better.